What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-31 compared with 2021-03-31 · 650 added, 1018 removed, 245 unchanged (87% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firms

Consolidated Financial Statements of Reliability, Inc.

Report of Independent Registered Public Accounting Firms PCAOB ID NO:

Audited Consolidated Financial Statements of Reliability,

Consolidated Balance Sheets as of December 31, 2021, and 2020

Consolidated Statements of Operations for the years ended December 31, 2021, and 2020

Consolidated Statements of Changes in Stockholders’

Equity for the years ended December 31, 2020 and 2019

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021, and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2021, and 2020

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on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of Reliability Incorporated and Subsidiary (the “Company”)

as of December 31, 2020 and 2019, and the related consolidated statements of operations, stockholders’

equity, and cash

flows for the years then ended, and the related notes to the consolidated financial statements (collectively referred to as the

“consolidated financial statements”).

have audited the accompanying consolidated balance sheets of Reliability Incorporated and Subsidiary (the “Company”) as of

December 31, 2021, and 2020, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the

years then ended, and the related notes to the consolidated financial statements (collectively referred to as the “consolidated

financial statements”).

our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position

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in conformity with accounting principles generally accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an

opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered

with Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect

to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Security and

Exchange Commission and the PCAOB.

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

in note 2 to the consolidated financial statements, the Company has experienced cash constraints and extended payment terms from its

customers, has been unable to negotiate payments due on its related party receivables which are currently in default, is currently unable

to access the capital markets, and believes the impact of the COVID 19 pandemic will continue to have a material impact on its business,

operations and cash flows.

These factors raise substantial doubt about its ability to continue as a going concern.

The consolidated financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with Public Company

Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Security and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether

due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over

financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting,

but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis,

evidence supporting the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements.

audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due

to error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis, evidence

supporting the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in note 2 to the consolidated financial statements, the Company has experienced cash constraints and extended payment

terms from its customers, has been unable to negotiate payments due on its related party receivables which are currently in default,

is currently unable to access the capital markets, and believes the impact of the COVID 19 pandemic will continue to have a material

impact on its business, operations and cash flows.

These factors raise substantial doubt about its ability to continue as a going

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Audit Matters

critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements

that were communicated or required to be communicated to the Audit Committee of the Board of Directors and that:

(1) relate to

accounts or disclosures that are material to the consolidated financial statements and (2) involved challenging, subjective, or

complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial

statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on

the critical audit matter or on the accounts or disclosures to which they relate.

critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that

were communicated or required to be communicated to the Audit Committee of the Board of Directors and that:

(1) relate to accounts or

disclosures that are material to the consolidated financial statements and (2) involved challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as

a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or

on the accounts or disclosures to which they relate.

Party Transactions and Recoverability of Notes Receivable from Related Parties

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and arrangements with the majority owners of the Company and other companies owned by the majority owners.

In addition to holding

several receivable agreements, including notes receivable with these related parties, the Company is currently involved in a lawsuit

against one of the majority owners and other companies owned by the majority owner.

identified the evaluation of the identification of related parties, related party transactions and collectability of notes receivable

from related parties as a critical audit matter.

Auditor judgement was involved in assessing the sufficiency of the procedures

performed to identify related parties, identify related party transactions and assess the collectability of the notes receivable

from related parties.

In addition to holding several

receivable agreements, including notes receivable with these related parties, the Company is currently involved in a lawsuit against

one of the majority owners and other companies owned by the majority owner.

determined the (1) evaluation of the identification of related parties, (2) related party transactions and (3)

collectability of notes receivable from related parties, collectively, as a critical audit matter.

Auditor judgement was involved

in assessing the sufficiency of the procedures performed to identify related parties, identify related party transactions and assess

the collectability of the notes receivable from related parties.

following are the primary procedures we performed to address this critical audit matter.

We performed the following procedures

to evaluate the identification of related parties, related party transactions and the collectability of the notes receivable from

related parties by the Company:

Reviewed new agreements and contracts between the Company and its related parties;

We performed the following procedures to evaluate

the identification of related parties, related party transactions and the collectability of the notes receivable from related parties

by the Company:

Reviewed any new agreements and contracts between the Company and its related parties, noting none;

Queried the accounts payable system for transactions with its related parties;

Inspected director and officer questionnaires from the Company’s directors and officers;

Evaluated the Company’s reconciliation of its applicable accounts to the related parties’

records of transactions

and balances;

Read the Company’s minutes from meetings of the Board of Directors and related committees;

Inquired with executive officers and key members of management;

Inspected director and officer questionnaires from the Company’s directors and officers;

Evaluated the Company’s reconciliation of its applicable accounts to the related parties’ records of transactions and balances;

Read the Company’s minutes from meetings of the Board of Directors and related committees;

Inquired with executive officers and key members of management as to the collectability of these balances due from related parties;

Reviewed public filings, external news, and research sources for information related to transactions between the Company and related

Confirmed with the Company’s legal counsel, management, and its outside counsel as to the status of the lawsuits and the

collectability of the notes receivable from related parties.

have served as the Company’s auditor since 2009.

Confirmed with the Company’s management and its outside counsel as to the status of the lawsuits.

have served as the Company’s auditor since 2009.

Ramirez Jimenez International CPAs

AND SUBSIDIARY

BALANCE SHEETS

in thousands, except per share data)

(amounts in thousands, except per share data)

CURRENT ASSETS

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Trade receivables, net of allowance for doubtful accounts

Retention credit receivable

Notes receivable from related parties

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Other intangible assets, net

LIABILITIES AND STOCKHOLDER’S EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

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Income taxes payable

Current portion of mortgage loan payable

Other current liabilities

Total current liabilities

Mortgage loan payable, net of current portion

PPP loan payable

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Subsequent events (Note 15)

STOCKHOLDER’S EQUITY

STOCKHOLDERS’ EQUITY

Common stock, without par value, 300,000,000 shares authorized, 300,000,000 issued and outstanding as of December 31, 2021, and 2020

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Retained earnings

Total stockholder’s equity attributable to Reliability Inc.

Noncontrolling interest in consolidated affiliates

Total liabilities and stockholder’s equity

Total stockholders’ equity

Total liabilities and stockholders’ equity

accompanying notes to consolidated financial statements are an integral part of these financial statements.

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Interest expense

Other expense

Impairment of goodwill and other intangible assets

Other income (expense)

Income (loss) before income tax benefit / (expense)

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AND SUBSIDIARY

STATEMENTS OF CHANGE IN STOCKHOLDERS’

STATEMENTS OF CHANGE IN STOCKHOLDERS’ EQUITY

the year ended December 31, 2021 and 2020

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Net income (loss)

Recapitalization

Note receivable from shareholder for tax debt

VIE consolidation

Balance, December 31, 2020

Net income (loss)

Balance, December 31, 2021

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For the Years Ended December 31,

Cash flows from operating

Adjustments to reconcile

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

Cash flows from operating activities:

Net income (loss)

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

Depreciation and amortization

(Gain)/loss on disposal of property

and equipment

Deferred income taxes

(Gain)/loss on disposal of property and equipment

Accrued interest

Changes in operating

assets and liabilities:

Loss on impairment of goodwill and other intangible assets

Gain on forgiveness of PPP loan payable and interest

Changes in operating assets and liabilities:

Trade receivables

Retention credit

Prepaid expenses and other current assets

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Other liabilities

Income taxes payable/tax paid

Net cash provided

by operating activities

Cash flows from investing

Cash from merger

Income taxes payable

Net cash provided by (used in)

operating activities

Cash flows from investing activities:

Purchase of fixed assets

Net cash used in

investing activities

Cash flows from financing

Net cash used in investing activities

Cash flows from financing activities:

Net borrowing/(repayment) of line-of-credit

Proceeds from issuing short-term debt

Net borrowing/(payment) of long-term

Proceeds from long-term debt (PPP)

Repayment of notes

Advances to related parties

Repayment of long-term debt

Net cash provided

by financing activities

Net increase (decrease)

in cash and cash equivalents

Cash and cash equivalents,

beginning of year

Cash and cash equivalents,

Net cash used in

financing activities

Net (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

accompanying notes to consolidated financial statements are an integral part of these financial statements.

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Supplemental disclosures of non-cash investing and financing activities:

Net tangible assets acquired in acquisition of IQS

Net intangible assets acquired in acquisition of IQS

Liabilities assumed during acquisition of IQS

Reduction in notes receivable from related parties for acquisition of IQS

ASC 842 leases added to property, plant and equipment

Leases placed in other current liabilities

Non-cash impact of recapitalization from merger

Liabilities assumed in merger

Conversion of shareholder loan to equity in merger

PPP Loan and interest forgiveness

VIE net asset consolidated (unconsolidated)

VIE liabilities consolidated (unconsolidated)

VIE reduction in equity

accompanying notes to consolidated financial statements are an integral part of these financial statements.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

1 - NATURE OF OPERATIONS

is a leading provider of employer of record and temporary media and information technology (“IT”) staffing services

that operates, along with its wholly owned subsidiary, The Maslow Media Group, Inc., (collectively, “Reliability”

or the “Company”), primarily within the United States of America in three industry segments:

Employer of Record (“EOR”),

is a leading provider of employer of record and temporary media and information technology (“IT”) staffing services

that operates, along with its wholly owned subsidiary, The Maslow Media Group, Inc., (collectively, “Reliability” or the

“Company”), primarily within the United States of America in three industry segments:

Employer of Record (“EOR”),

Recruiting and Staffing and Video and Multimedia Production which provides script to screen media talent.

EOR which is a unique

workforce management solution, represented 80.7% of the revenue in 2020.

Our Staffing segment provides skilled field talent on

a nationwide basis for IT and finance and accounting client partner projects.

Our Staffing includes revenue derived from permanent

Video Production involves assembling and providing crews for special projects that can last anywhere from a week to

October 29, 2019, Maslow Media Group (“Maslow”

or “MMG”) became a wholly owned subsidiary of Reliability

via a reverse merger (the “Merger”).

