What changed in this filing

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Item 1. Financial Statements

2020-11-12 compared with 2020-08-14 · 604 added, 572 removed, 352 unchanged (77% of the section changed)

Financial Statements

AND SUBSIDIARIES

INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

in thousands, except per share data)

and cash equivalents

receivables, net of allowance for doubtful accounts

receivable from related parties

expenses and other current assets

September 30, 2020

December 31, 2019

CURRENT ASSETS

plant and equipment, net

intangible assets, net

AND STOCKHOLDER’S EQUITY

taxes payable

portion of mortgage loan payable

current liabilities

Cash and cash equivalents

Trade receivables, net of allowance for doubtful accounts

Notes receivable from related parties

Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net

Other intangible assets, net

LIABILITIES AND STOCKHOLDER’S EQUITY

CURRENT LIABILITIES

loan payable, net of current portion

term debt (Note 4)

and contingencies (Note 6)

events (Note 11)

STOCKHOLDERS’

stock, without par value, 300,000,000 shares authorized, 300,000,000 issued and outstanding as of June 30, 2020 and December

paid-in capital

Accounts payable

Accrued expenses

Accrued payroll

Deferred revenue

Income taxes payable

Notes payable

Current portion of mortgage loan payable

Other current liabilities

Total current liabilities

Mortgage loan payable, net of current portion

Long term debt (Note 4)

Total liabilities

Commitment and contingencies (Note 5)

Subsequent events (Note 10)

STOCKHOLDERS’

Common stock, without par value, 300,000,000 shares authorized, 300,000,000 issued and outstanding as of September 30, 2020 and December 31, 2019

Additional paid-in capital

Retained earnings

Total stockholders’

equity attributable to Reliability Inc.

Noncontrolling

interest in consolidated affiliates

liabilities and stockholders’

Noncontrolling interest in consolidated affiliates

Total liabilities and stockholders’

accompanying notes are an integral part of these statements.

AND SUBSIDIARIES

INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

in thousands, except per share data)

the Three Months Ended

general and administrative expenses

income (loss)

income (expense)

(loss) before income tax benefit

net income (loss)

income (loss) attributable to noncontrolling interest in consolidated affiliates

income (loss) attributable to Reliability Inc.

income per share:

used in per share computation:

For the Three Months Ended

September 30,

Revenue earned

Service revenue

Cost of revenue

Selling, general and administrative expenses

Operating income (loss)

Other income (expense)

Interest income

Interest expense

Other (income) expense

Income (loss) before income tax benefit

Income tax benefit/(expense)

Consolidated net income (loss)

Net income (loss) attributable to noncontrolling interest in consolidated affiliates

Net income (loss) attributable to Reliability Inc.

Net income per share:

Share used in per share computation:

accompanying notes are an integral part of these statements.

AND SUBSIDIARIES

INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

in thousands, except per share data)

the Six Months Ended

general and administrative expenses

income (loss)

income (expense)

(loss) before income tax benefit

net income (loss)

income (loss) attributable to noncontrolling interest in consolidated affiliates

income (loss) attributable to Reliability Inc.

income per share:

used in per share computation:

For the Nine Months Ended

September 30,

Revenue earned

Service revenue

Cost of revenue

Selling, general and administrative expenses

Operating income (loss)

Other income (expense)

Interest income

Interest expense

Other (expense)

Income (loss) before income tax benefit

Income tax benefit

Consolidated net income (loss)

Net income (loss) attributable to noncontrolling interest in consolidated affiliates

Net income (loss) attributable to Reliability Inc.

Net income per share:

Share used in per share computation:

accompanying notes are an integral part of these statements.

AND SUBSIDIARIES

INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

the Six Months Ended June 30, 2020 and 2019

the Nine Months Ended September 30, 2020 and 2019

in thousands, except per share data)

December 31, 2018

Controlling Interest

Non - Controlling

Balance, December 31, 2018

Recapitalization

consolidation

June 30, 2019

December 31, 2019

consolidation

June 30, 2020

Note receivable from shareholder for tax debt

VIE consolidation

Balance, September 30, 2019

Balance, December 31, 2019

VIE consolidation

Balance, September 30, 2020

accompanying notes are an integral part of these statements.

AND SUBSIDIARIES

INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

in thousands)

the Six Months Ended

flows from operating activities:

income (loss)

to reconcile net income (loss) to net cash provided by operating activities:

and amortization

on disposal of property, plant, and equipment

in operating assets and liabilities:

expenses and other current assets

taxes payable

cash provided by operating activities

flows from investing activities:

of fixed assets

cash used in investing activities

flows from financing activities:

repayment of line-of-credit

from long term debt (PPP)

of long term debt

borrowing of notes payable

Repayment/(advances)

from/to related parties

cash provided by (used in) financing activities

increase in cash and cash equivalents

and cash equivalents, beginning of period

and cash equivalents, end of period

For the Nine Months Ended

September 30,

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

Accrued interest

Gain/(loss) on disposal of property, plant, and equipment

Changes in operating assets and liabilities:

Trade receivables

Prepaid expenses and other current assets

Accounts payable

Accrued payroll

Accrued expenses

Deferred revenue

Other liabilities

Income taxes payable

Net cash provided by operating activities

Cash flows from investing activities:

Purchase of fixed assets

Cash from reverse merger

Net cash used in investing activities

Cash flows from financing activities:

Net repayment of line of credit

Proceeds from long term debt (PPP)

Repayment of long term debt

Proceeds from notes payable

Repayment of notes payable

Repayment/(advances) from/to related parties

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

accompanying notes are an integral part of these statements.

AND SUBSIDIARIES

INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

in thousands)

the Six Months Ended

disclosures of cash flow information:

paid during the period for:

disclosures of non-cash financing activities:

impact of recapitalization from merger

assumed in merger

of shareholder loan to equity in merger

net assets consolidated

liabilities consolidated

reduction in equity

For the Nine Months Ended

September 30,

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Supplemental disclosures of non-cash financing activities:

Non-cash impact of recapitalization from merger

Liabilities assumed in merger

Conversion of shareholder loan to equity in merger

VIE net assets consolidated

VIE liabilities consolidated

VIE reduction in equity

accompanying notes are an integral part of these statements.

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Incorporated (“Reliability”

or the “Company”) is a leading provider of employer of record (EOR) and temporary

or the “Company”;

references herein to the Company include both Reliability

and its wholly-owned, consolidated subsidiary, Maslow) is a leading provider of employer of record (“EOR”) and temporary

staffing services for media and information technology (“IT”) that operates, along with its wholly owned subsidiary,

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that can last anywhere from a week to six months.

was incorporated under the laws of the State of Texas in 1953, but the then principal business of the Company started in 1971

was closed down in 2007.

The Company completed a reverse merger with MMG (the “Merger”) on October 29, 2019.

acquired the customer contracts and trade receivables and assumed certain liabilities of Intelligent Quality Solutions (“IQS”)

in exchange for a reduction of notes receivable from Vivos Holdings LLC (“Vivos Holdings”), the previous sole shareholder

of MMG, (the “Acquisition”) on December 1, 2019.

The owners of Vivos Holdings and their transferees who were issued

shares of Reliability Common Stock include Naveen Doki, Silvija Valleru, Shirisha Janumpally (through Judos Trust and Federal

Systems), and Kalyan Pathuri (through Igly Trust) together own approximately 86% of the issued and outstanding shares of Reliability

Common Stock and are referred to herein as “Vivos”

or the “Vivos Shareholders.”

acquisition of IQS has enabled Maslow to expand its staffing capabilities into the IT realm.

Reliability was incorporated under the laws of the State of Texas

in 1953, but the then principal business of the Company started in 1971 was closed down in 2007.

The Company completed a reverse

merger with MMG (the “Merger”) on October 29, 2019 via the merger agreement filed with the SEC (“Merger Agreement”).

Company acquired the customer contracts and trade receivables and assumed certain liabilities of Intelligent Quality Solutions

(“IQS”) in exchange for a reduction of notes receivable from Vivos Holdings LLC (“Vivos Holdings”), the

previous sole shareholder of MMG, (the “IQS Acquisition”) on December 1, 2019.

The owners of Vivos Holdings and their

transferees who were issued shares of Reliability Common Stock as consideration in the Merger include Naveen Doki, Silvija Valleru,

Shirisha Janumpally (through Judos Trust and Federal Systems), and Kalyan Pathuri (through Igly Trust) who together own approximately

84.4% of the issued and outstanding shares of Reliability Common Stock and are referred to herein as “Vivos”

“Vivos Shareholders.”

IQS Acquisition has enabled Maslow to expand its staffing capabilities into the IT realm.

of presentation

unaudited consolidated interim financial statements include the accounts of the Company and all wholly owned subsidiaries, including

its 100% owned subsidiary, MMG.

unaudited consolidated interim financial statements include the accounts of the Company and its only 100% owned subsidiary, MMG.

All significant intercompany accounts and transactions have been eliminated in consolidation.

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further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual

report on Form 10-K for the year ended December 31, 2019 and the Company’s quarterly report on Form 10-Q for the quarter

ended March 31, 2020.

report on Form 10-K for the year ended December 31, 2019.

INCORPORATED AND SUBSIDIARIES

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of Credit Risk

the three and six months ended June 30, 2020, 17.9% and 27.5%, respectively of revenue came from AT&T Services, Inc.

of its DirecTV division) (“AT&T”) and 15.1% and 11.4% respectively from Janssen Pharmaceuticals (which includes

workforce partners Johnson & Johnson).

For the three months ended June 30, 2020, 10.1% of revenue came from Goldman Sachs

For the three and six months ended June 30, 2019, 36.9% and 38.1%, respectively of revenue came from AT&T and 10.4%

and 9.6% respectively from Janssen Pharmaceuticals.

No other client exceeded 10% of revenues.

Janssen, and Goldman Sachs accounted for 22.4%, 26.3%, and 15.4% of accounts receivable as of June 30, 2020.

As of June 30, 2019,

AT&T, Janssen, and Goldman Sachs accounted for 46.9%, 15.8%, and 10.2% of accounts receivable, respectively.

the three and nine months ended September 30, 2020, 27.7% and 27.6%, respectively of revenue came from AT&T Services, Inc.

(inclusive of its DirecTV division) (“AT&T”) and 10.0 % and 11.0%, respectively from Janssen Pharmaceuticals (which

includes workforce partners Johnson & Johnson).

For the three and nine months ended September 30, 2019, 38.5% and 38.2%, respectively

of revenue came from AT&T.

For the three months ended September 30, 2020, 12.1% was from WETA.

No other client exceeded 10%

Janssen, and Goldman Sachs accounted for 37.1%, 17.4%, and 14.3%, respectively of accounts receivable as of September 30, 2020.

As of September 30, 2019, AT&T and Janssen accounted for 63.3% and 10.8% of accounts receivable, respectively.

LIQUIDITY AND GOING CONCERN

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On May 5, 2020 (the “Effective Date”), MMG received the proceeds of a loan pursuant to a promissory note (the “Note”)

under the Paycheck Protection Program with TBK Bank, SSB (“Lender”), in the amount of $5,216 (the “PPP Loan”).

The Paycheck Protection Program (“PPP”) was established under the recently enacted Coronavirus Aid, Relief, and Economic

Security Act (the “CARES Act”) and is administered by the U.S.

under the Paycheck Protection Program (“PPP”) with TBK Bank, SSB (“Lender”), in the amount of $5,216 (the

“PPP Loan”).

The Paycheck Protection Program was established under the recently enacted Coronavirus Aid, Relief, and

Economic Security Act (the “CARES Act”) and is administered by the U.S.

Small Business Administration (“SBA”).

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factor under its existing Factoring and Security Agreement, dated November 4, 2016, as amended and modified.

Paycheck Protection Program Flexibility Act (PPPFA) signed into law on June 5, 2020, resulted in the SBA issuing two revisions

on June 11 and June 12, 2020 to the First Interim Final Rule, which was originally posted on the Treasury and SBA websites on

April 2, 2020 and published in the Federal Register on April 15, 2020 (85 Fed.

of June 30, 2020, $2,390 of the PPP funds had been utilized with 99% covering payroll costs.

As of June 30, 2020, $2,826 of the

PPP funds remained available and the Company intends to apply the permitted twenty-four week measuring period, allowing the Company

additional weeks to put toward payroll costs of the Company].

The Company believes that the funds have been employed to achieve

a high level of forgiveness.

as the Company intends to apply for forgiveness in accordance with the latest PPP rules.

the Company believes that a significant portion of the PPP Loan will be forgiven, no assurance can be given that any of such PPP

Loan will, in fact, be forgiven.

June, the Company made required repayments of principal and interest of approximately $140 pursuant to the convertible notes described

in Note 4 below.

Payments under the remaining outstanding notes with an aggregate value of approximately $952 will be made over

a 4-month period as these notes reach maturity.

Paycheck Protection Program Flexibility Act (“PPPFA”) signed into law on June 5, 2020, resulted in the SBA issuing

two revisions on June 11 and June 12, 2020 to the First Interim Final Rule, which was originally posted on the Treasury and SBA

websites on April 2, 2020 and published in the Federal Register on April 15, 2020 (85 Fed.

of September 30, 2020, 100% of the PPP funds had been utilized with 99% covering payroll costs.

The Company believes that the

funds have been employed to achieve a high level of forgiveness.

Although the Company believes that a significant portion of the

PPP Loan will be forgiven, no assurance can be given that any of such PPP Loan will, in fact, be forgiven.

the third quarter of 2020, the Company made required repayments of principal and interest of approximately $806 pursuant to the

Convertible Notes described in Note 4 below.

Thus, with interest, the total bridge loan debt serviced was $946.

Company’s ongoing liquidity position has experienced additional pressures due to the loss of business resulting from the

COVID-19 Pandemic.

In the second quarter of 2020, the business saw a year over year comparative drop in revenue by 46%, attributable

in large part to the impact of the COVID-19 Pandemic.

In the third quarter of 2020, that loss dwindled to approximately 28%, as

the Company generated $6,201 in third quarter revenue.

This improved total, however, was 38% lower than the third quarter of 2019.

business does not return to historical levels, a significant portion of the PPP loan is not forgiven, or if other challenges facing

the Company are not resolved favorably, the Company may cease to continue as a going concern.

INCORPORATED AND SUBSIDIARIES

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in thousands, except per share data)

Company’s ongoing liquidity position is facing additional pressures due to the loss of business resulting from the COVID-19

In the second quarter, the business saw a year over year comparative drop in revenue by 46%, attributable in large part

to the impact of the COVID-19 Pandemic.

If this business does not return to historical levels, a significant portion of the PPP

loan may not be forgiven, and if other challenges facing the Company are not resolved favorably, the Company may cease to continue

as a going concern.

Company continues to face pressure to make cash payments pursuant to the Settlement Agreements (filed as exhibits 10.4, 10.5 and

10.6 the Company’s Current Report on Form 8-K filed on October 30, 2019) prior to the Company’s anticipated liquidation

of the shares of Company Common Stock pledged pursuant to the Agreement for the Contingent Liquidation of the Common Stock of

Reliability Incorporated (as successor in interest to Maslow Media Group, Inc.), dated October 28, 2019 (the “Liquidation

Agreement”) (filed as exhibit 10.30 to the Company’s Current Report on Form 8-K filed on October 30, 2019).

Shareholders that are the counterparties to the Liquidation Agreement are not cooperating with the Company to liquidate the shares

subject thereto.

No assurance can be given that the beneficiaries of the Settlement Agreement will continue to forebear.

part of its response management has invested in business development in order to increase client workforce needs and has worked

to eliminate non-essential general and administrative costs.

The Company continues to face pressure to make cash payments pursuant

to the Settlement Agreements (filed as exhibits 10.4, 10.5 and 10.6 the Company’s Current Report on Form 8-K filed on October

30, 2019) prior to the Company’s anticipated liquidation of the shares of Company Common Stock pledged pursuant to the Agreement

for the Contingent Liquidation of the Common Stock of Reliability Incorporated (as successor in interest to Maslow Media Group,

Inc.), dated October 28, 2019 (the “Liquidation Agreement”) (filed as exhibit 10.30 to the Company’s Current

Report on Form 8-K filed on October 30, 2019).

The Vivos Shareholders that are the counterparties to the Liquidation Agreement

are not cooperating with the Company to liquidate the shares subject thereto, and the shares underlying the Liquidation Agreement

itself may not be properly held as claimed in the Arbitration (defined below).

No assurance can be given that the beneficiaries

of the Settlement Agreement will continue to forebear.

assurance can be given that the Company will return to its pre-Pandemic revenue levels, how long it will take to enforce the requirements

of the Liquidation Agreement, the Company’s ability to tap the capital markets using common stock, and the actual amount

of PPP Loan forgiveness.

As a result, the Company faces hurdles to maintaining sufficient liquidity to continue to operate, in

which case the Company might be forced to liquidate or seek to reorganize under applicable bankruptcy statutes.

of the Liquidation Agreement, the Company’s ability to utilize capital markets, and the actual amount of PPP Loan forgiveness.

As a result, the Company may face hurdles in maintaining sufficient liquidity to continue operations, in which case the Company

might be forced to liquidate or seek to reorganize under applicable bankruptcy statutes.

Company is quoted on the OTC Marketplace under the symbol “RLBY”.

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Accounting Pronouncements

August 2018, the Financial Accounting Standards Board (the “FASB”) issued new guidance on disclosures related to fair

value measurements.

The guidance is intended to improve the effectiveness of the notes to financial statements by facilitating

clearer communication, and it includes multiple new, eliminated and modified disclosure requirements.

The guidance was effective

for the Company as of January 1, 2020 and did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the Financial Accounting Standards

Board (the “FASB”) issued new guidance on disclosures related to fair value measurements.

The guidance is intended

to improve the effectiveness of the notes to financial statements by facilitating clearer communication, and it includes multiple

new, eliminated, and modified disclosure requirements.

The guidance was effective for the Company as of January 1, 2020

and did not have a material impact on the Company’s consolidated financial statements.

August 2018, the FASB issued new guidance on the accounting for internal-use software.

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accounting principles and clarifies and amends existing guidance to facilitate consistent application of the accounting principles.

The new guidance is effective for us as of January 1, 2021.

The Company is assessing the impact of the adoption of this guidance

on its consolidated financial statements.

The new guidance is effective for the Company as of January 1, 2021.

The Company is assessing the impact of the adoption of this

guidance on its consolidated financial statements.

Company had convertible notes payable (“Convertible Notes”) in the amount of $802 as of June 30, 2020 and $890 as

of December 31, 2019, respectively, pursuant to a convertible debt offering that commenced June 13, 2019.

As of September 30,

2020, the balance was zero ($0) as all note payments have been satisfied.

The offering was conducted pursuant to Section 4(a)(2)

of the Securities Act of 1933, as amended, and the rules promulgated thereunder.

The notes bore interest at 12% per year, with

the balance due and payable within 1 year from the issuance date, unless earlier converted into shares of Company Common Stock.

Warrants, issued in connection with these notes, can only be exercised if the proceeds of $5,000 are obtained by the Company from

the sale of equity securities within 5 years of issuance.

INCORPORATED AND SUBSIDIARIES

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in thousands, except per share data)

Company has notes payable in the amount of $802 as of June 30, 2020 and $890 as of December 31, 2019, respectively, pursuant to

a convertible debt offering that commenced June 13, 2019.