December 1, 2019, the Company acquired the customer contracts and trade receivables and assumed certain liabilities of Intelligent

Quality Solutions, Inc.

(“IQS”).

EOR which is a unique workforce

management solution, represented 80.8 % of the revenue in 2021.

Our Staffing segment provides skilled field talent on a nationwide basis

for IT and finance and accounting client partner projects.

Our Staffing includes revenue derived from permanent placement.

Video Production

involves assembling and providing crews for special projects that can last anywhere from a week to 6 months.

October 29, 2019, Maslow Media Group (“Maslow” or “MMG”) became a wholly owned subsidiary of Reliability via

a reverse merger (the “Merger”).

December 1, 2019, the Company acquired the customer contracts and trade receivables and assumed certain liabilities of Intelligent Quality

Solutions, Inc.

IQS operates as a division of MMG.

2021 MMG began building its direct hire business as a separate business segment titled Permanent placement.

This division added $ 167

in revenue and $ 164 in gross profit in 2021.

2 - LIQUIDITY AND GOING CONCERN

December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China.

In January 2020, this coronavirus

spread to other countries, including the United States, and efforts to contain the spread of this coronavirus intensified.

outbreak continued throughout 2020 and into 2021.

The outbreak and any preventative or protective actions that governments or

we may take in respect of this coronavirus may result in a period of business disruption, reduced customer traffic and reduced

The impact of this coronavirus has had a material negative in the short term.

The full financial impact cannot be

reasonably estimated at this time, but may materially affect our business, financial condition and results of operations .

impact of the COVID-19 pandemic on the Company and its clients continues to evolve and is expected to adversely impact the Company’s

profitability, cash, assumptions and projections.

before the state and U.S.

governments’

reaction to COVID-19 forced employees to work from their homes starting around March

12, 2020, the Company had begun to experience cash constraints due to the following factors:

Approximately

$4,300 of outstanding debt owed to the Company had not been paid and is in default.

utilization of cash used in financing Vivos Group affiliated activities of $688

inability to access capital markets due to not having any available shares of common stock.

management took swift action on March 16, 2020 by reducing hours of employees who worked on clients significantly impacted by

the COVID-19 virus concerns.

Six (6) administrative employees were subsequently furloughed as of March 20, 2020, and a temporary

across the board reduction in pay was instituted across the remaining administrative staff members with executives taking a 50%

larger cut in salary.

We also began having employees work from their homes making full use of our cloud-based infrastructure,

and subsequently terminated the lease effective April 30, 2020 in Rockville, MD which saved the Company approximately $246 a year.

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

Small Business Administration

(“SBA”).

These funds were utilized entirely for payroll

during the 24-week covered period which commenced in May 2020 and ended in October 2020.

Maslow exhausted use of the funds for

payroll by the end of August 2020.

the years ended December 31, 2021, and 2020, we had an operating loss of $ 301

respectively.

considers on a regular basis, the Company’s ability to continue as a going concern.

The factors which have impacted the business

and our liquidity are;

in outcome of arbitration hearing with Vivos Group which will likely not have decision rendered until approximately the end of the

second quarter;

loss of approximately $ 301 for the year ending December 31, 2021;

of $ 475 plus $ 3 in associated legal costs on July 21, 2021, to satisfy a Vivos Group debt that was supposed to have been paid by

the Vivos Group and covered by the Liquidation Agreement but Vivos Group refuses to cooperate;

pandemic-resulting decline in client demand for our services continuing through the present;

in raising cash via public markets for organic and inorganic growth, due to lack of unissued authorized shares available for Company

use, despite having public company cost structure;

to realize approximately $ 5 M in notes receivables from Vivos Group;

liabilities, described further in Note 10

these conditions noted and factored in above with the prevailing risk being that the arbitration (see Item 1) outcome is not in the Company’s

favor, and the $ 4,985 in

notes receivable are not realized in full, part, or all, creates substantial doubt about the Company’s ability to continue

as a going concern.

Additionally,

from an operational view the underlying business has yet to fully recover from COVID-19 with 2021 quarterly comparative revenue levels

down as much as 47% from 2019 standards.

there can be no assurances that the Company will be successful in managing the impact of the foregoing or its ability to maintain sufficient

liquidity over a period of time that will allow it to continue as a going concern.

The accompanying consolidated financial statements

do not include any adjustments that might result from the outcome from these uncertainties.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

PPP Loan enabled MMG to return furloughed employees who were still available to work and hire additional staff for purposes of

vital sales, marketing and general and administrative projects.

Salaries were returned to normal levels and amounts that were

previously suspended were returned to most corporate employees.

Those employees who accepted permanent reductions in pay were

given incentives to achieve at those levels and beyond.

No employee was reduced below the 25% threshold that the PPP Loan mandated.

after receiving PPP funds, we continued to look for ways to streamline our business by re-structuring IQS, eliminating occupancy

of office in Plymouth, MN, and trimming many non-essential SG&A expenses.

Company applied for PPP loan forgiveness on March 3, 2020 for the entire amount borrowed in accordance with the PPP rules and

The Company believes that the entire $5,216 of the PPP Loan will be forgiven.

However, no assurance can be given that

all or any of the PPP Loan will, in fact, be forgiven.

Our consolidated financial statements do not include any adjustments to

reflect the possible future effects on the forgiveness of the PPP Loan.

Additionally,

the Company is pursuing CARES Act Paycheck Protection Program round 2 for which we believe we qualify.

the year ended December 31, 2020, we incurred a net loss in the amount of $789 and utilized cash from operating activities in

the amount of $2,070.

Our revenues decreased by $9,242 or 24% when compared to 2019, largely due to the COVID-19 pandemic.

also incurred an operating loss of $988 in 2020 compared to operating income of $1,084 in 2019.

these conditions noted above, most notably the adverse impact of sales by COVID 19and presumption that all debts coming due

without ability to raise cash from Vivos Holdings receivable, raise substantial doubt about the Company’s ability to

continue as a going concern.

There can be no assurances that the Company will be successful in managing the impact of the foregoing

or its ability to maintain sufficient liquidity over a period of time that will allow it to continue as a going concern.

The accompanying

consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability

and classification of assets or the amounts and classifications of liability that may results from the possible inability of the

Company to continue as a going concern.

3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

Company’s consolidated financial statements reflect the financial position and operating results of Reliability, Inc.

its wholly owned subsidiary, Maslow.

All intercompany transactions and balances have been eliminated in consolidation.

Company’s fiscal year is from January 1 st through December 31 st .

consolidated financial statements and related disclosures are prepared in conformity with United States (“U.S.”) generally

accepted accounting principles (“GAAP”).

The Company must make estimates and judgments that affect the amounts reported

in the consolidated financial statements and accompanying notes.

Estimates are used for, but not limited to revenue recognition,

allowances for doubtful accounts, recoverability of notes receivable, useful lives for

depreciation and amortization, loss contingencies, allocation of purchase price in connection with business combinations, valuation

allowances for deferred income taxes, and the assumptions used for web site development cost classifications.

Actual results may

be materially different from those estimated.

In making its estimates, the Company considers the current economic and legislative

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

Company’s fiscal year is from January 1 st through December 31 st .

consolidated financial statements and related disclosures are prepared in conformity with United States (“U.S.”) generally

accepted accounting principles (“GAAP”).

The Company must make estimates and judgments that affect the amounts reported in

the consolidated financial statements and accompanying notes.

Estimates are used for, but not limited to revenue recognition, allowances

for doubtful accounts, recoverability of notes receivable, goodwill and intangible assets, useful lives for depreciation and amortization,

loss contingencies, valuation allowances for deferred income taxes, and the assumptions used for web site development cost classifications.

Actual results may be materially different from those estimated.

In making its estimates, the Company considers the current economic

and legislative environment.

and Cash Equivalents

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of Credit Risk

the year ended December 31, 2020, the Company’s top 10 clients generated over 82% of the revenue.

A large portion of our

business comes from two clients, AT&T Services, Inc.

(inclusive of its DirecTV division) (“AT&T”) and Janssen

Pharmaceuticals (which includes workforce partners Johnson & Johnson).

AT&T accounted for 29% and 38% of revenue in 2020

and 2019, respectively.

AT&T comprised approximately 49% and 50% of the accounts receivable balance as of December 31, 2020

and 2019, respectively.

Janssen Pharmaceuticals (which includes workforce partners Johnson & Johnson) accounted for approximately

11% of our total revenues for the years ended December 31, 2020 and 2019.

Janssen Pharmaceuticals comprised approximately18% and

19% of accounts receivable as of December 31, 2020 and 2019, respectively.

the year ended December 31, 2021, the Company’s top 10 clients generated over 85 % of the revenue.

A large portion of our business

comes from two clients, AT&T Services, Inc.

(inclusive of its DirecTV division) (“AT&T”) and Janssen Pharmaceuticals

(which includes workforce partners Johnson & Johnson).

AT&T accounted for 28 % and 29 % of revenue in 2021 and 2020, respectively.

AT&T comprised approximately 41 % and 49 % of the accounts receivable balance as of December 31, 2021, and 2020, respectively.

Pharmaceuticals (which includes workforce partners Johnson & Johnson) accounted for approximately 15 % and 11 % of our total revenues

for the years ended December 31, 2021, and 2020, respectively.

Janssen Pharmaceuticals comprised approximately 33 % and 18 % of accounts

receivable as of December 31, 2021, and 2020, respectively.

Morgan Stanley and Goldman Sachs receivables were 6.4 % and 5.5 % of receivables

respectively.

No other client exceeded 10% of revenues .

instruments, which potentially subject the Company to concentrations of credit risk, are primarily cash and accounts receivable.

The Company performs continuing credit evaluations of its customers and does not require collateral.