The offering was conducted pursuant to Section 4(a)(2) of the Securities

Act of 1933, as amended, and the rules promulgated thereunder.

The notes bear interest at 12% per year, with the balance due and

payable within 1 year from the issuance date, unless earlier converted into shares of Company Common Stock.

Warrants, issued in

connection with these notes, can only be exercised if the proceeds of $5,000 are obtained by the Company from the sale of equity

securities within 5 years of issuance.

February 2020, the Company took out a $250 6-month term loan from Triumph at 10% APR, in order to meet our cash obligations.

April 7, 2020, in the face of the COVID 19 lockdown, Triumph offered a 2-month payment holiday and to extend the note payment,

which ultimately was agreed to end in February 2021.

As of June 30, 2020, $195 was outstanding under the term loan arrangement.

the Maslow Media Group was initially acquired by Vivos Holdings, LLC in December 2016, Maslow’s corporate status was changed

February 2020, the Company took out a $250 6-month term loan from Triumph Business Capital (“Triumph”) at 10% per

annum, in order to meet the Company’s cash obligations (“Triumph Term Loan”).

On April 7, 2020, in the face

of the COVID 19 lockdown, Triumph offered a 2-month payment holiday and to extend the note payment, which ultimately was agreed

to end in February 2021.

As of September 30, 2020, $117 was outstanding under the Triumph Term Loan arrangement.

the Maslow Media Group was initially acquired by Vivos Holdings in December 2016, Maslow’s corporate status was changed

from an S Corp to a C Corp due to its new ownership structure.

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impact per year, for four years, that the Company is working with the IRS to pay off.

As of June 30, 2020, the tax liability was

$703 compared to $817 as of December 31, 2019.

As of September 30, 2020, the tax liability

was $258 compared to $817 as of December 31, 2019.

Business Capital

November 4, 2016, the Company entered into a factoring and security agreement with Triumph Business Capital (“Triumph”).

Pursuant to the agreement, the Company received advances on its accounts receivable (i.e.

invoices) through Triumph to fund growth

and operations.

The proceeds of this agreement were used to pay operating costs of the business which include employee salaries,

vendor payments and overhead expenses.

On January 5, 2018, the agreement was amended to lower the factoring fee and interest rate

for a term of one year.

The agreement was amended again on January 19, 2018, to increase the maximum advance rate to $5,500.

January 2020, a new agreement was negotiated with Triumph lowering advance rate from 18 basis points to 15 and the interest rate

from prime plus 2.5% to prime plus 2%.

The amount of an invoice eligible for sale to Triumph went from 90% to 93%.

November 4, 2016, the Company entered into a factoring and security agreement with Triumph.

Pursuant to the agreement, the Company

received advances on its accounts receivable (i.e.

invoices) through Triumph to fund growth and operations.

The proceeds of this

agreement were used to pay operating costs of the business which included employee salaries, vendor payments and overhead expenses.

On January 5, 2018, the agreement was amended to lower the factoring fee and interest rate for a term of one year.

The agreement

which previously renewed annually, is now month to month.

The Company continues to be obligated to meet certain financial covenants

in respect to invoicing and reserve account balance.

INCORPORATED AND SUBSIDIARIES

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

was amended again on January 19, 2018, to increase the maximum advance rate to $5,500.

In January 2020, a new agreement was negotiated

with Triumph lowering advance rate from 18 basis points to 15 and the interest rate from prime plus 2.5% to prime plus 2%.

portion of an invoice eligible for sale to Triumph went from 90% to 93%.

The agreement which previously renewed annually, is now

month to month.

The Company continues to be obligated to meet certain financial covenants in respect to invoicing and reserve

account balances.

accordance with the agreement, a reserve amount is required for the total unpaid balance of all purchased accounts multiplied

by a percentage equal to the difference between one hundred percent and the advanced rate percentage.

As of June 30, 2020, the

required amount was 10%.

As of September 30, 2020,

the required amount was 10%.

Any excess of the reserve amount is paid to the Company on a weekly basis, as requested.

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receivable were sold with full recourse.

Proceeds from the sale of receivables were $9,307 and $13,299 for the six months ended

June 30, 2020 and 2019, respectively.

Proceeds from the sales of receivables were $2,450 and $6,683 for the three months ended

June 30, 2020 and 2019, respectively.

The total outstanding balance under the recourse contract was $1,042 on June 30, 2020 and

$5,508 as of December 31, 2019.

Proceeds from the sale of receivables were $10,175 and $19,815 comparatively for the

nine months ended September 30, 2020 and 2019, respectively.

Proceeds from the sales of receivables were $868 and $6,516 for the

three months ended September 30, 2020 and 2019, respectively.

The total outstanding balance under the recourse contract was $306

on September 30, 2020 and $5,508 as of December 31, 2019.

Factoring Facilities are collateralized by substantially all the assets of the Company.

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Total finance line fees for the three and

six months ended June 30, 2020 and 2019 totaled $14, $18, $15 and $27, respectively.

April 29, 2020, MMG was approved for a $5,216 loan through the Payroll Protection Program (the “PPP”) with a term

nine months ended September 30, 2020 and 2019 totaled $1, $19, $14, and $42, respectively.

INCORPORATED AND SUBSIDIARIES

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

April 29, 2020, MMG was approved for a $5,216 loan through the Paycheck Protection Program (the “PPP”) with a term

of two (2) years and an interest rate of 1% per annum.

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requirements.

The accrued interest on the PPP loan as of June 30, 2020 was $8.

The accrued interest on the PPP loan as of September 30, 2020 was $22.

June 5 th , 2020 , The Paycheck Protection Program Flexibility Act (the “PPPF Act”) went into effect

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The Company may apply for forgiveness

earlier if we determine that doing so will maximize the amount of loan forgiveness.

earlier if they determine that doing so will maximize the amount of loan forgiveness.

date the Company ultimately decides to apply for forgiveness will be dependent on maximizing headcount which, in turn will determine

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no assurance can be given that all or any portion of this loan will be forgiven.

VARIABLE INTEREST ENTITY (“VIE”)

December 2019, the Company’s executive management learned that prior to the Merger, in December 2017, one of Vivos Shareholders,

on behalf of Maslow, executed a guarantee of obligations of Vivos Real Estate Holdings, LLC (“VREH”), under a mortgage

loan for the purchase of the property at 22 Baltimore Rd., Rockville, Maryland.

Maslow leased this space on market terms.

lease obligation had not been included in Maslow’s financial statements and was not separately disclosed prior to the Merger.

The Company terminated the lease of the property at 22 Baltimore Road effective April 30, 2020.

GAAP requires the Company to assess whether VREH is a VIE because Maslow (i) share common shareholders who may or may not have

significant influence or control, (ii) is a guarantor of the mortgage loan, (iii) is the sole lessee under a lease where the landlord

is an affiliate of the Company, and (iv) has no other business in VREH.

INCORPORATED AND SUBSIDIARIES

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

VIE is a legal business structure (such as a corporation, partnership, or trust) that:

not provide equity investors with voting rights;

equity investors do not have sufficient financial resources to meet the ongoing operating needs of the business.

This is referred

to as a thinly capitalized structure.

the Company had neither any decision-making authority over VREH, nor financial interest in the operations of VREH, the Company

was required to consolidate its financial statements with those of VREH for the reasons mentioned above, as it is considered the

primary beneficiary of the VIE through April 30, 2020.

assets and liabilities of the consolidated VIE are comprised of the following as of June 30, 2020 and December 31, 2019:

Office equipment

Accumulated depreciation

Liabilities assumed

Total net assets consolidated

the Company terminated the lease on April 30, 2020, thus VREH is no longer considered a VIE required to be consolidated.

deconsolidated this entity effective April 30, 2020.

a result, the related party note receivable with the VIE in the amount of $772 was eliminated for the period ending December 31,

2019, respectively.

Notwithstanding

that there remains potential financial exposure under the guarantee, to date, no payments under the guarantee have been requested.

COMMITMENTS AND CONTINGENCIES

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or about February 17, 2020, the Company, as plaintiff, filed a complaint with the Circuit Court of Montgomery County, Maryland

against Vivos Holdings, LLC, VREH and Naveen Doki (the “Defendants”), to enforce Maslow’s rights under certain

promissory notes and a personal guarantee made by the defendants (the “Debt Collection Suit”).

The case is proceeding.

The Company believes that it will be granted a judgment in its favor.

Maslow intends to continue to vigorously pursue this litigation.

INCORPORATED AND SUBSIDIARIES

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

against Vivos Holdings, LLC, Vivos Real Estate Holdings, LLC (“Vivos Real Estate”) and Naveen Doki (the “Defendants”),

to enforce Maslow’s rights under certain promissory notes and a personal guarantee made by the defendants (the “Debt

Collection Suit”).

The aggregate amount of these obligations as of the Balance Sheet Date is approximately $4,229.

is proceeding, and Maslow intends to continue to vigorously pursue this litigation.

The trial on this matter is scheduled for

or about May 6, 2020, the Defendants filed with the Circuit Court of Montgomery County, Maryland a Counterclaim and Third-Party

Complaint for Damages, Declaratory and Injunctive Relief and Jury Demand (the “Counterclaim”), The Company believes

that the Counterclaim has no merit and is a tactic designed to delay the Defendant’s payment of the debts they owe the Company.

The Company will vigorously defend itself and its indemnified officers, directors and other parties as permitted by the Company’s

organizational documents.

The Company and the other Counterclaim defendants have moved to have the Debt Collection Suit and the

Counterclaim stayed pending the outcome of the Arbitration described below.

that the Counterclaim has no merit.