The Company has not experienced

significant losses related to receivables.

Company performs continuing credit evaluations of its customers and does not require collateral.

The Company has not experienced significant

losses related to receivables.

Receivable, Contract Assets, and Contract Liabilities (Deferred Revenue)

represent both trade receivables from customers in relation to fees for the Company’s services and unpaid amounts for benefit

services provided by third-party vendors, such as healthcare providers for which the Company records a receivable for funding

until the payment is received from the customer and a corresponding customer obligations liability until the Company disburses

the balances to the vendors.

Company provides for an allowance for doubtful accounts by specifically identifying accounts with a risk of collectability and

providing an estimate of the loss exposure.

Management considers all contract receivables as of December 31, 2020 and 2019 to

be fully collectible, therefore an allowance for doubtful accounts is not provided for.

Company records accounts receivable when its right to consideration becomes unconditional.

Contract assets primarily relate to

the Company rights to consideration for services provided that they are conditional on satisfaction of future performance obligations.

Company holds customer deposits of certain customers related to its EOR business to minimize cash flow impact and reduces risks

of uncollectible trade receivables.

Company records contract liabilities (deferred revenue) when payments are made or due prior to the related performance obligations

being satisfied.

The current portion of the Company contract liabilities is included in accrued liabilities in its consolidated

balance sheets.

The Company does not have any material contract assets or long-term contract liabilities.

of December 31, 2020, and 2019, the Company’s deferred revenue totaled $182 and $347 respectively.

represent both trade receivables from customers in relation to fees for the Company’s services and unpaid amounts for benefit services

provided by third-party vendors, such as healthcare providers for which the Company records a receivable for funding until the payment

is received from the customer and a corresponding customer obligations liability until the Company disburses the balances to the vendors.

Company provides for an allowance for doubtful accounts by specifically identifying accounts with a risk of collectability and providing

an estimate of the loss exposure.

Management considers all contract receivables as of December 31, 2021, and 2020 to be fully collectible,

therefore an allowance for doubtful accounts is not provided for.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

Company records accounts receivable when its right to consideration becomes unconditional.

Contract assets primarily relate to the Company

rights to consideration for services provided that they are conditional on satisfaction of future performance obligations.

Company holds customer deposits of certain customers related to its EOR business to minimize cash flow impact and reduces risks of uncollectible

trade receivables.

Company records contract liabilities (deferred revenue) when payments are made or due prior to the related performance obligations being

The current portion of the Company contract liabilities is included in accrued liabilities in its consolidated balance sheets.

The Company does not have any material contract assets or long-term contract liabilities.

of December 31, 2021, and 2020, the Company’s deferred revenue totaled $ 176

respectively.

Value Measurements

Company measures fair value based on the price that the Company would receive upon selling an asset or pay to transfer a liability

in an orderly transaction between market participants at the measurement date.

Various inputs are used in determining the fair

value of assets or liabilities.

Company measures fair value based on the price that the Company would receive upon selling an asset or pay to transfer a liability in

an orderly transaction between market participants at the measurement date.

Various inputs are used in determining the fair value of

assets or liabilities.

Inputs are classified into a three-tier hierarchy, summarized as follows:

Quoted prices in active markets for identical assets or liabilities;

Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the assets

or liabilities;

Significant unobservable inputs for the assets or liabilities.

Level 1 inputs are not available, the Company measures fair value using valuation techniques that maximize the use of relevant

observable inputs (Level 2) and minimizes the use of unobservable inputs (Level 3).The carrying amounts reported as of December

31, 2020 and 2019 for cash and cash equivalents, trade receivables, prepaid expenses and other current assets, accounts payable

and accrued expenses, factoring liability, notes and mortgages payable approximate their fair values due to the short-term nature

of these instruments or are based on interest rates available to the Company that are comparable to current market rates.

estimated fair value of the Company’s PPP loan payable approximates its carrying value as the rate on this debt is determined

government which was offered to all participating companies under the CARES Act.

It is not practicable to estimate

the fair value of the notes receivable from related parties due to their related party nature.

Level 1 – Quoted

prices in active markets for identical assets or liabilities;

Level 2 – Quoted

prices in active markets for similar assets and liabilities and inputs that are observable for the assets or liabilities;

Level 3 – Significant

unobservable inputs for the assets or liabilities.

Level 1 inputs are not available, the Company measures fair value using valuation techniques that maximize the use of relevant observable

inputs (Level 2) and minimizes the use of unobservable inputs (Level 3).The carrying amounts reported as of December 31, 2021 and 2020

for cash and cash equivalents, trade receivables, prepaid expenses and other current assets, accounts payable and accrued expenses, and

factoring liability approximate their fair values due to the short-term nature of these instruments or are based on interest rates available

to the Company that are comparable to current market rates.

The estimated fair value of the Company’s PPP loan payable approximated

its carrying value as the rate on this debt was determined by the U.S.

government which was offered to all participating companies under

the CARES Act.

It is not practicable to estimate the fair value of the notes receivable from related parties due to their related party

and Equipment

and equipment are stated at cost and are depreciated using primarily the straight-line method over the following estimated useful

furniture, fixtures, and computer equipment —

three to seven years;

leasehold improvements —

over the shorter

of the estimated useful life of asset or the lease term.

The estimated useful life of building was thirty-nine years.

for renewals and betterments are capitalized whereas expenditures for repairs and maintenance are charged to income as incurred.

Upon sale or disposition of property and equipment, the difference between the unamortized cost and the proceeds is recorded as

either a gain or a loss.

Depreciation and amortization expense for the years ended December 31, 2020 and 2019 totaled $46 and

and equipment are stated at cost and are depreciated using primarily the straight-line method over the following estimated useful lives:

furniture, fixtures, and computer equipment — three to seven years;

leasehold improvements — over

the shorter of the estimated useful life of asset or the lease term .

Expenditures for renewals and betterments are capitalized whereas expenditures for repairs and maintenance are charged to income as incurred.

Upon sale or disposition of property and equipment, the difference between the unamortized cost and the proceeds is recorded as either

a gain or a loss.

Depreciation and amortization expense for the years ended December 31, 2021, and 2020 totaled $ 38

respectively.

Company reviews its long-lived assets, primarily fixed assets, intangible assets and goodwill, for impairment whenever events

or changes in circumstances indicate that the carrying amount of the asset may not be recovered.

The Company looks primarily to

the undiscounted future cash flows in its assessment of whether or not long-lived assets have been impaired.

There were no impairments

recorded during the years ended December 31, 2020 and 2019.

Company holds intangible assets with finite lives.

Intangible assets with finite useful lives are amortized over their respective

estimated useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible

asset is realized.

For the years ended December 31, 2020 and 2019, amortization expense was $33 and $3, respectively.

Company reviews its long-lived assets, primarily fixed assets, intangible assets and goodwill, for impairment whenever events or changes

in circumstances indicate that the carrying amount of the asset may not be recovered.

The Company looks primarily to the undiscounted

future cash flows in its assessment of whether or not long-lived assets have been impaired.

The Company recorded an impairment loss in

the amount of $ 688 for goodwill and intangible assets in 2021.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

Company held intangible assets with finite lives.

Intangible assets with finite useful lives were amortized over their respective estimated

useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible asset is

For the years ended December 31, 2021, and 2020, amortization expense was $ 34

for both years prior to taking impairment on

the remaining intangible value.

intangible assets recognized in conjunction with acquisitions are recorded at fair value.

Significant unobservable inputs are

used to determine the fair value of the identifiable intangible assets based on the income approach valuation model whereby the

present worth and anticipated future benefits of the identifiable intangible assets were discounted back to their net present

Company evaluates the recoverability of intangible assets whenever events or changes in circumstances indicate that an intangible

asset’s carrying amount may not be recoverable.

The Company annually evaluates the remaining useful lives of all intangible

assets to determine whether events and circumstances warrant a revision to the remaining period of amortization.

The Company determined

that there was no impairment needed for these assets during the year ended December 31, 2020.

Significant unobservable inputs are used to

determine the fair value of the identifiable intangible assets based on the income approach valuation model whereby the present worth

and anticipated future benefits of the identifiable intangible assets were discounted back to their net present value.

Company evaluates the recoverability of intangible assets whenever events or changes in circumstances indicate that an intangible asset’s

carrying amount may not be recoverable.

The Company annually evaluates the remaining useful lives of all intangible assets and goodwill

to determine whether events and circumstances warrant a revision to the remaining period of amortization.

The Company determined that

there was impairment needed for these assets during the year ended December 31, 2021, and thus impaired $ 170 in remaining carrying value

of IQS based intangible assets.

represents the difference between the enterprise value/cash paid less the fair value of all recognized net asset fair values including

identifiable intangible asset values in a business combination.

The Company reviews goodwill for impairment annually during the

fourth quarter or whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

Based on annual testing, the Company has determined that there was no goodwill impairment during the year ended December 31, 2020.

Company first evaluates qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than

50 percent) that the fair value of the reporting unit is less than it’s carrying amount, including goodwill.

If after qualitatively

assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value

of the reporting unit is less than it’s carrying amount, then further testing is unnecessary.

If after assessing the totality

of events or circumstances, the Company determines that it is more likely than not that the fair value of the reporting unit is

less than its carrying amount, the Company then estimates the fair value of the reporting unit and compares the fair value of

the reporting unit with its carrying amount, including goodwill, as discussed below.

assessing whether it is more likely than not that an indefinite-lived intangible asset is impaired, the Company assesses relevant

events and circumstances that could affect the significant inputs used to determine the fair value.

quantitative impairment test for an indefinite-lived intangible asset consists of a comparison of the fair value of the asset

with its carrying amount.

If the carrying amount of an intangible asset exceeds its fair value, the Company shall recognize an

impairment loss in an amount equal to that excess.

quantitative goodwill impairment test involves a two-step process.

In the first step, the Company compares the fair value of each

reporting unit to its carrying value.

If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired,

and no further testing is required.

If the fair value of the reporting unit is less than the carrying value, The Company must

perform the second step of the impairment test to measure the amount of impairment loss.

In the second step, the reporting unit’s

fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets,

in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was

being acquired in a business combination.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

the implied fair value of the reporting unit’s goodwill is less than the carrying value, the difference is recorded as an

impairment loss.

The Company determined that there was no impairment needed for the year ended December 31, 2020.

The Company reviews goodwill for impairment annually during the fourth

quarter or whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

Based on annual

testing, the Company has determined that there was goodwill impairment during the year ended December 31, 2021.

the Company recorded a goodwill impairment adjustment of $ 518 upon finalizing the detailed step two impairment analysis for the IQS segment

that led to a decrease in revenue ($ 2,000 ) in 2021 from 2020.

Company derives its revenues from three segments:

EOR, Recruiting and Staffing, and Video and Multimedia Production.

provides temporary staffing and permanent placement services.

Revenues are recognized when promised services are delivered to

client, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

as presented on the consolidated statements of operations represent services rendered to clients, less sales adjustments and allowances.

Reimbursements, including those related to out-of-pocket expenses, are also included in revenues, and the related amounts of reimbursable

expenses are included in cost of services.

staffing revenues - Field talent revenues from contracts with clients are recognized in the amount to which the Company has a

right to invoice when the services are rendered by the Company’s field talent.

placement staffing revenues - Permanent placement staffing revenues are recognized when employment candidates start their permanent

The Company estimates the effect of permanent placement candidates who do not remain with its client through the guarantee

period (generally 90 days) based on historical experience.

Allowances, recorded as a liability, are established to estimate these

Fees to client are generally calculated as a percentage of the new worker’s annual compensation.

No fees for permanent

placement services are charged to employment candidates.

The Company provides

temporary staffing and permanent placement services.

Revenues are recognized when promised services are delivered to client, in an amount

that reflects the consideration the Company expects to be entitled to in exchange for those services.

Revenues as presented on the consolidated

statements of operations represent services rendered to clients, less sales adjustments and allowances.

Reimbursements, including those

related to out-of-pocket expenses, are also included in revenues, and the related amounts of reimbursable expenses are included in cost

staffing revenues - Field talent revenues from contracts with clients are recognized in the amount to which the Company has a right to

invoice when the services are rendered by the Company’s field talent.

placement staffing revenues - Permanent placement staffing revenues are recognized when employment candidates start their permanent employment.

The Company estimates the effect of permanent placement candidates who do not remain with its client through the guarantee period (generally

90 days) based on historical experience.

Allowances, recorded as a liability, are established to estimate these losses.

Fees to client

are generally calculated as a percentage of the new worker’s annual compensation.

No fees for permanent placement services are

charged to employment candidates.

to Note 14 for disaggregated revenues by segment.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

terms in our contracts vary by the type and location of our client partner and the services offered.

The term between invoicing and

when payment is due is not significant.

The term between invoicing and when

payment is due is not significant.

There were no unsatisfied performance obligations as of December 31, 2021.

There were no

revenues recognized during years ended December 31, 2020 and 2019 related to performance obligations satisfied or partially

satisfied in previous periods.

There were no revenues

recognized during years ended December 31, 2021, and 2020 related to performance obligations satisfied or partially satisfied in previous

There are no contract costs capitalized.

The Company did not recognize any contract impairments

during the years ended December 31, 2020 and 2019.

Company recognizes advertising expense in selling, general and administrative expenses as the services are incurred.

Total advertising

expense for the years ended December 31, 2020 and 2019 was $24 and $43, respectively.

The Company did no t recognize any contract impairments during the years ended December

31, 2021, and 2020.

Company recognizes marketing and promotion expense in selling, general and administrative expenses as the services are incurred.

marketing and promotion expense for the years ended December 31, 2021, and 2020 was $ 23

respectively.

(Loss) Per Share

1 unchanged sentence

during the year.

earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock

were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of

earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were

exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

Company accounts for income taxes utilizing the asset and liability method.

Under this method, deferred tax assets and liabilities

are determined based on differences between the financial statement carrying amounts of existing assets and liabilities and their

respective tax basis, and net operating loss and tax credit carryforwards, using enacted tax rates and laws that are expected

to be in effect when the differences reverse.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

valuation allowance is recorded against deferred tax assets in these cases when management does not believe that the realization

is more likely than not.

While management believes that its judgements and estimates regarding deferred tax assets and liabilities

are appropriate, significant differences in actual results may materially affect the Company’s future financial results.

Company recognizes any uncertain income tax positions at the largest amount that is more-likely-than-not to be sustained upon

audit by the relevant taxing authority.

An uncertain income tax position will not be recognized if it has less than a 50% likelihood

of being sustained.

The Company’s policy is to recognize interest and/or penalties related to income tax matters in income

Under this method, deferred tax assets and liabilities are

determined based on differences between the financial statement carrying amounts of

assets and liabilities and their respective tax basis, and net operating loss and tax credit carry forwards, using enacted tax rates

and laws that are expected to be in effect when the differences reverse.

valuation allowance is recorded against deferred tax assets in these cases when management does not believe that the realization is more

likely than not.

While management believes that its judgements and estimates regarding deferred tax assets and liabilities are appropriate,

significant differences in actual results may materially affect the Company’s future financial results.

Company recognizes any uncertain income tax positions at the largest amount that is more-likely-than-not to be sustained upon audit by

the relevant taxing authority.

An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being

The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

As of December 31, 2021, and 2020, the Company did not record any accruals for interest and penalties.

does not foresee material changes to its uncertain tax positions within the next twelve months.

The Company’s tax years

are subject to examination for 2017 and forward for U.S.

The Company does not foresee material

changes to its uncertain tax positions within the next twelve months.

The Company’s tax years are subject to examination for 2018

and forward for U.S.

Federal tax purposes and for 2017 and forward for state tax purposes .

Issued Accounting Pronouncements

June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2016-13, Financial

Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , to replace the incurred

loss methodology with an expected credit loss model that requires consideration of a broader range of information to estimate

credit losses over the lifetime of the asset, including current conditions and reasonable and supportable forecasts in addition

to historical loss information, to determine expected credit losses.

Pooling of assets with similar risk characteristics and the

use of a loss model are also required.

Also, in April 2019, the FASB issued ASU No.

2019-04, Codification Improvements to Topic

326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging , and Topic 825, Financial Instruments ,

to clarify the inclusion of recoveries of trade receivables previously written off when estimating an allowance for credit losses.

The amendments in this update were required to be applied using the modified retrospective method with an adjustment to retained

earnings and were effective for us beginning with fiscal year 2020, including interim periods.

The adoption of the amendments

in this update as of January 1, 2020 did not have a material impact on our accounts receivable, retained earnings, as well as

our results of operations for the year ended December 31, 2020.

August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—

Changes to the

Disclosure Requirements for Fair Value Measurement , to improve the fair value measurement reporting of financial instruments.

The amendments in this update require, among other things, added disclosure of the range and weighted average of significant unobservable

inputs used to develop Level 3 fair value measurements.

The amendments in this update eliminate, among other things, disclosure

of the reasons for and amounts of transfers between Level 1 and Level 2 for assets and liabilities that are measured at fair value

on a recurring basis and an entity’s valuation processes for Level 3 fair value measurements.

The amendments in this update

were effective for us beginning with fiscal year 2020.

Retrospective application is required for all amendments in this update

except the added disclosures, which should be applied prospectively.

The adoption of the amendments in this update did not have

a material impact on our consolidated financial position and results of operations as of and for the year ended December 31, 2020.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

July 2021, the FASB issued ASU No.

2021-05, Leases (Topic 842):

Lessors—Certain Leases with Variable Lease Payments.

issued to address the day-one loss issue related to a lessor’s accounting for certain leases with variable lease payments.

the update, a lessor will classify a lease with variable lease payments that do not depend on an index or a rate as operating if the

following two conditions are met:

the lease would be classified as sales-type or direct financing lease and doing so would result in

recognizing a selling loss.

Fixed lease payments will be recognized in income on a straight-line basis and any variable payments will

continue to be recognized when the changes in facts and circumstances on which those variable payments are based occur.

ASU 2021-05 if

effective for all companies in fiscal year starting after December 15, 2021.

Public companies are required to adopt this ASU in interim

periods during the fiscal year starting after December 15, 2021, which other entities will adopt in interim periods starting after December

Early adoption is permitted.

The Company is currently evaluating the impact on its consolidated financial statements and related

In October 2020, the FASB issued ASU No.

Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs.

This ASU provides more detailed

explanation on the subsequent measurement of callable debt and whether callable debt falls within the scope of paragraph 310-20-35-33.

ASU 2020-08 applies to all entities with callable debt and is effective for public business entities for fiscal years beginning after

December 15, 2020, with early adoption not permitted.

The Company’s adoption of this ASU did not have a material impact on its

consolidated financial position and results of operations for the year ending December 31, 2021.

August 2018, the FASB issued ASU No.

2018-15, Intangibles–Goodwill and Other—Internal-Use Software (Subtopic

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service

Contract , to provide additional guidance on the accounting for costs of implementing cloud computing arrangements that

are service contracts.

The amendments in this update require the capitalization of implementation costs during the

application development stage of such hosting arrangements and amortization of the expense over the term of the arrangement,

including any option to extend reasonably certain to be exercised or option to terminate reasonably certain not to be

Capitalized implementation costs and amortization thereof are also required to be classified in the same line item

in the statements of financial position, operations and cash flows associated with the hosting service fees.

2018-15, Intangibles–Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract , to provide

additional guidance on the accounting for costs of implementing cloud computing arrangements that are service contracts.

The amendments

in this update were effective for us beginning with fiscal year 2020.

Entities may select retrospective or prospective

application to all implementation costs incurred after the adoption

We selected prospective application to all implementation costs incurred after the adoption date.