The Company will vigorously defend itself and its indemnified officers, directors and other

parties as permitted by the Company’s organizational documents.

The Company and the other Counterclaim defendants have moved

to have the Debt Collection Suit and the Counterclaim stayed pending the outcome of the Arbitration described below.

this matter is scheduled for March 2021.

The Defendants have also brought a motion seeking an injunction related to corporate

The Company has objected to this motion and a hearing has been scheduled for November 2020.

or about June 5, 2020, the Company submitted a Claimant’s Notice of Intention to Arbitrate and Demand For Arbitration (the

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in his capacity as trustee of Igly Trust) and Federal Systems (the “Respondents”).

The Arbitration alleges that the

Respondents breached the Merger Agreement in a number of significant respects and committed fraud in connection with the Merger.

The Company is seeking damages which will likely be in whole or in part shares of Company Common Stock received by the Respondents

in connection with the Merger.

The Company expects to prevail in the Arbitration.

or about February 28, 2020, the Company obtained a temporary restraining order (the “TRO”) regarding any and all actions

purportedly taken at an improper meeting of the shareholders of the Company ostensibly called by the Vivos Shareholders.

was granted because the Vivos Shareholders failed to properly call and hold a shareholders meeting in accordance with applicable

Texas corporate law and therefore any action purported to be taken there have no meaning or effect.

The hearing on motion had

been delayed due to the COVID-19 pandemic.

On or about May 12, 2020 the Vivos Shareholders filed a motion for contempt alleging

that the Company violated the terms of the TRO.

At a hearing held on June 5, 2020 the Texas court dismissed the motion for contempt

and heard technical arguments regarding jurisdiction.

This decision is not expected to have a material impact on the Company regardless

of the outcome.

Igly Trust, a Vivos entity, brought a new action in Texas to compel the Company to provide it certain corporate

records, including the Company’s shareholder list.

The Company has moved to have this action stayed pending the outcome

of the Arbitration.

February 28, 2020, Healthcare Resource Network, LLC (“HCRN”) filed a complaint against Maslow in the Circuit Court

of Montgomery County, Maryland.

The plaintiff has not specified any alleged damage caused by Maslow and the

Company believes any claims are without merit.

The Arbitration alleges that certain

of the Respondents breached the Merger Agreement providing for the Merger of MMG into a subsidiary of Reliability, in a number

of significant respects and committed fraud in connection with the Merger.

The Company is seeking damages which if granted will

likely be the remedy set forth within the merger agreement which is primarily the relinquishment in whole or in part shares of

Company Common Stock received by the Respondents in connection with the Merger.

The Company has brought a motion to compel the

Arbitration in accordance with the Merger Agreement which is currently being decided by the Federal Courts in New York.

believes a strong basis for the motion exists, but no assurance can be given that it will be granted.

Regardless, the Company

intends to pursue claims under the Merger Agreement in whatever venue is required.

INCORPORATED AND SUBSIDIARIES

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

June 12, Igly Trust, a Vivos entity, brought an action in Texas to compel the Company to provide it certain corporate records,

including the Company’s shareholder list.

The Company has moved to have this action stayed pending the outcome of the arbitration.

February 28, 2020, Healthcare Resource Network, LLC (“HCRN”), an entity previously owned by Vivos Holdings,

filed a complaint against Maslow in the Circuit Court of Montgomery County, Maryland.

The plaintiff has not specified any alleged

damage caused by Maslow and the Company believes any claims are without merit.

The Company will defend itself from this case.

Since HCRN’s primary claim

relates to the improper actions of Vivos, the parties have been discussing the tolling of HCRN’s claims against the Company

while both the Company and HCRN, together or separately, resolve the matters against Vivos.

Since HCRN’s primary claim relates to the improper actions of Vivos, the parties have been discussing the tolling of HCRN’s

claims against the Company while both the Company and HCRN, together or separately, resolve the matters against Vivos.

3, 2020, MMG and HCRN entered into a Tolling Agreement pursuant to which HCRN dismissed MMG from this litigation without prejudice

and agreed to forebear filing a new complaint or initiating any lawsuit or other legal proceeding against MMG until January 31,

September 28, 2018, Credit Cash filed a complaint against Maslow, Vivos, Vivos Acquisitions, LLC, Dr.

Valleru (the “Parties”)

and other defendants in the United States District Court for the District of New Jersey for, among other things, breach of contract

of the Maslow and HRCN Credit Facilities and their respective guaranties in relation to the November 15, 2017 agreement (the “DNJ

Action”).

On October 30, 2018, Credit Cash filed a motion to intervene in an action pending in New York State, Monroe County,

filed by HCRN and LE Finance, LLC against the Parties and other defendants (“NY State Action”).

On December 10, 2018,

the Parties entered into a settlement agreement for the purpose of settling certain claims related to the DNJ Action only.

to the settlement agreement, certain repayment terms were agreed upon between Credit Cash and the Parties, but Credit Cash did

not relinquish the right to pursue any claims related to the NY State Action, nor to pursue any remedies against any of the parties

in relation to the November 15, 2017 agreement.

Certain of the Vivos Shareholders executed and delivered to Maslow that certain

Agreement for the Contingent Liquidation of the Common Stock of Maslow Media Group, Inc., dated as of October 28, 2019 (the “Liquidation

Agreement”), pursuant to which such Vivos Shareholders pledged to

Valleru (the “Credit

Cash Parties”) and other defendants in the United States District Court for the District of New Jersey for, among other

things, breach of contract of the Maslow and HCRN Credit Facilities and their respective guaranties in relation to the November

15, 2017 agreement (the “DNJ Action”).

On October 30, 2018, Credit Cash filed a motion to intervene in an action pending

in New York State, Monroe County, filed by HCRN and LE Finance, LLC against the Parties, and other defendants (“NY

State Action”).

On December 10, 2018, the Parties entered into a settlement agreement for the purpose of settling certain

claims related to the DNJ Action only.

Pursuant to the settlement agreement, certain repayment terms were agreed upon between

Credit Cash and the Parties, but Credit Cash did not relinquish the right to pursue any claims related to the NY State Action,

nor to pursue any remedies against any of the parties in relation to the November 15, 2017 agreement.

Certain of the Vivos Shareholders

executed and delivered to Maslow that certain Agreement for the Contingent Liquidation of the Common Stock of Maslow Media Group,

Inc., dated as of October 28, 2019 (the “Liquidation Agreement”), pursuant to which such Vivos Shareholders pledged

to Maslow the shares of Company Common Stock they received in the Merger to provide the capital required to satisfy the Parties’

obligations under the Settlement Agreements.

Immediately prior to the execution of the Liquidation Agreement, certain Vivos Shareholders

misrepresented to Maslow the status of the obligations under the Settlement Agreement, which were, in fact, then in default.

date these Vivos Shareholders have not cooperated with the Company to monetize those shares as contemplated by the Liquidation

Agreement and certain of the shares underlying the Liquidation Agreement may not be properly held by Vivos as claimed in the Arbitration

(defined below) due to violations of the Merger Agreement by Vivos Shareholders..

The Company will take appropriate action to

enforce its rights under the Liquidation Agreement, which actions will be dictated in part by the outcome of the Arbitration.

On or about March 16, 2020, Credit Cash entered its New Jersey confession of judgment with the Circuit Court of Montgomery County,

Company may be required to make cash payments pursuant to the Settlement Agreements (filed as exhibits 10.4, 10.5 and 10.6 the

Company’s Current Report on Form 8-K filed on October 30, 2019).

INCORPORATED AND SUBSIDIARIES

1 unchanged sentence

in thousands, except per share data)

the shares of Company Common Stock they received in the Merger to provide the capital required to satisfy the Parties’

under the Settlement Agreements.

To date these Vivos Shareholders have not cooperated with the Company to monetize those shares

as contemplated by the Liquidation Agreement.

The Company will take appropriate action to enforce its rights under the Liquidation

On or about March 16, 2020, Credit Cash entered its New Jersey confession of judgment with the Circuit Court of Montgomery

County, Maryland.

Company may be required to make cash payments pursuant to the Settlement Agreements (filed as exhibits 10.4, 10.5 and 10.6 the

Company’s Current Report on Form 8-K filed on October 30, 2019) prior to the Company’s anticipated liquidation of

the shares of Company Common Stock pledged pursuant to the Liquidation Agreement.

On or about May 5, 2020, Libertas Holdings LLC

and Kinetic Direct Funding entered their New York confession of judgment with the Circuit Court of Montgomery County, Maryland,

and have approached the Company regarding payment, which the parties have been discussing.

The Vivos Shareholders that are the

counterparties to the Liquidation Agreement are not cooperating with the Company to liquidate the shares subject thereto as contemplated

The Company will enforce its rights under the Liquidation Agreement as expeditiously as possible.

Rather than bringing

another court action at this time, the Company expects to first attempt to enforce its rights under the Liquidation Agreement

in the Arbitration.

or about May 5, 2020, Libertas Holdings LLC and Kinetic Direct Funding entered their New York confession of judgment with the

Circuit Court of Montgomery County, Maryland, and have approached the Company regarding payment, which the parties have been discussing.

The Vivos Shareholders that are the counterparties to the Liquidation Agreement are not cooperating with the Company in regard

to the payment of the debt.

These debts were incurred by another company held by the Vivos Shareholders for the other company’s

benefit but for which Maslow, while under the Vivos Shareholders ownership, guaranteed payment for the benefit of the other company.

Company’s authorized capital stock consists of 300,000,000 shares of common stock, with no par value.

All authorized shares

of Company Common Stock are issued and outstanding.

All authorized

shares of Company Common Stock are issued and outstanding.

RELATED PARTY TRANSACTIONS

3 unchanged sentences

), a related party affiliate and former owner

of MMG, acquired 100% of the Company through a stock acquisition exchange for a purchase price of $1,750.

$1,400 was paid at settlement

with proceeds from the Company and also entered into a promissory note to pay the remaining $350.

The promissory note was to be

paid in twenty-four equal installments, including interest at 4.5%, in the amount of approximately $15, commencing six months

after closing with the last payment on March 1, 2019;

these payments were paid by the Company on behalf of the Vivos.

Vivos subsequently

entered into a promissory note receivable with the Company, described below, for the full stock purchase price.

Company has notes receivable from Vivos and VREH, a member of Vivos, both related party affiliate.

As disclosed in Note 6, the

Company is pursuing legal action to collect these notes.

connection with the stock purchase agreement noted above, on November 15, 2016, the Company executed a promissory note receivable

with Vivos in the amount of $1,400.

As defined by the agreement, the loan consists of two periods, whereby the first period from

November 15, 2016 until September 30, 2018, no principal or interest payments were required.

Interest will accrue monthly and

a new loan in the amount of $1,773 will be subject to a second loan period.

During the second loan period, interest shall be paid

in twenty equal consecutive payments, quarterly.

of MMG, acquired 100% of MMG through a stock acquisition exchange (“Stock Purchase Agreement”) for a purchase price

of $1,750 of which$1,400 was paid at closing with proceeds from MMG (“MMG Purchase Proceeds”) and $350 through the

execution of a promissory note (“MMG Purchase Note”) .

The MMG Purchase Note was to be paid in twenty-four equal installments,

including interest at 4.5%, in the amount of approximately $15, commencing nine months after closing with the last payment on

March 1, 2019.

Both the MMG Purchase Proceeds and the MMG Purchase Note were funded by MMG on behalf of Vivos.

Vivos and MMG executed

a promissory note receivable (“Vivos Promissory Note”), described below, for the full stock purchase price.

Company has notes receivable from Vivos and Vivos Real Estate, a member of Vivos, both related party affiliates.

in Note 5, the Company is pursuing legal action to collect on the affiliated party debt.

connection with the Stock Purchase Agreement noted above, on November 15, 2016, the MMG executed a Vivos Promissory Note”

in the amount of $1,400.

As defined by the Vivos Promissory Note and agreement, the loan consists of two periods, whereby the

first period from November 15, 2016 until September 30, 2018 (“Vivos Note Period 1”), no principal or interest payments

were required.

Interest then began to accrue monthly with the issuance of a new loan in the amount of $1,773 subject to a second

loan period (“Vivos Note Period 2”).

During the second loan period, interest shall be paid in twenty equal consecutive

payments, quarterly.

Principal plus any unpaid interest is due September 20, 2023.

Interest during

both loan periods accrues at a rate of 2.5%.

Additionally, monthly payments of $15 are made on behalf of Vivos to the seller by

These payments, plus any other payments made by the Company on behalf of Vivos, are added to the principal balance

of the promissory note receivable.

In 2018, all quarterly interest payments to be made in phase 2 were offset by the management

fees due to Vivos.

As of June 30, 2020, and December 31, 2019, the total outstanding balance was $2,702 and $2,666, which includes

accrued interest receivable of $200 and $162, respectively.

Interest during both loan periods accrues at

a rate of 2.5%.

Additionally, monthly payments of $15 are made by MMG on behalf of Vivos to the seller in accordance with the

MMG Purchase Note.

These payments, plus any other payments made by the Company on behalf of Vivos, are added to the principal

balance of the Vivos Promissory Note receivable.

In 2018, all quarterly interest payments to be made in Vivos Note Period 2 were

offset by the management fees due to Vivos.

As of September 30, 2020, and December 31, 2019, the total outstanding balance was

$2,719 and $2,666, which includes accrued interest receivable of $217 and $162, respectively.

November 15, 2017, MMG executed an intercompany promissory note receivable with Vivos Real Estate in the amount of $772 (“Vivos

RE Promissory Note”).

As defined by the Vivos RE Promissory Note and agreement, the loan consists of two periods, where

the first period from November 15, 2017 until June 30, 2018, no principal or interest payments were required but interest accrued

monthly and a new loan amount of $781 was then subject to a second loan period.

During the second period, interest is payable

in 20 equal consecutive installments and the principal balance plus accrued and unpaid interest is due June 30, 2023.

during both periods accrues at a rate of 3.5% annually.

In 2018, all quarterly interest payments to be made in Phase 2 were offset

by the management fees due to Vivos.

In addition, principal payments totaling $30 were made by Vivos.

As of September 30,

2020, and December 31, 2019, the total outstanding balance of the Vivos RE Promissory Note was $746 and $772, respectively.

December 31, 2019 balance was eliminated during consolidation of the VIE during this period.

INCORPORATED AND SUBSIDIARIES

1 unchanged sentence

in thousands, except per share data)

November 15, 2017, the Company executed an intercompany promissory note receivable with VREH in the amount of $772.

by the agreement, the loan consists of two periods, whereby the first period from November 15, 2017 until June 30, 2018, no principal

or interest payments are required.

During the first loan period, interest accrued monthly and a new loan amount of $781 will be

subject to a second loan period.

During the second period, interest is payable in 20 equal consecutive installments and the principal

balance plus accrued and unpaid interest is due June 30, 2023.

Interest during both periods accrues at a rate of 3.5% annually.

In 2018, all quarterly interest payments to be made in Phase 2 were offset by the management fees due to Vivos.

In addition, principal

payments totaling $30 were made by Vivos.

As of June 30, 2020, and December 31, 2019, the total outstanding balance was $740 and

$772, respectively.

The December 31, 2019 balance was eliminated during consolidation of the VIE during this period.

June 12, 2019, Maslow entered into a Personal Guaranty agreement with Dr.

Doki, pursuant to which Dr.

Naveen Doki personally guaranteed

to Maslow repayment of $3,000 of the balance of the Promissory Note issued to Vivos on November 15, 2017 within the 2019 calendar

June 12, 2019, MMG entered into a personal guaranty agreement with Naveen Doki, pursuant to which Mr.

Doki personally guaranteed

to MMG repayment of $3,000 of the balance of the Promissory Note issued to Vivos on November 15, 2017 within the 2019 calendar

year via cash, stock, or other business assets acceptable to the Company.

4 unchanged sentences

September 5, 2019, Maslow entered into a secured promissory note agreement with Vivos, pursuant to which Maslow issued a secured

promissory note to Vivos in the principal amount of $750.

The note bears interest at 2.5% per year and requires Vivos to make

monthly payments to Maslow of $10 beginning December 1, 2019, with balance due and payable on November 1, 2026.

Upon an event

of default, which occurs upon failure of Vivos to make any monthly payment due under the terms of the note, Maslow has the right

to declare the entire unpaid balance of the note due and payable.

The note is secured by 30,000,000 shares of Company Common Stock,

which is due and payable upon a default by Vivos, which occurs upon failure of Vivos to make any monthly payment due under the

terms of the note.

promissory note to Vivos in the principal amount of $750 (“Secured Note”).

The note bears interest at 2.5% per year

and requires Vivos to make monthly payments to Maslow of $10 beginning December 1, 2019, with balance due and payable on November

Upon an event of default, which occurs upon failure of Vivos to make any monthly payment due under the terms of the note,

Maslow has the right to declare the entire unpaid balance of the note due and payable.

The note is secured by 30,000,000 shares

of Company Common Stock, which is due and payable upon a default by Vivos, which occurs upon failure of Vivos to make any monthly

payment due under the terms of the note.

However, under claims made within the Arbitration, the ownership of the 30,000,000

shares of Company Common Stock by certain Vivos Shareholders is in question.

In addition, both Naveen Doki and Silvija Valleru personally guaranty the repayment of the note by Vivos.

Doki and Silvija Valleru are beneficial owners of Vivos and are also 5% or greater beneficial owners of Company Common Stock.

As of June 30, 2020, and December 31, 2019, the total outstanding balance was $759 and $752, respectively, which includes interest

of $9 and $2, respectively.

As of September 30, 2020, and December 31, 2019, the total outstanding balance was $764 and $752, respectively, which includes

interest of $14 and $2, respectively.

This note is in default and the Company is pursuing collection.

1 unchanged sentence

August 10, 2017, Vivos executed a receivable advance agreement with Argus Capital Funding.

The Company received a net advance

of $487 in exchange for $705 of the Company’s accounts receivable.

Included in this loan is a fee of $218.

The agreement

was refinanced on November 15, 2017, when Vivos, and Vivos Acquisitions, LLC, via Dr.

Naveen Doki and Dr.

Silvija Valleru entered

into an agreement with CC Business Solutions, a division of Credit Cash NJ, LLC (“Credit Cash”) pursuant to which

Credit Cash advanced to the Company $600 in exchange for $780 of the Company’s accounts receivable, to be repaid fully by

approximately May 20, 2019 (the “Maslow Credit Facility”).

INCORPORATED AND SUBSIDIARIES

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

Maslow received a net advance of $487

in exchange for $705 of the Maslow’s accounts receivable.

Included in this loan was a fee of $218.

The agreement was refinanced

on November 15, 2017, when Vivos, and Vivos Acquisitions, LLC, via Mr.

Naveen Doki and Mr.

Silvija Valleru entered into an agreement

with CC Business Solutions, a division of Credit Cash NJ, LLC (“Credit Cash”) pursuant to which Credit Cash advanced

to Maslow $600 in exchange for $780 of the Company’s accounts receivable, to be repaid fully by approximately May 20, 2019

(the “Maslow Credit Facility”).

addition, pursuant to the same agreement, Credit Cash advanced to HCRN a credit facility in the principal amount of $1,005 (“HCRN

Credit Facility”).

Each of Maslow, Vivos, Vivos Acquisitions, LLC, Dr.