The adoption of the amendments

in this update did not have a material impact on our property and equipment, net and results of operations as of and for the year

ended December 31, 2020.

in this update require the capitalization of implementation costs during the application development stage of such hosting arrangements

and amortization of the expense over the term of the arrangement, including any option to extend reasonably certain to be exercised or

option to terminate reasonably certain not to be exercised.

Capitalized implementation costs and amortization thereof are also required

to be classified in the same line item in the statements of financial position, operations and cash flows associated with the hosting

service fees.

The amendments in this update were effective for us beginning with fiscal year 2020.

Entities may select retrospective

or prospective application to all implementation costs incurred after the adoption date.

We selected prospective application to all implementation

costs incurred after the adoption date.

The adoption of the amendments in this update did not have a material impact on our property

and equipment, net and results of operations as of and for the year ended December 31, 2021

December 2019, the FASB issued ASU No.

2019-12 Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes , to

remove certain exceptions and improve consistency of application, including, among other things, requiring that an entity reflect the

effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the

enactment date.

The amendments in this update will be effective for us beginning with fiscal year 2021, with early adoption permitted.

Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a

retrospective or modified retrospective basis.

The adoption of the amendments did have a material impact on our consolidated financial

position and results of operations as of and for the year ended December 31, 2021.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

March 2020, the FASB issued ASU No.

2020-04 Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference

Rate Reform on Financial Reporting , that provides optional relief to applying reference rate reform to contracts, hedging

relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR), which will be discontinued by

the end of 2021.

Also, in January 2021, the FASB issued ASU No.

2021-01 Reference Rate Reform (Topic 848)—Scope ,

to clarify that cash flow hedges are eligible for certain optional expedients and exceptions for the application of subsequent

assessment methods to assume perfect effectiveness as previously presented in ASU 2020-04.

The amendments in this update are effective

for us immediately and may be applied through December 31, 2022.

The adoption of this update is not expected to have a material

impact on our consolidated financial position and results of operations.

December 2019, the FASB issued ASU No.

2019-12 Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes ,

to remove certain exceptions and improve consistency of application, including, among other things, requiring that an entity reflect

the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes

the enactment date.

The amendments in this update will be effective for us beginning with fiscal year 2021, with early adoption

Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must

be applied on a retrospective or modified retrospective basis.

The adoption of the amendments in this update is not expected to

have a material impact on our consolidated financial position and results of operations.

October 2020, the FASB issued ASU No.

2020-10 Codification Improvements , to make incremental improvements to U.S.

and address stakeholder suggestions, including, among other things, clarifying that the requirement to provide comparative information

in the financial statements extends to the corresponding disclosures section.

The amendments in this update will be effective

for the Company beginning with fiscal year 2021, with early adoption permitted.

The amendments in this update should be applied

retrospectively and at the beginning of the period that includes the adoption date.

The adoption of the amendments in this update

is not expected to have a material impact on our consolidated financial position and results of operations.

January 2017, the FASB issued ASU No.

2017-04, Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill

Impairment , to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.

entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value

of a reporting unit to all of its assets and liabilities as if the reporting unit had been acquired in a business combination.

Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing

the fair value of a reporting unit with its carrying amount.

The FASB also eliminated the requirements for any reporting unit

with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform

Step 2 of the goodwill impairment test.

The amendments in this update will be effective for the Company beginning with fiscal

year 2023, with early adoption permitted.

The adoption of the amendments in this update is not expected to have a material impact

on our consolidated financial position and results of operations.

no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting

unit to all of its assets and liabilities as if the reporting unit had been acquired in a business combination.

Instead, under the amendments

in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting

unit with its carrying amount.

The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount

to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.

The amendments

in this update will be effective for the Company beginning with fiscal year 2023, with early adoption permitted.

The Company adopted

this during 2021 resulting in an impairment charge as stated in the financial statements.

Company does not believe any other recently issued but not yet effective accounting pronouncement, if adopted, would have a material

effect on its present or future consolidated financial statements.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

4 - ACQUISITION

Quality Solutions (“IQS”)

December 1, 2019, the Company acquired the customer contracts and trade receivables and assumed certain liabilities of Intelligent

Quality Solutions, Inc.

IQS in exchange for a reduction of approximately $691 of the notes receivable from relates parties (Vivos

assets acquired in the IQS asset purchase agreement were acquired by Maslow.

The acquisition of IQS allows the Company to strengthen

and expand its IT operations throughout the Midwest U.S.

region and expand to markets across the country with talent and software

quality assurance services.

consolidated statement of operations for the year ended December 31, 2019 includes one month of IQS operations, which was approximately

$245 of revenue and $6 of net operating loss.

The purchase price has been allocated to the assets acquired and liabilities assumed

as of the date of acquisition.

All amounts recorded to goodwill are expected to be deductible for tax purposes.

The allocation

is as follows:

Accounts receivable

Prepaid expenses and other assets

Intangible assets

Liabilities assumed

Total net assets acquired

Working capital adjustment

Total fair value of consideration transferred for acquired business

allocation of the intangible assets is as follows:

Estimated Fair Value

Customer relationships

Company incurred costs of $6 related to the IQS acquisition.

These costs were expensed as incurred in selling, general and administrative

expenses in 2019.

following unaudited pro forma financial information includes the results of operations of the Company and is presented as if IQS

had been acquired as of January 1, 2019.

The unaudited pro forma information has been provided for illustrative purposes only.

The unaudited proforma information does not purport to be indicative of the actual results that would have been achieved by the

combined companies for the periods presented, or the results that may be achieved by the combined companies in the future.

results may vary significantly from the results reflected in the following unaudited pro forma financial information because of

future events and transactions, as well as other factors, many of which are beyond the control of the Company.

Net profit was

calculated using an assumed blended tax rate of approximately 28%.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

Proforma (unaudited)

Operating Income

4 – TRADE RECEIVABLES

OF CONTRACT RECEIVABLES

Contract receivables consist of the following as of:

5 unchanged sentences

plant and equipment as of December 31, 2021, and 2020 consists of the following:

OF PROPERTY, PLANT AND EQUIPMENT

Office equipment

Computer software

Leasehold improvements

Operating lease asset

Property, plant and equipment, gross

Accumulated depreciation

Property, plant and equipment, net

6 – GOODWILL AND OTHER INTANGIBLE ASSETS

Company acquired intangible assets as part of the IQS acquisition in 2019.

The Company recorded $ 518

of goodwill and $ 240

of intangibles from this acquisition.

fourth quarter of 2021, the Company determined through testing using guidance from ASU 2017-04 that the goodwill of $ 518

and remaining $ 170

in intangible assets made up of the IQS trade

name and customer base had been fully impaired and were written off.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

GOODWILL AND OTHER INTANGIBLE ASSETS

Company acquired intangible assets as part of the IQS acquisition during the year ended December 31, 2019 as discussed in Note

The Company recorded $518 of goodwill from this acquisition.

regarding purchased intangible assets as of December 31, 2020 is as follows:

Accumulated Amortization

Net Carrying Value

Customer relationships

regarding purchased intangible assets as of December 31, 2019 is as follows:

Accumulated Amortization

Net Carrying Value

Customer relationships

name and customer relationships are amortized over 10 and 3 years, respectively.

Amortization expense relating to purchased intangible

assets was $33 and $3, for the years ended December 31, 2020 and 2019, respectively.

future amortization expense for the next five years and thereafter is as follows:

Years Ending December 31:

7 - ACCRUED EXPENSES

expenses consist of the following as follows:

OF ACCRUED EXPENSES

Accrued vendor costs

1 unchanged sentence

Accrued expenses

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

8 - INCOME TAXES

tax expense (benefit) for the years ended December 31, 2021, and 2020 are comprised of the following:

OF INCOME TAX EXPENSE

Current federal income tax

2 unchanged sentences

Income tax expense (benefit)

components of the Company’s deferred income tax assets (liabilities) are as follows at:

OF DEFERRED INCOME TAX ASSETS (LIABILITIES)

Deferred tax assets (liabilities):

1 unchanged sentence

Cash to accrual

Accrued workers’

compensation and other

Accrued workers’ compensation and other

State deduction

Acquisition fees

163(j) interest limitation

Federal and State net operating loss carryforwards

Federal and State net operating loss carry forwards

Deferred tax liabilities:

3 unchanged sentences

income tax provision, reconciled to the tax computed at the statutory federal rate, is as follows:

OF INCOME TAX PROVISION, RECONCILED TO TAX COMPUTED AT STATUTORY FEDERAL RATE

Tax expense at federal statutory rate

1 unchanged sentence

Meals and entertainment

Nondeductible acquisition costs

Forgiveness of PPP Loan - Federal

Valuation allowance

1 unchanged sentence

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

Company had notes payable in the amount of $890 as of December 31, 2019, 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.

Pursuant to this agreement, the Company issued to each individual a warrant for 0.5 shares of Company

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

bore interest at 12% per year with the balance becoming due within 1 year from the issuance date unless earlier converted into

shares of Company Common Stock upon the issuance by Reliability of Company Common Stock for gross proceeds of at least $5,000.

Since this did not happen and the Company did not have Common Stock available to convert into these, notes were paid in full as

they became due over a 3-month period between June 2020 and September 2020.

can only be redeemable if the proceeds of $5,000 are secured.

MMG was initially acquired by Vivos Holdings, LLC in December 2016, the Company’s corporate status was changed from an S

Corp to a C Corp due to its new ownership structure.

This triggered an accelerated tax event, a $215 estimated annual impact per

year for 4 years which was accounted for in subsequent tax returns through 2019.

As of December 31, 2020, the Company’s

overall tax liability was $292 which include tax liabilities for 2018, 2019 from completed tax returns and loss carryback provisions

MMG was initially acquired by Vivos Holdings, LLC in December 2016, the Company’s corporate status was changed from an S Corp to

a C Corp due to its new ownership structure.

This triggered an accelerated tax event, a $ 215

estimated annual impact per year for 4 years

which was accounted for in subsequent tax returns through 2019.

In 2021 Maslow completed settlement of the estimated

tax liability caused by the Vivos Group in 2017,

paying the final estimated portion of $ 300

As of December 31, 2021, the Company’s overall

tax liability was $ 517

compared to $ 292

at the end of 2020.

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

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%.

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

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 .

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

The amount 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 balance.

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 December 31, 2020,

the required amount was 10%.

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

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 December 31, 2021, the required amount was

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

shortfall exists for a period of ten-days, the Company is required to make payment to the financial institution for the shortage.

Capital Management

order to be able to factor IQS invoices after the IQS asset acquisition as discussed in Note 4, the Company took on a factoring

relationship with Wilco Capital Management (formerly known as First Avenue Funding, LLC) (“Wilco”).

The original agreement

was signed on January 7, 2019 with a minimum monthly volume of $125 with a maximum advance of $500 for a term of one year.

advanced rate was 90% of eligible accounts receivable (as defined by the agreement) and a finance rate of 1.275% per month and

adjusted with any increase to the prime rate.

As of December 31,

2019, the outstanding balance was $479.

This relationship ended on March 31, 2020, when Triumph bought out this factoring relationship.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

receivable were sold with full recourse.

If a reserve shortfall exists for a period

of ten-days, the Company is required to make payment to the financial institution for the shortage.

receivables were sold with full recourse.

Proceeds from the sale of receivables were $ 6,436 and $ 13,787 for the years ended December

3 unchanged sentences

Factoring Facility is collateralized by substantially all the assets of the Company.

In the event of a default, the Factor may

demand that the Company repurchase the receivable or debit the reserve account.

In the event of a default, the Factor may demand

that the Company repurchase the receivable or debit the reserve account.

Total finance line fees for the years ended December 31, 2021,

and 2020 totaled $ 71

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.

The PPP provides that the Company may apply for forgiveness of this loan

if the loan proceeds were used for payroll and certain other specified operating expenses while maintaining specified headcount

requirements.

The accrued interest on the PPP loan as of December 31, 2020 was $34.

June 5, 2020, the Paycheck Protection Program Flexibility Act (the “PPPF Act”) went into effect providing more flexibility

to participants in the PPP which included extending the time to begin repayment of the PPP loan until the amount of forgiveness,

if any, is determined, which could be as late as December 31, 2020.

The Company may apply for forgiveness earlier if they determine

that doing so will maximize the amount of loan forgiveness (see Note 17).

February 2020, the Company took out a $250 6-month term loan from 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 December 31,

2020, $37 was outstanding under the Triumph Term Loan Arrangement.

VARIABLE INTEREST ENTITY (VIE)

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

related parties, 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

This obligation had not been included in Maslow’s financial statements and were not separately disclosed prior to

GAAP requires the Company to assess whether VREH is a variable interest entity (“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.

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.

respectively.

June 10, 2021, MMG received notification by the Small Business Administration (“SBA”)

of forgiveness of its PPP 2020 Loan totaling $ 5,216 .

The forgiveness included the deferred interest of $ 59

in principal and interest.

was booked as of June

10, 2021, which was the portion credited to interest expense.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

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 was considered

the primary beneficiary of the VIE.

to a lack of cooperation from VREH, the Company had not been able to acquire financial information about this entity for consolidation

purposes prior to 2019.

As a result, the Company has consolidated this entity for 2019.

assets and liability of the consolidated VIE were comprised of the following:

Office equipment

Accumulated depreciation

Liabilities assumed

Total net assets consolidated

addition, the related party note receivable with the VIE in the amount of $772 was eliminated in 2019.

potential financial exposure to loss as a guarantor could equal all the book value of the related party mortgage loan payable,

a total of approximately $1,745 as of December 31, 2020, with $126 due within the next year.

VREH is currently three months behind

To date, the Company has not been called on for any loan repayment guarantee.

The Company believes there is adequate

equity in the property should the bank decide to foreclose, and the Company decides not to make past due payments.

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

As a result, VREH was considered a

VIE for only four months of the 2020 fiscal year.

Note 14 for details on the related party notes receivable.

10 – COMMITMENTS AND CONTINGENCIES

Company is engaged from time to time in legal matters and proceedings arising out of its normal course of business.

establishes a liability related to its legal proceedings and claims when it has determined that it is probable that the Company

has incurred a liability and the related amount can be reasonably estimated.

If the Company determines that an obligation is reasonably

possible, the Company will, if material, disclose the nature of the loss contingency and the estimated range of possible loss,

or include a statement that no estimate of the loss can be made.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

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

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.

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.

the Parties acknowledged and agreed, that the Credit Cash relationship benefitted Parties other than Maslow, certain of the Parties

and their related parties, executed and delivered to the Company 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”).

the Liquidation Agreement the parties thereto pledged shares of Company Common Stock to Maslow to be used to obtain releases from

the Lenders defined therein, including Credit Cash and its affiliates.

The Liquidation Agreement permits Maslow to either transfer

the shares to the Lenders in satisfaction of the outstanding obligations or to arrange for the sale of the shares and using the

cash to satisfy such obligations.

are a number of debts and confessions of judgement (“COJ”) related to the Vivos Group that included Maslow as a co-signer

or guarantor at some stage in the Vivos Group debt process from November 2016 through October 29, 2019, when Vivos Holdings LLC owned

All known debts disclosed to Maslow management and Reliability prior to the merger were addressed by various safeguards such

as the Liquidation Agreement, and the Naveen Doki personal guarantee described in Item 1.

However, there were certain non-disclosures

by Vivos Holdings, LLC that are included below which are completely covered in Note 12 and Item 3 Legal Proceedings.

December 2019, the Company’s executive management learned that prior to the Merger, in January 2018, one of the Company’s

related parties, 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.

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

March 3, 2022, Maslow received a notice of default, acceleration, and demand for payment in full from FVCBank due to incurable

events of default on behalf of Borrower Vivos Real Estate Holdings LLC.

Per the default notice, “As of March 2, 2022, the

total indebtedness due and owing under the Loan (the ‘‘Debt’’) is $ 1,743 consisting

of an unpaid principal balance in the amount of $ 1,703 accrued

and unpaid interest in the amount of $ 7 ,

deferred payments in the amount of $ 20 and

late fees in the amount of $ 12 plus

prepayment penalties and attorneys’ fees, costs and expenses,” less setoff fees of $ 16 .

Maslow may have grounds to contest it being a guarantor

Maslow has not been formally notified of an obligation to pay Credit Cash due to a now known default on Vivos Group’s COJ.

October 9, 2018, Maslow Media Group, Inc.

was named as a defendant in an Affidavit of Confession of Judgment filed in the Supreme

Court of the State of New York in relation to a case brought by Hop Capital, which the defendants collectively agree to pay a

sum of $400 to Hop Capital.

was named as a defendant in an Affidavit of COJ filed in the Supreme Court of the State of

New York in relation to a case brought by Hop Capital against members of the Vivos group, which had collectively agreed to pay a sum

to HOP Capital.

Maslow Media Group, Inc.

is named as one defendant among six other defendants, all of which are entities

related to the Vivos Group.

The claim brought by Hop Capital against the defendants in this case is in relation

to a Merchant Agreement dated October 4, 2018;

an agreement to which Maslow Media Group, Inc.

as one defendant among six other defendants.

The claim brought by HOP Capital against the defendants in this case is in relation to a

Merchant Agreement dated October 4, 2018, to which Maslow Media Group, Inc.

was not a party.

As such, Maslow

Media Group, Inc.

contends that being named in the Affidavit of Confession of Judgment as a defendant was made in error and is

currently seeking to have its name removed from Affidavit of Confession of Judgment as a defendant.

As of March 2021, we have

not been contacted again on this matter, nor have we been notified on any developments The Company will defend itself from this

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

against Vivos Holdings, LLC, Vivos Real Estate Holdings, LLC and Naveen Doki, to enforce Maslow’s rights under certain promissory

notes and a personal guarantee made by the defendants.

The case is proceeding.

The Company believes that it will be granted a

judgment in its favor.

The Company intends to continue to vigorously prosecute this litigation.

On February 28,

2020, Healthcare Resource Network, LLC filed a complaint against Maslow in the Circuit Court of Montgomery County, Maryland alleging

that Maslow participated with the Vivos Group to financially harm the plaintiff.

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.

16th, 2020, CC Business Solutions, a division of Credit Cash NJ, LLC domesticated a foreign judgement in the Montgomery County

Circuit Court system again Health Care Resources Network (HCRN), Maslow Media Group, Vivos Holdings, LLC, Vivos Acquisitions,

LLC, Naveen Doki and Silvija Valleru.

This foreign judgement relates to Vivos Holdings adding Maslow Media Group as a guarantor

on a loan made to Health Care Resources Network which is in default by HCRN and Vivos Holdings.

Foreign judgement total

This judgement relates to the default on the settlement agreement dated December 10, 2018 referenced above.

5th, 2020, Libertas Funding, LLC domesticated a foreign judgement in the Montgomery County Circuit Court system again Health Care

Resources Network (HCRN), Maslow Media Group, Vivos Holdings, LLC, Vivos Acquisitions, LLC, Vivos IT, LLC, Vivos Global Services,

LLC, Alliance Micro, Inc.

and Naveen Doki.

This foreign judgement from the State of New York relates to loans the Vivos

Group took out by adding Maslow Media Group additional collateral.

This loan is currently in default.

Foreign Judgement

total is $229.

5th, 2020, Kinetic Direct Funding domesticated a foreign judgement in the Montgomery County Circuit Court system again Health

Care Resources Network (HCRN), Maslow Media Group, US IT Solutions Inc., 360 IT Professionals, Alliance Micro, Inc.

This foreign judgement from the State of New York relates to loans the Vivos Group took out by adding Maslow Media

Group as additional collateral.

This loan is currently in default.

Foreign Judgement total is $579.

5th, 2020, Libertas Funding, LLC domesticated a foreign judgement in the Montgomery County Circuit Court system again Health Care

Resources Network (HCRN), Maslow Media Group, Vivos Holdings, LLC, Vivos Acquisitions, LLC, Vivos IT, LLC, Vivos Global Services,

LLC, Alliance Micro, Inc.

and Silvija Valleru.

This foreign judgement from the State of New York relates to loans the Vivos

Group took out by adding Maslow Media Group additional collateral.

This loan is currently in default.

Foreign Judgement

total is $229.

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.

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.

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

(the “Arbitration”) with the American Arbitration Association in New York, and to the Respondents thereto:

Silvija Valleru;

Shirisha Janumpally (individually and in her capacity as trustee of Judos Trust);

Kalyan Pathuri (individually

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 if granted will likely be the remedy set forth within the Merger Agreement which is 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 which is currently being decided by the Federal Courts in New York.

The Company 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.

June 12, 2020, Igly Trust, a Vivos entity, asked the Texas court for an injunction requiring the Company to provide a shareholder

list and to hold a shareholder meeting.

On October 20, 2020, the Texas court denied the injunction but, incongruously, dismissed

all the Vivos plaintiffs for lack of personal jurisdiction.

The Company appealed the dismissal because the court had jurisdiction

over Igly Trust once it made affirmative claims in Texas and because the Court’s order denying the injunction is an important

precedent for establishing that the directors under Texas law retain control of shareholder lists and determining the timing of

shareholder meetings.

December 23, 2020, at a hearing in the Maryland District Court, a motion by the Vivos Group to compel a shareholder

meeting was summarily dismissed.

The judge agreed with the Company that permitting the Vivos Group to vote their

shares at a meeting of shareholders could materially harm the interests of the Company as a whole, its employees and minority

shareholders.

This judge will be presiding over a full trial regarding these matters over a two-week period starting on October

4, 2021, absent any COVID-19 disruptions that could affect scheduling.

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.

As such, Maslow Media Group, Inc.

contends that being named in the Affidavit of COJ as a defendant was made in error and is currently seeking to have its name removed

from Affidavit of COJ as a defendant.

As of March 24, 2022, we have not been contacted again on this matter, nor have we been notified

on any developments.

February 28, 2020, Healthcare Resource Network, LLC filed a complaint against Maslow in the Circuit Court of Montgomery County, Maryland

alleging that Maslow participated with the Vivos Group to financially harm the plaintiff.

The plaintiff has not specified any alleged

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

or about May 6, 2020, the Vivos Debtors and other Vivos Group members, specifically.

Pathuri, Judos, and Igly responded to the Vivos

Default Claim with the “Vivos Default Counterclaim”.

The Company continues to believe that the Counterclaim has no merit

and is vigorously defending itself and its indemnified officers, directors and other parties as permitted by the Company’s organizational

documents, via a March 2022 arbitration hearing which both parties agreed on September 7, 2021, to resolve their disputes before a single

arbitrator in Maryland.

The hearing began on March 21 and is set to conclude on March 30, 2022.

A decision isn’t anticipated

until sometime in the late second quarter.

At the present time,

the Company is uncertain as to whether any of the above items will have a material impact on their consolidated financial statements.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

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.

12 - RELATED PARTY TRANSACTIONS

Purchase Agreement

November 9, 2016, Vivos Holdings LLC ( “

Vivos ”

), a related party affiliate and former owner

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

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

November 9, 2016, Vivos Holdings LLC, the former owner of MMG, acquired 100 %

of MMG through a stock acquisition exchange for a purchase price of $ 1,750 ,

was paid at settlement with proceeds from MMG

and (ii) a promissory note to pay the remaining $ 350

(“Vivos/MMG Purchase Agreement”).

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 Holdings subsequently entered into a promissory note receivable with the Company, described below,

for the full stock purchase price.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

The Company has notes receivable from Vivos

Holdings and VREH, a member of the Vivos Group, both related party affiliates.

In connection with the stock purchase agreement

noted above, on November 15, 2016, the Company executed a promissory note receivable with Vivos Holdings in the amount

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 20 equal consecutive

payments, quarterly.

These payments were paid by the MMG on behalf of the Vivos Debtors.

The Vivos Debtors subsequently entered into a promissory note receivable

with the MMG, described below, for the full stock purchase price.

No payment has ever been made against this note and between 2018

to present there has been $ 2,503 in additional borrowing.

Company has notes receivable from Vivos Holdings, LLC and VREH, a member of Vivos Group, both related party affiliates due to their ownership

percentage in the Company.

In January 2021, MMG began applying the legal minimum rate of interest which per Virginia statute is 8.0 %

on two of the three defaulted notes receivable below.

Per Code of Virginia the legal rate of interest shall be implied when there is

an obligation to pay interest and no express contract to pay interest at a specified rate.

However, it was determined that the two notes

had clauses capping the default interest at 4.5 % and 5.5 % respectively.

The rate adjustment for the allowed periods were made using the

eligible agreement rates.

connection with the Vivos/MMG Purchase Agreement, on November 15, 2016, MMG executed a promissory note receivable with Vivos Holdings

LLC in the amount of $ 1,400 .

As defined by the Vivos/MMG Purchase 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 would accrue monthly and

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

During the second loan period, interest shall be paid in

20 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 Holdings to the seller by the Company.

These payments, plus any other payments made by the Company on behalf of Vivos Holdings, 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 Holdings.

As of December 31, 2020, and 2019, the total outstanding balances were $2,736 and $2,666,

which includes accrued interest receivable of $229 and $162, respectively.

On November 15, 2017, the Company executed

an intercompany promissory note receivable with VREH in the amount of $772.

As defined by the agreement, the loan consists of

two periods, whereby the first period from November 15, 2017 until March 31, 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 March 31, 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 Holdings.

In addition, principal

payments totaling $30 were made by Vivos Holdings.

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

$753 and $772, respectively.

On June 12, 2019, Maslow entered into

a Personal Guaranty agreement with Mr.

Doki, pursuant to which Mr.

Naveen Doki personally guaranteed to Maslow the 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.

Doki is a 5% or greater beneficial holder of Company Common Stock, and

therefore is a related party.

As of February 2020, the Company filed a lawsuit against the majority stockholder, pursuant to the

personal guaranty agreement for defaulting on the outstanding notes receivables.

In summary the Vivos Holdings receivable

totaled $4,169 on December 31, 2019 which included $2,007 of additional borrowings over the period between November 2016 and December

As of December 31, 2020, the receivable totaled $4,258.

Interest during both loan periods

accrues at a rate of 2.5 %.

Additionally, monthly payments of $ 15 are made on behalf of Vivos Holdings, Inc.

to the seller by MMG.

payments, plus any other payments made by MMG on behalf of Vivos Holdings, LLC, are added to the principal balance of the promissory

note receivable (“Vivos/MMG Purchase Agreement Note Receivable”).

In 2018, all quarterly interest payments to be made in

phase 2 were offset by the management fees due to Vivos Holdings.

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

As defined by the agreement, the loan consists of two periods, whereby the first period from November 15, 2017, until September 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.

the second period, interest is payable in 20 equal consecutive installments and the principal balance plus accrued and unpaid interest

is due September 30, 2023.

Interest during both periods accrues at a rate of 3.5 %

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

In addition, principal payments totaling $ 30

were made by the Vivos Group.

As of December

31, 2021, the total outstanding balance was $ 816

which includes accrued interest receivable of

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

Doki, pursuant to which Dr.

Naveen Doki personally guaranteed

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

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

Doki is a 5 % or greater beneficial holder of Company Common

Stock, and therefore is a related party.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

September 5, 2019, Maslow entered into a Secured Promissory Note agreement with Vivos Holdings, 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 Holdings 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 Holdings 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.

In addition, both Naveen Doki and Silvija Valleru personally guaranty

the repayment of the note by Vivos Holdings.

Naveen Doki and Silvija Valleru are beneficial owners of Vivos Holdings

and are also 5% or greater beneficial owners of Company Common Stock.

As of December 31, 2020, and 2019, the total

outstanding balance was $769 and $752, respectively which includes interest of $19 and $2 respectively.

of February 2020, the Company filed a lawsuit against the majority shareholder, pursuant to the personal guaranty agreement for defaulting

on the outstanding notes receivables.

summary, the Vivos Group receivable totaled $ 4,258 on December 31, 2020, which included $ 2,007 of additional borrowings over the period

between November 2016 and December 31, 2109.

As of December 31, 2021, the receivable totaled $ 4,985 .

September 5, 2019, MMG entered into a Secured Promissory Note agreement with Vivos, pursuant to which MMG issued a secured promissory

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

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

monthly payments to MMG 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, MMG 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.

both Naveen Doki and Silvija Valleru personally guaranty the repayment of the note by the Vivos Group.

Naveen Doki and Silvija Valleru

were beneficial owners of Vivos and are also 5 % or greater beneficial owners of Company Common Stock, which is qualified by the Merger

Arbitration complaint.

As of December 31, 2021, the total outstanding balance was $ 790 , which includes interest of $ 20 .

Settlement Agreements

On July 10, 2018, Vivos Holdings

executed a receivable financing agreement with a financial institution and agreed to remit $670 of accounts receivable over a

six-month period through daily remittances of $5 in exchange for $485.

The agreement is guaranteed by Vivos Holdings, both

shareholders and Maslow.

In October 2018, Vivos defaulted on the agreement and on October 25, 2018, executed a settlement agreement

whereby Maslow was to pay the outstanding balance over eleven installments with the final amount due August 31, 2019.

outstanding balance as of December 31, 2018 was $212.

As of December 31, 2020, and 2019, there was no outstanding balance

On July 5, 2018, Vivos Holdings executed

a receivable financing agreement with a financial institution whereby Vivos Holdings agreed to remit $556 of accounts receivable

over a six-month period through daily remittances of $4 in exchange for $400.

The agreement was guaranteed by Vivos Holdings,

it’s shareholders and the Company.

In October of 2018, Vivos Holdings defaulted on the agreement and on January

24, 2019, executed a settlement agreement whereby the Company is to pay the outstanding balance over eight installments with the

final amount due August 31, 2019.

On July 10, 2018, the Company (as a “merchant”) and Vivos Holdings (as a

“owner/guarantor”) entered into a receivable financing agreement with Kinetic Direct Funding LLC pursuant to which

the Company and Vivos Holdings agreed to remit $670 of the Company’s accounts receivable over a six-month period

through daily remittances of $5 in exchange for $485 (the “Kinetic Financing Agreement”).

The agreement is guaranteed

by Vivos Holdings as well as Naveen Doki in his individual capacity, and an owner of Vivos Holdings.

of 2018, there was a default under the Kinetic Financing Agreement by Vivos Holdings.

On October 25, 2018, the Company,

Naveen Doki, Silvija Valleru, and Vivos Holdings (among other entities) entered into a settlement agreement with Kinetic

Direct Funders LLC in relation to default of the Kinetic Financing Agreement whereby the Company is to pay the outstanding balance

over eleven installments with the final amount due August 31, 2019.

On April 10, 2019, the settlement agreement was amended extending

the remaining payment term to July 15, 2020.

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

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

shareholders’

obligations under the Settlement Agreements.

As of October 31, 2019, the Company has paid its portion of the

outstanding balance due under the settlement agreement in full.

On August 10, 2017, Vivos Holdings 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 Holdings,

and Vivos Acquisitions, LLC, via Mr.

Naveen Doki and Mrs.

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”).

July 21, 2021, Maslow settled the obligation which Vivos Holdings, LLC had obligated Maslow to in July 2018, with Libertas Funding, LLC

and Kinetic for $ 475 .

(See Section 1A).

March 6, 2022, Maslow received a notice of default, acceleration, and demand for payment in full from FVCBank due to incurable

events of default on behalf of Borrower Vivos Real Estate Holdings LLC.

(See Note 10).

Party Relationships

October 29, 2019, prior to the Merger, pursuant to the Merger Agreement, Naveen Doki and Silvija Valleru became beneficial owners of

206,606,528 and 51,652,908 shares of RLBY Common Stock, respectively, equal to 68.9 % and 17.2 % of the total number of shares of RLBY

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

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.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

addition, pursuant to the same agreement, Credit Cash advanced to Healthcare Resource Network, a company owned by the Vivos Group

(“HCRN”) a credit facility in the principal amount of $1,005 (“HCRN Credit Facility”).

Each of Maslow, Vivos

Holdings, Vivos Acquisitions, LLC, Mr.

Naveen Doki and Mrs.

Silvija Valleru guaranteed the HCRN Credit Facility.

To secure repayment of their guarantee obligations, the Company and Vivos Holdings 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 Holdings, Vivos Acquisitions, LLC, Mr.

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 Holdings 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 Holdings, 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.

As of December 31, 2019, the Company had repaid the outstanding balance due for the Maslow

Credit Facility under the settlement agreement in full.

Party Relationships and Transactions

October 29, 2019, prior to the Merger, pursuant to the Merger Agreement, Naveen Doki and Silvija Valleru became beneficial owners of

206,606,528 and 51,652,908 shares of RLBY Common Stock, respectively, equal to 68.9% and 17.2% of the total

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

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.

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 then 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.

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

and controlled by Mark Speck (“Mr.

Speck”), an officer and then director of Maslow.

to this agreement, MMG 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 bore interest at 12 % per year, with the balance of $ 56 paid in full on June 26,

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

July 31, 2019, prior to the Merger, MMG entered into a Securities Purchase Agreement with Mr.

Speck, the Company issued to this individual

a Warrant for 81,616 (on a post-Merger basis) shares of MMG Common Stock and a convertible promissory note of same date in the initial

principal amount of $ 50 , in exchange for $ 50 .

The note bore interest at 12 % per year, with balance of $ 56 paid in full on August 4, 2020.

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

Pursuant to this agreement, the Company issued to this individual 32,646 (on a post-Merger basis) shares of MMG Common Stock,

and a Warrant to purchase 16,323 (on

post-Merger basis) shares of the MMG Common Stock, and a Convertible Promissory Note of same date in the initial principal amount of

$ 100 , in exchange for $ 100 .

The note bore interest at 12 % per year, with balance of $ 112 becoming due and paid in full on July 31, 2020.

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

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

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 MMG agreed to assume the LOI and reimbursed Hawkeye for the deposit.

reimbursement took place on May 8, 2020, totaling $ 83 .

term “warrant” herein refers to warrants issued by MMG and assumed by the Company as a result of the Merger.

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” 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 $ 5,000 .

The exercise price per full share of the Company common stock shall be 120 % of the

average sale price of the Company 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 Company 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 liability on balance sheet because of uncertainty around their pricing, value

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

September 7, 2021, the Company entered in Arbitration and Tolling Agreements with alleged shareholder Naveen Doki, M.D., and his affiliates

and all other persons who were parties to the pending litigation previously reported in the Texas, New York and Maryland courts and before

the American Arbitration Association.

The Agreements call for the stay or dismissal of the pending litigation, with the parties agreeing

to resolve their disputes before a single arbitrator in Maryland.

The parties also agreed to maintain the status quo in corporate governance

and related matters pending a final non-appealable judgment confirming any award in arbitration.

The parties also signed a Tolling Agreement

to toll the statute of limitations following the dismissal of a pending litigation.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

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 bore interest

at 12% per year, with balance of $112 becoming due and paid on July 31, 2020.

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 reimbursed

Hawkeye for the deposit.

The reimbursement took place on May 8, 2020 and totaled $83.

term “warrant”

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

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”

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 $5,000.

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 liability on balance sheet because of uncertainty around their pricing, value and

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

13 - EMPLOYEE BENEFIT PLAN

Company provides a defined contribution plan (the “401(k) Plan”) for the benefit of its eligible full-time employees.

The 401(k) Plan allows employees to make contributions subject to applicable statutory limitations.

The Company currently does

not match employee contributions.

AND SUBSIDIARY

TO CONSOLIDATED FINANCIAL STATEMENTS

in thousands)

Company provides a defined contribution plan (the “401(k) Plan”) for the benefit of its eligible full-time employees.

401(k) Plan allows employees to make contributions subject to applicable statutory limitations.

The Company currently does not match

employee contributions.

14 - BUSINESS SEGMENTS

Company operates within three industry segments:

EOR, Recruiting and Staffing, and Video and Multimedia Production.

The EOR segment

provides media field talent to a host of large corporate customers in all 50 states.

The Recruiting and Staffing segment provides

skilled Media and IT field talent on a nationwide basis for customers in a myriad of industries.

The Video and Multimedia Production

segment provides Script to Screen services for corporate, government and non-profit clients, globally.

Company operates within four industry segments:

EOR, Recruiting and Staffing, Permanent Placement (Direct Hire) and Video and Multimedia

The EOR segment provides media field talent to a host of large corporate customers in all 50 states.

The Recruiting and Staffing

segment provides skilled Media and IT field talent on a nationwide basis for customers in a myriad of industries.

Permanent Placement

fulfils direct hire requests by MMG clients for a wide variety of posts, including administrative, media and IT professionals.

and Multimedia Production segment provides Script to Screen services for corporate, government and non-profit clients, globally.

operating income includes revenue and cost of services only.

1 unchanged sentence

costs at the segment level.

following table provides a reconciliation of revenue and operating income by reportable segment to consolidated results for the

periods indicated:

following table provides a reconciliation of revenue and operating income by reportable segment to consolidated results for the periods

SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS

Recruiting and Staffing

Video and Multimedia Production

Permanent Placement

15- SUBSEQUENT EVENTS

Company has evaluated subsequent events after the balance sheet date of December 31, 2020 through March 16, 2020, the date on

which the consolidated financial statements were available to be issued.

Based upon this evaluation, management has determined

that no material subsequent events have occurred that would require recognition in or disclosures in the accompanying consolidated

financial statements, except as follows:

March 4, 2021, Maslow Media Group submitted an application with the SBA for 100% forgiveness of its PPP loan payable.

Company has evaluated subsequent events after the balance sheet date of December 31, 2021, through March 31, 2021, the date on which

the consolidated financial statements were available to be issued.

Based upon this evaluation, management has determined that no material

subsequent events have occurred that would require recognition in or disclosures in the accompanying consolidated financial statements,

except as follows:

March 6, 2022, Maslow received a notice of default, acceleration, and demand for payment in full from FVCBank due to

incurable events of default on behalf of Borrower Vivos Real Estate Holdings LLC.

Per the default notice, “As of March 2,

2022, the total indebtedness due and owing under the Loan (the ‘‘Debt’’) is $ 1,743 consisting

of an unpaid principal balance in the amount of $ 1,703 accrued

and unpaid interest in the amount of $ 7 ,

deferred payments in the amount of $ 20 and

late fees in the amount of $ 12 plus

prepayment penalties and attorneys’ fees, costs and expenses,” less setoff fees of $ 16 .

Notwithstanding, Maslow has grounds to protest its status as a guarantor on the loan and is pursuing this matter with FVCBank.

assurances can be made to guarantee that the outcome of this matter is in the Company’s favor.

March 21, 2022, the Company began its arbitration proceedings against the Vivos Group that is slated to run into the

2 nd quarter of 2022, with anticipation of a decision by July 7, 2022.

Maslow contends

the Vivos Group committed merger violations and continues to pursue the defaults on the related party notes receivable.

of the arbitration could result in relinquishment in whole or in part shares of Company common stock received by the Respondents in

connection with the Merger.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data