Naveen Doki and Dr.

Each of Maslow, Vivos, Vivos Acquisitions, LLC, Mr.

Naveen Doki and Mr.

Silvija Valleru guaranteed the

HCRN Credit Facility.

To secure repayment of their guarantee obligations, the Company and Vivos granted to Credit Cash a security

interest in all their assets.

On September 14, 2018, the Company defaulted on the Maslow Credit Facility.

In addition, on same

date, the HCRN Credit Facility went into default.

As a result, repayment on both facilities was accelerated, with the full balance

for each becoming immediately due and payable.

On December 10, 2018, the Company, Vivos, Vivos Acquisitions, LLC, Dr.

Valleru and Credit Cash entered into a settlement agreement in connection the November 15, 2017 agreement to govern the terms

of the repayment of the HCRN Credit Facility and Maslow Credit Facility.

Pursuant to the settlement agreement, the Company agreed

to pay $10 per week until the entire balance of the Maslow Credit Facility was paid off.

Pursuant to a subsequent agreement dated

May 17, 2019 not involving the Company, Vivos and Vivos Acquisitions, LLC agreed to fully repay the HCRN Credit Facility via quarterly

payments beginning June 30, 2019.

The HCRN Credit Facility is still being repaid by Vivos, and as of October 29, 2019, has an

outstanding balance of approximately $635.

The Company has a binding and enforceable agreement with certain shareholders permitting

Maslow to liquidate up to the full amount of Maslow equity held by such shareholders in order to satisfy the shareholders’

obligations under the Settlement Agreements.

The total outstanding balance owed by the Company as of December 31, 2018 was $351.

In September 2019, the Company has repaid the outstanding balance due for the Maslow Credit Facility under the settlement agreement

Company is facing pressure to make cash payments pursuant to the Settlement Agreements prior to the Company’s anticipated

liquidation of the shares of Company Common Stock pledged pursuant to the Liquidation Agreement.

The Vivos Shareholders that are

the counterparties to the Liquidation Agreement are not cooperating with the Company to liquidate the shares subject thereto as

contemplated thereby.

No assurance can be given how long it will take to enforce the requirements of the Liquidation Agreement.

To secure repayment of their guarantee obligations, Maslow and Vivos granted to Credit Cash a security interest

in all their assets.

On September 14, 2018, Maslow defaulted on the Maslow Credit Facility.

In addition, on same date, the HCRN

Credit Facility went into default.

As a result, repayment on both facilities was accelerated, with the full balance for each becoming

immediately due and payable.

On December 10, 2018, Maslow, Vivos, Vivos Acquisitions, LLC, Dr.

Doki, and Dr.

Valleru and Credit

Cash entered into a settlement agreement in connection the November 15, 2017 agreement to govern the terms of the repayment of

the HCRN Credit Facility and Maslow Credit Facility (“Settlement Agreement”).

Pursuant to the Settlement Agreement,

the Company agreed to pay $10 per week until the entire balance of the Maslow Credit Facility was paid off.

Pursuant to a subsequent

agreement dated May 17, 2019, not involving the Company, Vivos and Vivos Acquisitions, LLC agreed to fully repay the HCRN Credit

Facility via quarterly payments beginning June 30, 2019.

The HCRN Credit Facility as of October 29, 2019, has an outstanding balance

of approximately $635.

however, the total outstanding balance owed by the Company as of December 31, 2018 was $351.

2019, the Company has repaid the outstanding balance due for the Maslow Credit Facility under the settlement agreement in full.

INCORPORATED AND SUBSIDIARIES

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

Company is facing pressure to make cash payments pursuant to the Settlement Agreements.

The Vivos Shareholders that are the counterparties

to the Liquidation Agreement are not cooperating with the Company to liquidate the shares subject thereto as contemplated thereby.

The resulting time gap may present a liquidity issue for the Company.

3 unchanged sentences

of RLBY Common Stock outstanding after giving effect to the Merger, respectively.

June 27, 2019, prior to the Merger, Maslow entered into a Securities Purchase Agreement with Hawkeye Enterprises, Inc., a company

owned and controlled by Mark Speck, an officer and director of the Company.

Pursuant to this agreement, Maslow issued to Hawkeye

Enterprises 16,323 (on a post-Merger basis) shares of Company Common Stock , a warrant (as defined below) for 81,616 (on a post-Merger

basis) shares of Company Common Stock and a convertible promissory note of same date in the initial principal amount of $50, in

exchange for $50.

The note bears interest at 12% per year, with balance due and was paid in full at $56 on June 27, 2020.

July 31, 2019, prior to the Merger, the Company entered into a Securities Purchase Agreement with the same officer and director

discussed above.

Pursuant to this agreement, the Company issued to this individual a Warrant for 81,616 (on a post-Merger basis)

shares of Company Common Stock and a convertible promissory note of same date in the initial principal amount of $50, in exchange

The note bears interest at 12% per annum, with balance due and payable on July 31, 2020.

As of June 30, 2020, principal

and accrued interest on this note was $56.

INCORPORATED AND SUBSIDIARIES

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

July 31, 2019 prior to the Merger, the Company entered into a Securities Purchase Agreement with Nick Tsahalis, an executive officer

and director of the Company.

Pursuant to this agreement, the Company issued to this individual 32,646 (on a post-Merger basis)

shares of RLBY Common Stock, and a Warrant to purchase 16,323 (on a post-Merger basis) shares of the RLBY Common Stock, and a

Convertible Promissory Note of same date in the initial principal amount of $100, in exchange for $100.

The note bears interest

at 12% per annum, with balance due and payable on July 31, 2020.

As of June 30, 2020, the principal and accrued interest on this

note was $111.

September 18, 2019, in anticipation of the closing of the Merger and intending that it be assumed by Maslow after the closing

of the Merger, Hawkeye entered into a letter of intent (the “LOI”) regarding the potential acquisition of a complementary

Maslow was then prohibited from entering into the LOI directly.

In connection with the LOI, Hawkeye paid a non-refundable

deposit of $75 with the understanding that after the closing of the Merger, the LOI would be assigned to the Company and the Company

would reimburse Hawkeye for the deposit.

On October 17, 2019, Hawkeye assigned, and Maslow agreed to assume the LOI and reimburse

Hawkeye for the deposit with an interest rate of 1.5% per month.

On May 8, 2020, Maslow repaid the principal and accrued interest

to Hawkeye, totaling $84.

term “warrant”

herein refers to warrants issued by Maslow and assumed by RLBY as a result of the Merger.

terms of all Warrants are the same other than as to the number of shares covered thereby.

The Warrant may be exercised at any

time or from time to time during the period commencing at 10:00 a.m.

Eastern time on first business day following the

completion of the Qualified Financing (as defined below) and expiring at 5:00 p.m.

Eastern time on the fifth annual

anniversary thereof (the “Exercise Period”).

Company repaid $588 in bridge loan notes which reached maturity between July 22, 2020 and July 31, 2020, including notes held

by Nick Tsahalis ($100), and Mark Speck ($50).

discussed in Note 4 (Convertible Debt), the term “warrant”

herein refers to warrants issued by Maslow and assumed

by RLBY as a result of the Merger.

The terms of all Warrants are the same other than as to the number of shares covered thereby.

The Warrant may be exercised at any time or from time to time during the period commencing at 10:00 a.m.

Eastern time on first

business day following the completion of the Qualified Financing (as defined below) and expiring at 5:00 p.m.

Eastern time on

the fifth annual anniversary thereof (the “Exercise Period”).

For purposes herein, a “Qualified Financing”

issuance by the Company, other than certain excluded issuances of shares of Common Stock, in one transaction or series of

related transactions, which transaction(s) result in aggregate gross proceeds actually received by the Company of at least

The exercise price per full share of RLBY Common Stock shall be 120% of the average sale price of the RLBY Common

Stock across all transactions constituting a part of the Qualified Financing, with equitable adjustments being made for any

splits, combinations or dividends relating to the RLBY Common Stock, or combinations, recapitalization, reclassifications,

extraordinary distributions and similar events, that occur following one transaction constituting a part of the Qualified

Financing and prior to one or more other transactions constituting a part of the Qualified Financing (the “Exercise

Price”).

note warrants were not valued and included as a liability on the Company’s balance sheet because of uncertainty around their

pricing, value and low probability at this juncture in receiving the $5,000 trigger.

means the issuance by the Company, other than certain excluded issuances of shares of Common Stock, in one transaction or series

of related transactions, which transaction(s) result in aggregate gross proceeds actually received by the Company of at least

The exercise price per full share of RLBY Common Stock shall be 120% of the average sale price of the RLBY Common Stock

across all transactions constituting a part of the Qualified Financing, with equitable adjustments being made for any splits,

combinations or dividends relating to the RLBY Common Stock, or combinations, recapitalization, reclassifications, extraordinary

distributions and similar events, that occur following one transaction constituting a part of the Qualified Financing and prior

to one or more other transactions constituting a part of the Qualified Financing (the “Exercise Price”).

Convertible note warrants were not valued

and included as a liability on the Company’s consolidated balance sheet because of uncertainty around their pricing, value,

and low probability at this juncture in receiving the $5,000qualifying event.

$125 of the convertible notes reached maturity

at the end of June 2020, resulting in return of principal with interest of $140.

The remaining convertible notes were paid in

full during the three months ended September 30, 2020.

December 1, 2019, the Company acquired assets of IQS from Vivos Holdings Inc.

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in thousands, except per share data)

following table provides a reconciliation of revenue by reportable segment to consolidated results for the three and six months

ended June 30, 2020 and 2019, respectively:

following table provides a reconciliation of revenue by reportable segment to consolidated results for the three and nine months

ended September 30, 2020 and 2019, respectively:

three months ended:

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Video and Multimedia Production

six months ended

nine months ended

Recruiting and Staffing

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CONTINGENT LIABILITY

described in Note 5, on January 22, 2018, VREH executed a mortgage loan for the purchase of the property at 22 Baltimore Rd.,

Rockville, Maryland, and the Company executed a guarantee of this loan.

The loan was in the amount of $1,875 with an interest

rate of 4.5% annually for the first 60 months of the loan and increasing to 5.25% annually on January 28, 2023 for the remaining

The monthly payments during repayment period is $11 with a lump sum payment of $1,393 on December 28, 2027.

The outstanding

balance on this mortgage loan as of June 30, 2020 was $1,768.

The Company has not yet been called on to make any payments under

its guarantee.

January 22, 2018, VREH executed a mortgage loan for the purchase of the property at 22 Baltimore Rd., Rockville, Maryland, and

the Company executed a guarantee of this loan.

The loan was in the amount of $1,875 with an interest rate of 4.5% annually for

the first 60 months of the loan and increasing to 5.25% annually on January 28, 2023 for the remaining 59 months.

payments during repayment period is $11 with a lump sum payment of $1,393 on December 28, 2027.

The outstanding balance on this

mortgage loan as of September 30, 2020 was $1,768.

The Company has not yet been called on to make any payments under its guarantee.

SUBSEQUENT EVENTS

Company has evaluated subsequent events through August 12, 2020, the date on which the unaudited consolidated financial statements

Company has evaluated subsequent events through November 9, 2020, the date on which the unaudited consolidated financial statements

were available to be issued.

No other material subsequent events have occurred that would require recognition in or disclosures

in the accompanying unaudited consolidated financial statements, except that on July 15, 2020, Larry Gaffey, a member of the Board

of Directors of the Company and a member of the Audit and Compensation Committees thereof, notified the Company of his intention

to retire from the Company’s Board of Directors for personal reasons, effective July 15, 2020.

Gaffey did not advise

the Company of any disagreement with the Company on any matter relating to its operations, policies or practices.

company repaid $588 in bridge loan notes which reached maturity between July 22, 2020 and July 31, 2020, including notes held

by Nick Tsahalis ($100), and Mark Speck ($50).

No material subsequent events have occurred that would require recognition in or disclosures in the

accompanying unaudited consolidated financial statements except that:

October 7, 2020, the Board Directors determined to reduce the number of employee directors on the Board and Mark Speck, the Chief

Financial Officer of the Company, volunteered to resign as a director effective October 7, 2020.

October 7, 2020, the Board of Directors of the Company appointed John Chanaud to fill the vacancy created by the resignation of

The initial term as director for Mr.

Chanaud will expire upon the election of his replacement at a duly called meeting

of shareholders.

Chanaud is independent under the Company’s criteria for determining director independence.

It is expected

Chanaud will be appointed as a member of each of the Company’s Compensation Committee and Audit Committee.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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impact of the COVID-19 pandemic continues to make forward looking assumptions and estimates very volatile.

Moreover, the contradictory

advice between the federal and state governments regarding such matters as reopening schools, social distancing and mask requirements

make it even more difficult to predict the timing of a return to pre-pandemic levels, particularly in the media production space.

Important factors that could cause actual results to differ materially from these forward-looking statements include, but are

not limited to:

Moreover, the continued

contradictory advice between the federal and state governments regarding such matters as reopening schools, social distancing

and mask requirements make it even more difficult to predict the timing of a return to pre-pandemic levels, particularly in the

media production space.

The current potential for a surge of cases heading into the late fall, winter period could also impact

the accuracy of forward looking statements.

Important factors that could cause actual results to differ materially from these

forward-looking statements include, but are not limited to:

the continuing impact of the COVID-19 pandemic on us and our clients

including renewed lock-downs that may be required if a surge levels are not contained;

our ability to access the capital markets

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following discussion and analysis of our financial condition and results of operations, our expectations regarding the future

performance of our business and the other non-historical statements in the discussion and analysis are forward-looking

These forward-looking statements are subject to risks, uncertainties and other factors including those described

in “Item 1A.

performance of our business and the other non-historical statements in the discussion and analysis are forward-looking statements.

These forward-looking statements are subject to risks, uncertainties and other factors including those described in “Item

Risk Factors”

of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019

with the SEC.

of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the

Our actual results may differ materially from those contained in any forward-looking statements.

read the following discussion together with our financial statements and related notes thereto and other financial

information included in this Quarterly Report on Form 10-Q.

You should read the following

discussion together with our financial statements and related notes thereto and other financial information included in this Quarterly

Report on Form 10-Q.

ACCOUNTING POLICIES AND COMMENTS RELATED TO OPERATIONS

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have been no material changes or developments in the Company’s evaluation of the accounting estimates and the underlying

assumptions or methodologies that it believes to be Critical Accounting Policies and Estimates as disclosed in its Form 10-K for

the year ended December 31, 2019.

assumptions or methodologies that it believes to be Critical Accounting Policies and Estimates from those disclosed in its Form

10-K for the year ended December 31, 2019.

Management’s

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We reacted as soon as March 20, 2020 when we instituted furloughs and cut administrative pay by 10% and executive

Other non-essential costs were reduced or eliminated Whereas we were prepared for this situation and were able to

Other non-essential costs were reduced or eliminated.

Whereas we were prepared for this situation and were able to

adapt quickly, our business began to suffer from companies and governors in the other 49 states simultaneously or subsequently

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With the board approving

the loan provisions in the loan documents presented to us on the same day, May 4th, the proceeds totaling $5,216 were then released

on May 5, 2020.

of June 30, 2020, we had deployed $2.390 in PPP funds, and had $2.826 remaining in PPP funds.

The Company believes that 99% of

the PPP funds deployed have been for eligible payroll per the SBA regulations governing fund eligibility for fund use and forgiveness.

the loan provisions in the loan documents presented to us on the same day, May 4th, the proceeds totaling $5,216 were then

released on May 5, 2020.

of September 30, 2020, we had deployed all $5,216 in PPP funds.

The Company believes that 99% of the PPP funds deployed have been

for eligible payroll per the SBA regulations governing fund eligibility for fund use and forgiveness.

However, there is no certainty

that any of or all the PPP funds will ultimately be forgiven.

our administrative staff continued to be productive using our web-based applications from the safety of their homes, management

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to the effective termination date of April 30, 2020.

Because our lease was on a month to month basis, there was no penalty or

negative consequences associated with this action.

We do not believe our work from home protocols have materially adversely impacted

our internal controls, financial reporting systems or our operations.

And because our lease was on a month to month basis, there was no

penalty or negative consequences associated with this action.

We do not believe our work from home protocols have materially adversely

impacted our internal controls, financial reporting systems or our operations.

this period, our critical priorities continue to be the health and safety of our team members, field talent, candidates, and client

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or treat its impact, circumstances permitting people to return to work, among others.

A surge in cases during the fall and winter

could result in additional shutdowns or protocols that could adversely impact the Company.

expect that the social distancing measures, the reduced operational status of our client partners, reductions in production at

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throughout the remainder of 2020, and possibly beyond.

for the three months ended June 30, 2020 was $5,197, a decrease of $4,420 or 46 %, due to

reduced demand for services resulting from the COVID-19 pandemic.

EOR revenue dropped 56% and Video and Multimedia production

declined by 44%, as clients curtailed studio and on-site productions due mostly to stay at home / shelter in place state orders.

Staffing Revenues however increased 136% due to IQS IT staffing which was not in place a year ago.

IQS staffing revenues when

compared to its pre-acquisition records as a stand-alone company, declined in the second quarter by $283 from $926 to $643, or

for the first two quarters ending June 30, 2020, totaled $13,998 was 22% off the pace of a year ago when it was $17,917 due to

the causes stated above which began in mid-March 2020.

the last two months of the third quarter our customers began to reengage in their media activities due in part to a relaxation

of state COVID-19 measures, and because customers had instituted safe policies and procedures for their and our employees to return

In addition, media coverage of the national election and return of the National Football League in September, propelled

business from its COVID-19 lows but not to the levels of 2019.

Due to the many uncertainties at this time, no assurance can be

given that this trend will continue at its current pace.

for the three months ended September 30, 2020 was $ 6,201, an increase of $1,004 or 19% over the quarter ending June 30, 2020

but a decrease of $3,874 or 38 % to same quarter ending September 30, 2019.

The comparable

drop to 2019 was predominantly due to reduced demand for services resulting from the COVID-19 pandemic.

EOR revenue dropped 47%

and Video and Multimedia production declined by 48%, as clients continued to curtail studio and on-site productions due mostly

to stay at home / shelter in place state orders.

Staffing Revenues however increased 4% due to IQS IT staffing which was not in

place a year ago.

the nine months ending September 30, 2020 revenues were $20,199, which was $7,807 or 27.9% less than the nine-month period ending

September 30, 2019.

This variance can also be attributed to reduced demand for workforce services due to COVID-19 pandemic.

staffing revenues when compared to its pre-acquisition records as a stand-alone company, declined in the third quarter by $283

from $926 to $643, or 31%

IT staffing Revenue for the three-month period ending September 30, 2020, totaled $624 which was 27% off the pace of a

year ago when it was $855 due to the causes stated above which although began in mid-March 2020, did not affect this IT business

as much until the end of the second quarter.

IT staffing Revenue for the nine-month period ending September 30, 2020, totaled $2,066 which was 11.7% off the pace of

a year ago when it was $2,340.

of Revenue / Gross Profit

decrease in gross profit for the quarter ended June 30, 2020 was $346 or a 32% decrease in gross profit compared to a year ago.

IQS contribution to gross profit was at $216

which represents 29.9% of the Company’s 2 nd quarter gross profit.

margin at approximately 34% led the improvement in overall gross margin to 13.9%, an improvement over IQS’s 2019’s

second quarter gross margin of 11.1% which was before the acquisition of IQS.

IQS gross margin improvement from 31% gross margin

in the same period in 2019 to 34%, can mostly be attributed to Maslow’s benefit structure that is less costly.

profit for the six months ended June 30, 2020, of $1,755 was not nearly as pronounced at $151 or 7.9% less than it was a year

ago at $1,906.

The gross profit decline was not as steep due to IQS which had strong YTD margins of 32% while representing a much

higher percentage of the overall business due to the COVID-19 decline levels suffered by the EOR segment.

Company’s gross margin in the third quarter was $654 or 10.5% which was well short of our second quarter performance of

$723 and 13.9% respectively.

This was caused by 2 factors:

i) an arrangement MMG made with one of our customers to employ our

PPP funds directly for a limited number of resources assigned to this client.

Hence, we returned up to 14 media specialists, so

far, to work and billed our client only the gross profit portion and not approximately $116 in payroll costs.

Although we still

had PPP funds when this arrangement commenced, it has continued several weeks past the point when we exhausted the PPP funds for

its intended use.

Because PPP fund forgiveness and accounting use has not been finalized, we could not apply these funds as a

subsidy to amply offset our cost of revenue for this project.

Otherwise our gross margin would have been $770 and 12.4% for quarter

and our gross profit total would have exceeded our second quarter total of $723 by $47;

ii) the other reason for the margin decline

was that our EOR business, which is our lowest margin segment, improved in a greater proportion to the other two segments, with

EOR representing 73% of the revenue in the second quarter to 79% in the third.

In contrast the IQS business, our highest margin

declined by 3% in revenue when comparing the third quarter 2020 to the second.

comparing gross profit performance for the quarter ended September 30, 2020 to its 2019 counterpart, the third quarter 2020 yielded

$654 or a 39% decrease in gross profit compared to a year ago.

contribution to gross profit was at $262 which represents 28.5% of the Company’s third quarter gross profit.

IT staffing’s gross margin was 30% for the quarter ending September, and year to date is now at 31%.

A change in client

composition has compacted margins from 34% to 31%.

IT staffing’s operating income for the nine-month period ending September 30, 2020 was $182 compared to a loss of ($21)

This is due to our ability to take on this business and manage with existing organizational structure resulting in

an elimination of redundancies.

gross profit for the nine months ended September 30, 2020, of $2,409 was $570 less or 19% less than it was a year ago at $2,979.

September’s revenue at $2,542 represented 41% of our third quarter revenue and was a 43% improvement over the average of

the 5 preceding months beginning in April and ending in August.

This improvement can be attributed to increases in EOR services

demand by AT&T, Janssen, and WETA which began increasing their media resources to percentages approaching pre-COVID 19 levels.

General and Administrative

general and administrative (SG&A) expenses for the three months ended June 30, 2020 were $1,240 as compared to $662 in 2019.

The increase is due to costs associated with being a public company and higher legal costs which totaled approximately $343 and

$69 respectively or $412 of the of the $578 difference.

The other major SG&A increase of $168 comes from IQS administrative

salaries and other IQS operating costs such as rent.

the six months ending June 30, 2020, SG&A expenses of $2,352 were $1,036 greater than 2019 with an identical paradigm to the

quarter with cost associated with being a public company and higher legal costs being the drivers, totaling approximately $674

general and administrative (“SG&A”) expenses for the three months ended September 30, 2020 were $1,086 as compared

to $724 in 2019.

The increase is due to costs associated with being a public company and higher legal costs which totaled

approximately $214 and $131, respectively, or $345 which exceeds the $314 difference.

The other major SG&A increase in comparing

2020 third quarter to a year ago is $128 comes from IQS administrative salaries.

So, when comparing MMG operating costs in the

third quarter 2020 to 2019, costs were reduced by $159, representing a 21% improvement.

the nine months ending September 30, 2020, SG&A expenses of $3,438 were $1,398 greater than 2019 with an identical paradigm

to the quarter with cost associated with being a public company and higher legal costs being the drivers, totaling approximately

$868 and $333, respectively, for a total of $1,201 of the $1,398 difference.

The remaining $219 increase can be attributed to in incremental

IQS administrative salaries and other costs offset by a reduction in other general and administrative spending.

Company recognized interest expense in the amount of $114 during the three months ended June 30, 2020, compared to $91 in 2019.

The decrease was attributable to the $850 in convertible notes being carried and offset by a large reduction in use of factoring

Company recognized interest expense in the amount of $30 during the three months ended September 30, 2020, compared to $100 in

The decrease was attributable to interest on the $850 in convertible notes and offset by a large reduction in use of factoring

which was due to the reduction of revenues and the PPP funds which do not necessitate immediate borrowing for working capital.

the six months ending June 30, 2020, interest expense increased to $253 compared with $174 in 2019 primarily due to the $850 in

convertible notes the Company took on mostly in the third quarter of 2019.

the nine months ending September 30, 2020, interest expense increased to $283 compared with $273 in 2019 primarily due to the

$725 in interest on the convertible notes the Company in the third quarter of 2020 compared with $491 in 2019.

factoring costs decreased year over year as the necessity to factor invoices was significantly diminished after receipt of the

Prior to receipt of the PPP funds, our average cash balance was $395, while employing 85-90% of factoring capabilities.

Use of PPP funds for payroll and rent enabled cash reserves to be fortified as our average cash improved to $458 from May 1 through

July 6, 2020.

Use of PPP funds for payroll and rent enabled cash reserves to be fortified as our average cash improved to $657 in the third

quarter 2020.

Hence, our 2020 factoring costs (factoring fee plus interest) were $8 compared to $79 in 2019.

Income (Loss)

Company incurred a net loss in the quarter ending June 30, 2020 of $324 compared to net profit in the same period 2019 of $286.

$346 decrease in gross profit coupled with corporate costs much of which are public company related ($343, see G&A) totaling

$459 exceed the $599 variance by $203 where the Company was able to reduce costs.

the six months ended June 30, 2020, the net loss was $561 versus a profit of 362 in the same period in 2019.

The $923 variance

can be attributed less to the $151 reduction in gross profit and more to the $842 in additional corporate costs, $673 of which

were public company related and $142 for legal fees.

Company incurred a net loss during the three months ended September 30, 2020 of $192 compared to net profit in the same period

2019 of $157.

$349 increase in net loss can be attributed to i) reduction in revenue by $3,874 leading to gross profit decrease by $406 as a

result of COVID-19 customer reductions in force;

ii) corporate costs much of which are public company related ($214, see quarterly

G&A results above) totaling $419 which include legal costs associated with shareholder disputes totaling $131;

iii) increase in cost of revenue due to the customer subsidy described above totaling $116 iv) additional losses were offset

by income tax benefit of $237.

the nine months ended September 30, 2020, the net loss was $753 versus a profit of 533 in the same period in 2019.

variance can be attributed less to the same factors cited above which can be simplified by focusing on the $570 gross profit deficit

and corporate costs of $1,191 that were not necessary a year ago.

Those two changes alone account for a $1,762 reduction in operational

profit in the nine months ending on September 30 in 2020 to a year ago offset by income tax benefit of $286.

AND CAPITAL RESOURCES

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terms by 30-60 days, we can be adversely impacted since Triumph, and most other factoring institutions no longer provide credit

after an account obligor pays 30 or more days from their contractual terms.

after an account obligor who pays 30 or more days from their contractual terms.

primary use of cash are for payments to field talent, corporate and staff employees, related payroll liabilities, operating expenses,

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In the first quarter

the Company continued to pursue repayment as the impact of not having that cash returned to the Company coupled with approximately

$900 more a year in costs associated with being a public company and the inability to tap the capital markets due to not having

any available shares, resulted in cash challenges.

of 2020, the Company continued to pursue repayment as the impact of not having that cash returned to the Company coupled with

approximately $900 more a year in costs associated with being a public company and the inability to tap the capital markets due

to not having any available shares, resulted in cash challenges.

as described in Note 5 to the Financial Statements above, Vivos Holdings LLC has defaulted its secured promissory note that would

have paid $10 per month to Company.

June, the Company made required repayments of principal and interest of approximately $140 pursuant to the convertible notes described

in Note 4 above.

Payments under the remaining outstanding notes with an aggregate value

approximately $952 will be made over a 4-month period, including $588 having been paid by August 3rd, as these notes reach maturity.

the third quarter of 2020, the Company made required repayments of principal and interest of approximately $806 pursuant to the

convertible notes.

This completed the repayment of outstanding notes having an aggregate value of principal and interest of approximately

March 2020, a national, lockdown began to unfold due to the COVID-19 pandemic.

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As stated above under Interest, use of PPP funds for payroll and rent enabled cash reserves to be fortified to average

(Non PPP) working capital of $458 from May 1 through July 6, 2020, from a previous 4 month average of $395K.

employed to repay the convertible notes (see Note 4) in the second quarter totaled $140 and will require disbursement in the third

quarter of $700, and a fourth quarter principal and interest payments of $112.

Although the outlay of the $812 in the third and

early fourth quarter will have a substantial impact on cash flows, the Company expects to have sufficient working capital after

making these payments.

cash provided by operating activities during the six months ended June 30, 2020 was $2,054 compared to $1,395 in the comparable

(Non PPP) working capital of $458 from May 1 through July 6, 2020, from a previous 4 month average of $395.

employed to repay the convertible notes in the second quarter totaled $140 and required disbursement in the third quarter

Although the outlay of the $806 in the third quarter had a substantial impact on cash flows, the Company expects to have

sufficient working capital after making these payments.

cash provided by operating activities during the nine months ended September 30, 2020 was $586 compared to $136 in the comparable

period of 2019.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements