What changed in this filing

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Item 1. Financial Statements

2022-05-16 compared with 2021-11-15 · 328 added, 545 removed, 220 unchanged (80% of the section changed)

3 unchanged sentences

in thousands, except per share data)

September 30, December 31,

CURRENT ASSETS

1 unchanged sentence

Trade receivables, net of allowance for doubtful accounts

Retention credit receivable

Notes receivable from related parties

2 unchanged sentences

Property, plant and equipment, net

Other intangible assets, net

LIABILITIES AND SHAREHOLDER’S EQUITY

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Factoring Liability

Accounts payable

5 unchanged sentences

Total current liabilities

PPP loan payable

Total liabilities

1 unchanged sentence

Subsequent events (Note 10)

SHAREHOLDER’S EQUITY

Common stock, without par value, 300,000,000 shares authorized, 300,000,000 issued and outstanding as of September 30, 2021, and as of December 31, 2020

SHAREHOLDERS’ EQUITY

Common stock, without par value, 300,000,000 shares authorized, 300,000,000 issued and outstanding as of March 31, 2022, and as of December 31, 2021

Additional paid-in capital

Retained earnings

Total shareholder’s equity

Total liabilities and shareholder’s equity

Total shareholders’ equity

Total liabilities and shareholders’ equity

accompanying notes are an integral part of these statements.

2 unchanged sentences

in thousands, except per share data)

For the Three Months Ended September 30,

For the Three Months Ended March 31

Revenue earned

11 unchanged sentences

Consolidated net income (loss)

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

Net income (loss) attributable to Reliability Inc.

Net income per share:

1 unchanged sentence

accompanying notes are an integral part of these statements.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

in thousands, except per share data)

For the Nine Months Ended September 30,

Revenue earned

Service revenue

Cost of revenue

Selling, general and administrative expenses

Operating loss

Other income (expense)

Interest income

Interest expense

Other income (expense)

Income (loss) before income tax (expense) benefit

Income tax (expense) benefit

Consolidated net income (loss)

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

Net income (loss) attributable to Reliability Inc.

Net income per share:

Share used in per share computation:

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY

the Nine Months Ended September 30, 2021, and 2020

the Three Months Ended March 31, 2022, and 2021

in thousands, except per share data)

Controlling Interest

Non-Controlling

Balance, December 31, 2020

VIE consolidation

Balance, September 30, 2020

$ 300,000,000

Balance, March 31, 2021

Balance, December 31, 2021

Net income (loss)

Balance, September 30, 2021

$ 300,000,000

Beginning Balance

$ 300,000,000

Balance, March 31, 2022

Ending Balance

accompanying notes are an integral part of these statements.

2 unchanged sentences

in thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31

Cash flows from operating activities:

Net income (loss)

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

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

Depreciation and amortization

Accrued interest

(Gain)/Loss on disposal of property and equipment

Gain on forgiveness of PPP loan payable

Changes in operating assets and liabilities:

Accounts receivables

Trade receivables

Retention credit receivable

Prepaid expenses and other current assets

2 unchanged sentences

Accrued expenses

Deferred revenue

Other liabilities

Income taxes payable

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

3 unchanged sentences

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

Proceeds from long term debt (PPP)

Repayment of note payable

Borrowing of note payable

Advances to related Parties

Repayment of notes receivable from related parties

Net cash used in financing activities

Net cash provided by (used in) financing activities

Net decrease in cash and cash equivalents

5 unchanged sentences

in thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Supplemental disclosures of non-cash investing and financing activities:

The Company received forgiveness from the SBA of its PPP loan payable

accompanying notes are an integral part of these statements.

Cash paid during the year for:

INCORPORATED AND SUBSIDIARY

10 unchanged sentences

Our Staffing segment occasionally received requests for (direct) placements.

Because of an uptick in direct hire requests in

2021, factoring in the much higher margins that business derives, MMG decided to add Permanent (Direct) Placement as a stand-alone

business segment.

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

Because of an uptick in direct hire requests in 2021, factoring

in the much higher margins that business derives, MMG decided to add Permanent (Direct) Placement as a stand-alone business segment.

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

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

1 unchanged sentence

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

Holdings LLC, the previous sole shareholder of MMG and their transferees who were issued shares of Reliability Common Stock include Naveen

Doki, Silvija Valleru, Shirisha Janumpally (through Judos Trust and Federal Systems), and Kalyan Pathuri (through Igly Trust) together

own approximately 84 % of the issued and outstanding shares of Reliability Common Stock.

Vivos Holdings, LLC and Vivos Real Estate

Holdings, LLC and Mr.

Doki have outstanding notes with MMG that date back to acquisition of MMG in November 2016 (See Note 9) (collectively

“Vivos Debtors”).

November 9, 2016, Linda Maslow sold the business to Vivos Holdings, LLC (“Vivos Holdings”) owned by Dr.

Doki”) and Silvija Valleru (“Ms.

2018, Vivos Holdings and several other Vivos companies, (“Vivos Group”) engaged an investment banker who approached management

of Reliability to discuss a potential reverse merger transaction.

The other investors who collaborated on a share swap of MMG for other

Vivos companies were Shirisha Janumpally (“Mrs.

Janumpally”) ,

Doki, and Kalyan Pathuri (“Mr.

Pathuri”), husband of Silvija Valleru.

4 individuals, Dr.

Janumpally, Mr.

Doki, and Mr.

Pathuri also have common ownership combinations in a number of other entities [Vivos Holdings, LLC.

Real Estate Holdings, LLC (“VREH”), Vivos Holdings, Inc., Vivos Group, Vivos Acquisitions, LLC., and Federal Systems, LLC],

(collectively referred to herein as “Vivos Group”).

Pathuri, and Mrs.

Valleru also have common ownership combinations in a number of

other entities [Vivos Holdings, LLC.

Vivos Real Estate Holdings, LLC (“VREH”), Vivos Holdings, Inc., Vivos Group, Vivos Acquisitions,

LLC., and Federal Systems, LLC], (collectively referred to herein as “Vivos Group”).

reverse merger was consummated on October 29, 2019.

As a result of the Merger, the Vivos Group (Vivos Holdings LLC, officially)

acquired approximately 84 %

of the issued and outstanding shares of Reliability which were distributed by Vivos Holdings LLC.

October 29, 2019, MMG became a wholly owned subsidiary of Reliability by merging R-M Merger Sub, Inc., a Virginia corporation and a wholly

owned subsidiary of Reliability, with and into Maslow, with MMG being the surviving corporation (the “Merger”).

is more fully described in our Current Report on Form 8-K filed on October 30, 2019.

Company ceased to be a “shell” company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, (the

“Exchange Act”) by virtue of its ownership of MMG following the Merger.

The acquisition of MMG also resulted in a “change

in control” of Reliability.

or about February 25, 2020, the Company, as plaintiff, filed a complaint with the Circuit Court of Montgomery County, Maryland against

Vivos Debtors (“Vivos Default Claim”) (See Note 7).

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

Kaylan Pathuri (“Pathuri”), Judos Trust

by Shirisha Janumpally, its trustee (“Judos”) and Igly Trust by Kaylan Pathuri, its trustee, (“Igly”) responded

to the Vivos Default Claim with a Counterclaim and Third-Party Complaint (the “Vivos Default Counterclaim”).

June 5, 2020, Reliability commenced an arbitration seeking to address purported merger violations before the American Arbitration Association

The remedy for the nature and extent of the alleged violations, per the merger agreement, is the forfeiture of Vivos

Group shares.

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

Vivos Holdings, LLC, Vivos Real Estate Holdings, LLC and Dr.

Doki (collectively “Vivos Debtors”), to enforce Maslow’s

rights under certain promissory notes and a personal guarantee made by the Dr.

On or about May 6, 2020, the Defendants filed a

counterclaim and third-party complaint for Damages, declaratory and injunctive Relief and jury Demand (the “Counterclaim”).

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

Company also began pursuing arbitration in New York in 2020 which was the contractual remedy for breaches of the Merger agreement between

MMG and Reliability.

It is the Company’s contention that the Vivos Group failed to disclose several material pieces of information

to Reliability management pre-merger as was required by the Merger agreement.

Additionally, the Vivos Group declined to honor a number

of commitments made to Reliability including a $3,000 promissory note and an agreement to shield the Company from their personal debt

per the “Liquidation Agreement” (See 1A and Item 3).

Per the Merger Agreement, these breaches can lead to a loss of up to

all shares in Reliability for the Vivos group.

December 23, 2020, at a hearing in the Maryland Circuit Court of Montgomery County, Maryland, a motion by the Vivos Group to compel a

shareholder meeting was summarily dismissed.

On January 20, 2021, Defendants and Counter/Third-Party Plaintiffs, Vivos, VREH, Dr.

Pathuri, Igly, Judos, by counsel, filed a Notice of Appeal on the dismissal.

However, the deadline to pursue the

appeal lapsed absent additional filings by the Vivos Group.

July 21, 2021, MMG settled the obligation which with it had been committed by Vivos Holdings, LLC in July 2018, with Libertas Funding,

LLC and Kinetic for $ 475 .

This debt belonged to Vivos Holdings LLC, and the aforementioned Liquidation Agreement, had been created as

a safeguard to shelter MMG should Vivos Holdings, LLC default, which actually transpired prior to the Merger closing in October 2019.

(See Section 1A).

September 7, 2021, the Company entered to Arbitration and Tolling Agreements with the (the “Agreements”) Vivos Group 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 (See Note 7).

to resolve their disputes before a single arbitrator in Maryland.

March 21, 2022, the Company began its arbitration proceedings against the Vivos Group.

MMG contends the Vivos Group committed merger

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

with the Merger.

We anticipate an arbitration decision in the third quarter 2022.

refer below to the disputes between Reliability and the Vivos Group as the “Vivos Matter.”

a final resolution as to the underlying ownership and rights of certain shareholders, the Company intends to hold an annual meeting of

shareholders within a reasonable time thereafter.”

of presentation

2 unchanged sentences

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

These unaudited

consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S (“U.S.

GAAP”) for interim financial information and with instructions to Form 10-Q.

Operating results of the interim periods are not necessarily

indicative of financial results for the full year.

These unaudited consolidated financial statements should be read in conjunction with

the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year

ended December 31, 2020.

In preparing these unaudited consolidated financial statements, management is required to make estimates and

assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the

reported amount of revenues and expenses during the reporting periods.

Actual results could differ from those estimates.

estimates and assumptions included in the Company’s consolidated financial statements relate 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.

accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted

in the United States and the rules of the SEC and should be read in conjunction with the audited financial statements and notes thereto

contained in our Form 10-K.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for

a fair presentation of financial position and the results of operations for the periods presented have been reflected herein.

of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

further information, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K

for the year ended December 31, 2021.

Concentration

of Credit Risk

the nine months ended September 30, 2021, 26.7 % of revenue came from AT&T Services, Inc.

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

15.7 % from Goldman Sachs, 12.8 % from Janssen Pharmaceuticals (which includes workforce partners Ortho McNeil and Johnson & Johnson),

and 11 % from Morgan Stanley.

Combined, this totals 66.4 % of revenue.

AT&T, Goldman Sachs, Janssen, and Morgan Stanley accounted

for 27.6 %, 8.8 %, 10.9 % and 5.7 %, respectively, in revenue for the same time period ended September 30, 2020.

No other client has exceeded

10% of revenues in 2021.

INCORPORATED AND SUBSIDIARY

1 unchanged sentence

in thousands, except per share data)

Concentration

of Credit Risk

the three months ended March 31, 2022, 24.2 %

of revenue came from AT&T Services, Inc.

(inclusive of its DirecTV division) (“AT&T”), 21.4 %

from Goldman Sachs, and 11.2 %

from Janssen Pharmaceuticals (which includes workforce partners Ortho McNeil and Johnson & Johnson).

Combined, this totals 56.8 %

AT&T, Goldman Sachs, Janssen, and

Morgan Stanley accounted for 24.6 %,

respectively, in revenue for the same period ended March 31, 2021.

other client has exceeded 10% of revenues in 2022

LIQUIDITY AND GOING CONCERN

2 unchanged sentences

and our liquidity are;

from the SBA on June 10, 2021, that our PPP Loan totaling $ 5,275 in principal and interest had been 100% forgiven;

for Employee Retention Credits (“ERC”) resulting in refunds totaling $ 3,221 and payroll credits in the third quarter

totaling $ 1,156 ;

loss in third quarter ending September 30, 2021, of $ 63 which is a $ 368 improvement over the third quarter operating loss

a year ago and $ 161 in the second quarter;

of the ERC by Congress’ passing infrastructure bill, retroactively effective September 30, 2021;

tax return submission with net operating loss carry back of $ 339 which will reduce tax liabilities;

loss of approximately $ 287

for the nine months ended September 30, 2021;

of $ 475 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 (see notes 2 and 7), but Vivos refuses to cooperate;

estimated tax of $ 1,075

based on current year operations;

to finance over $ 3,000 in accounts receivable (based on unfactored portion on September 30, 2021);

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;

● Uncertainty

in outcome of the arbitration hearing with Vivos Group which will likely have decision rendered

in the third quarter 2022;

loss of approximately $ 575 for the quarter ending March 31, 2022;

slow-moving rebound of client demand for our services to pre-pandemic levels;

● Difficulties

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

authorized shares available for Company use;

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

liabilities, described further in Note 7.

these conditions noted and factored in above, but from a prevailing operational view there is still substantial doubt about the Company’s

ability to continue as a going concern as the underlying business has yet to recover from COVID-19 with revenue levels down as

much as 35% from 2019 standards.

There is also the risk that the arbitration (see Note 7) outcome is not in the Company’s favor,

and or the $ 4.9 M in notes receivable is not realized in a timely fashion.

As far as cash equivalents, once the $ 3,221 in ERC is fully

refunded, the Company will have sufficient capital resources, but these are based on government stimulus programs.

● Commitments

And Contingencies, described further in Note 6.

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 $ 5,039 in notes receivable is 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 current 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 interim 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 result from the possible inability of the Company to continue as a going concern.

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

as well as ongoing outside legal costs related to Doki Group disputes and increased pressure to make cash payments for Doki group

MCA obligations, which ultimately took place on July 21, 2021, pursuant to the Settlement Agreements (filed as exhibits 10.4,

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

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

Stock of Reliability Incorporated (as successor in interest to MMG Media Group, Inc.), dated October 28, 2019 (the

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

The Vivos Group that are the counterparties to the Liquidation Agreement are not cooperating with the Company to liquidate

the shares subject thereto as contemplated thereby.

No assurance can be given that the Company will return to its pre-pandemic

revenue levels and how long it will take to enforce the requirements of the Liquidation Agreement.

As a result, the Company could

face hurdles maintaining sufficient liquidity to continue to operate, in which case the Company might be forced to liquidate or seek

to reorganize under applicable bankruptcy statutes.

The accompanying consolidated financial statements

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

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

INCORPORATED AND SUBSIDIARY

1 unchanged sentence

in thousands, except per share data)

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

ACCOUNTS RECEIVABLE

1 unchanged sentence

OF ACCOUNTS RECEIVABLE

September 30, December 31,

Accounts Receivable

Trade receivables

Other receivables (ERC Refund)

Unbilled receivables

Less allowance for doubtful accounts

Total Accounts Receivable

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Total Trade Accounts Receivable

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Pronouncements

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.

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

The adoption of this update is not expected to have a material impact on our consolidated financial position and results of

January 2017, the FASB issued ASU No.

11 unchanged sentences

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.

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

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.

Company had notes payable in the amount of $ 890 as of December 31, 2019, pursuant to a convertible debt offering that MMG commenced June

Pursuant to this agreement, MMG 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 .

The notes 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 no conversion occurred, the 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 within 5 years of note issuance, which expires correspondingly to each note

between June and October 2024.

MMG was initially acquired by Vivos Holdings, LLC in December 2016, MMG’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 four years,

that MMG has been working with the IRS to pay.

As of September 30, 2021, the tax liability was $ 1,030 compared to $ 292 as of December

The Company also has accrued current incremental income taxes of $ 1,075 YTD, $ 396 of which was recorded in Q3, as of

September 30, 2021, relating to its current operations.

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 MMG completed settlement of the estimated $ 860 tax liability

caused by the Vivos Group in 2017, paying the final estimated portion of $ 300 in 2021.

of March 31, 2022, the Company’s overall tax liability was $ 688 compared to $ 517 at end of same period in 2021.

Business Capital

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

to the agreement, MMG received advances on its accounts receivable (i.e., invoices) through TBC to fund growth and operations.

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

overhead expenses.

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

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

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.

MMG 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 September 30, 2021, the required amount was

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

If a reserve shortfall exists for a period of ten-days,

MMG is required to make payment to the financial institution for the shortage.

receivable (A/R) were sold with full recourse.

Proceeds from the sale of receivables were $ 1,756 for the three months ended September

30, 2021, compared to $ 10,175 in the same period ending September 30, 2020.

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.

INCORPORATED AND SUBSIDIARY

1 unchanged sentence

in thousands, except per share data)

outstanding balance with TBC as of September 30, 2021, was $ 939 and $ 2,999 on December 31, 2020.

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

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 three months ended September 30,

2021, and 2020 comparatively totaled $ 15 and $ 30 , respectively.

VARIABLE INTEREST ENTITY (“VIE”)

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 2 %.

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

The agreement which previously renewed annually, is now 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

As of March 31, 2022, the required amount was 10 %.

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

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

receivables were sold with full recourse.

Proceeds from the sale of receivables were $ 2,811 for the three-month period ending March 31,

2022, compared to $ 1,332 for the same period ending on March 31, 2021.

The total outstanding balance under the recourse contract was

$ 1,590 on March 31, 2022, compared to $ 946 as of December 31, 2021, and $ 592 on March 31, 2021.

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.

Total finance line fees for the three months ended March 31,

2022, and 2021 totalled $ 29 and $ 32 respectively.

COMMITMENTS AND CONTINGENCIES

are a number of debts and confessions of judgement (“COJ”) related to the Vivos Group that included MMG 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 Maslow.

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 MMG, executed a guarantee of obligations of Vivos Real Estate Holdings, LLC (“VREH”), under

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.

MMG leased this space on market terms.

challenges its status as a guarantor on the building.

the Company has 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 as it was considered the primary beneficiary of the VIE.

As a result of the

Company terminating the lease on April 30, 2020, VREH was no longer to be considered a VIE after April 30, 2020.

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 $ 1,734 as of June 30, 2021, (the latest information made available to the Company), with $ 21 unpaid in 2021 as

VREH was behind on two of their mortgage payments.

The loan is deemed to be in default with outstanding taxes due of $ 7 , a 2019 DSC ratio

violation, failure to submit updated financials, and subsequent liens without bank written consent for $ 250 to another Vivos Group creditor.

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

The Company believes the building valuation is at or near

the current mortgage amount.

COMMITMENTS AND CONTINGENCIES

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

is involved in litigation outside of the normal course of business.

The Company 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

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.

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

“Credit Cash Defendants”) and other defendants in the United States Circuit Court of Montgomery County, Maryland for the

District of New Jersey for, among other things, breach of contract of the MMG and HCRN Credit Facilities and their respective guaranties

in relation to the November 15, 2017, agreement (the “Credit Cash Complaint”).

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 Credit Cash Defendants,

and other defendants (“NY State Action”).

On December 10, 2018, the Credit Cash Defendants entered into a settlement agreement

for the purpose of settling certain claims related to the Credit Cash Complaint only.

Pursuant to the settlement agreement, certain repayment

terms were agreed upon between Credit Cash and the Credit Cash Defendants, 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 Credit Cash Defendants in relation to the November

15, 2017, agreement.

Naveen Doki, Kalyan Pathuri, Shirisha Janumpally, and Federal Systems, LLC, (“Credit Cash Vivos Group”)

executed and delivered to MMG that certain Agreement for the Contingent Liquidation of the Common Stock of MMG , dated as of October

28, 2019 (the “Liquidation Agreement”), pursuant to which the Credit Cash Vivos Group pledged to MMG the shares of Company

Common Stock they received in the Merger to provide the capital required to satisfy the Credit Cash Defendants’ obligations under

the Settlement Agreements.

Members of the Credit Cash Vivos Group misrepresented upon the execution of the Liquidation Agreement the

status of its obligations under the Settlement Agreement, which were, in fact, then in default.

To date the Credit Cash Vivos Group have

not cooperated with the Company to monetize those shares as contemplated by the Liquidation Agreement.

The Company will take appropriate

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

wherein relinquishment of shares for certain claims may be an applied remedy.

On or about March 16, 2020, Credit Cash entered its New

Jersey confession of judgment with the Circuit Court of Montgomery County, Maryland.

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

October 9, 2018, MMG was named as a defendant along with six other defendants, all of which are entities related to the Vivos Group,

in an Affidavit of Confession of Judgment (“COJ”) filed in the Supreme Court of the State of New York in relation to a case

brought by Hop Capital, wherein the defendants collectively agree to pay a sum of $ 400 to Hop Capital.

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 MMG was not a

As such, MMG contends that being named in the COJ as a defendant was made in error and is currently seeking to have its name removed

from the COJ.

As of October 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 case.

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 (“Vivos Debtors”), to enforce MMG’s rights under

certain promissory notes and a personal guarantee made by the Vivos Debtors (“Vivos Default Claim”).

This was settled on

October 1st, 2021 with both parties mutually releasing each other of any claims

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

County, Maryland alleging that Maslow participated with members of the Vivos Group to financially harm the plaintiff.

The plaintiff has

not specified any alleged damage caused by MMG and the Company believes any claims are without merit.

The Company will defend itself

from this case.

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

Court system against HCRN, MMG, Vivos Holdings, LLC, Vivos Acquisitions, LLC, Naveen Doki and Silvija Valleru.

This foreign judgement

relates to Vivos Holdings adding MMG as a guarantor on a loan made to HCRN which is in default by HCRN and Vivos Holdings.

Foreign judgement

total is $ 820 .

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

Cash Complaint.

May 5, 2020, Libertas Funding, LLC (“Libertas”) domesticated a foreign judgement in the Montgomery County Circuit Court system

against HCRN, MMG, Vivos Holdings, LLC, Vivos Acquisitions, LLC, Vivos IT, LLC, Vivos Global Services, LLC, Alliance Micro, Inc.

This foreign judgement from the State of New York relates to loans the Vivos Group took out by adding MMG additional collateral.

This loan is currently in default.

Foreign Judgement total is $ 229 .

Maslow settled with Libertas/Kinetic (both judgements) this summer

for $ 475 (See last 2 paragraphs below).

May 5, 2020, Kinetic Direct Funding (Kinetic”) domesticated a foreign judgement in the Montgomery County Circuit Court system against

HCRN, MMG, US IT Solutions Inc., 360 IT Professionals, 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 MMG as additional collateral.

This loan is currently in default.

Judgement total is $ 579 .

There were 4 total loans in the settlement, with the 3 domesticated judgements in Montgomery County circuit

court relating to MMG totaling $ 1,038 .

Maslow settled with Libertas/Kinetic (both judgements) this summer for $ 475 (See last 2 paragraphs

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

March 3, 2022, MMG 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 .

MMG believes it has grounds

to contest it being a guarantor on the loan.

MMG 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 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

of $ 400 to HOP Capital.

Maslow Media Group, Inc.

is named 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

As such, MMG 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.

INCORPORATED AND SUBSIDIARY

1 unchanged sentence

in thousands, except per share data)

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

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

The plaintiff has not specified any alleged damage

caused by MMG 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 had planned to vigorously defend itself and its indemnified officers, directors and other parties as permitted

by the Company’s organizational documents, when a trial on this matter was scheduled to begin on October 4, 2021, but both parties

agreed on September 7 th , 2021, to resolve their disputes before a single arbitrator in Maryland, which calls for the stay

or dismissal of the pending litigation.

The agreement provides 150 days to resolve all pending matters through binding arbitration in

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

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 “Merger Respondents”).

The Merger Arbitration alleges that the Merger Respondents

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

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 Merger 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, but the Respondents countered with a motion to dismiss

Reliability’s Petition to Compel Arbitration to the Federal Courts in New York.

On August 4, the US District Court, Southern District

of New York, denied the Respondents motion to dismiss.

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 Circuit Court of Montgomery County, Maryland, a motion by the Vivos Group to compel a

shareholder meeting was summarily dismissed.

On January 20, 2021, Defendants and Counter/Third-Party Plaintiffs, Vivos, VREH, Doki, Pathuri,

Igly, Judos, by counsel, filed a Notice of Appeal on the dismissal.

However, the deadline to pursue the appeal lapsed absent additional

filings by the Vivos Group.

July 21, 2021, Maslow settled the obligation which with it had been committed by Vivos Holdings, LLC in July 2018, with Libertas and

Kinetic for $ 475 .

The agreement which included $ 100 in legal fees, released MMG from all claims judgements and obligation against MMG

but did not release Naveen Doki, Silvija Valleru, Judos Trust, Igly Trust, Srinivas Kalidindi, Shirisha Janumpally, Federal Systems,

Kalyan Pathuri, US IT Solutions Inc., 360 IT Professionals Inc., Alliance Micro Inc.

Viv’s IT LLC, Vivos Global Holdings LLC, Vivos

Acquisitions LLC, or Vivos Holdings from the remaining obligation.

This debt belonged to Vivos Holdings LLC, and the aforementioned Liquidation

Agreement, (See Note 2) had been created as a safeguard to shelter MMG should Vivos default, which actually transpired prior to the merger

closing in October 2019.

felt compelled to settle Vivos’ Holdings at this time due to 1) added pressure placed by Libertas to collect a balance that now

exceeded $1,700, 2) a desire to clear liens against the Company to improve its credit status, and 3) its ability to negotiate a much

lower and separate settlement.

is pursuing remedy for the $ 475 payment to Libertas with the Vivos Group through the arbitration process.

In the meantime, the $ 475 has

been added the Vivos Debtor balance which as of September 30, 2021, is $ 4,944 .

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

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 portion began on March 21 and has since concluded.

There are other phases in progress.

A decision isn’t anticipated until the third quarter, 2022.

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

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

3 unchanged sentences

Purchase Agreement

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 , of which:

(i) $ 1,400 was paid at settlement with proceeds from MMG and (ii) a promissory note to pay the remaining $ 350

(“Vivos/MMG Purchase Agreement”).

The promissory note was to be paid in twenty-four equal installments, including interest

at 4.5%, in the amount of approximately $15, commencing six months after closing, with the last payment on March 1, 2019.

These payments

were paid by the MMG on behalf of the Vivos.

Vivos 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.

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 rate of interest which per Virginia statute

is 8.0 % on two of the three defaulted notes receivable below, which were so eligible.

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 , of which:

(i) $ 1,400 was paid at settlement with proceeds from MMG and (ii) a promissory note to pay the

remaining $ 350 (“Vivos/MMG Purchase Agreement”).

The promissory note was to be paid in twenty-four equal installments,

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

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 the 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.

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

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

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to the seller by MMG.

These 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.

January 2021, MMG began applying the legal rate of interest which per Virginia statute is 8.0 % on two of the three defaulted notes receivable,

which were eligible.

Only the $ 750 September 5, 2019, note is not eligible for a default rate of interest but is eligible for recovery

of legal fees.

As of September 30, 2021, the total outstanding balance was $ 2,767 which includes accrued interest receivable of $ 55 .

The actual funds (additional eligible interest and legal fees) sought may be greater than what is represented herein per GAAP.

These 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”).

all quarterly interest payments to be made in phase 2 were offset by the management fees due to Vivos Holdings.

As of March 31,

2022, the total outstanding balance on this note was $ 3,420 which includes accrued interest for period of $ 38 .

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

3 unchanged sentences

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

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

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

and unpaid interest is due September 30, 2023.

2 unchanged sentences

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 September 30, 2021, the total outstanding balance was $ 774 .

which includes

accrued interest receivable of $ 15 .

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

In addition, principal payments

totaling $ 30 were made by the Vivos Group.

As of March 31, 2022, the total outstanding balance was $ 823 which includes accrued interest

for period of $ 11 .

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

1 unchanged sentence

Naveen Doki personally guaranteed

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

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

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

2 unchanged sentences

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 September 30, 2021, the receivable totaled

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

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

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, 2019.

As of March 31, 2022, and December 31, 2021, the receivable totaled $ 5,039 and $ 4,985 , respectively.

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 Vivos to make monthly payments to MMG of $ 10

beginning December 1, 2019, with balance due and payable on November

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

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

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

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.

In addition, both Naveen Doki and Silvija Valleru personally guaranty the repayment

of the note by Vivos.

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 September 30,

2021, the total outstanding balance was $ 780,

which includes interest of $ 12 .

In January 2021, MMG began charging the Maryland minimum interest rate by law allowed for defaulted totals as this note is in

default and we are pursuing collection via the Vivos Default Claim.

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 Dr.

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

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.

On December 31, 2021, the total outstanding balance was $ 790 ,

which includes interest for period of $ 5 .

As of March 31, 2021, the total outstanding balance was $ 795 ,

which includes interest for period of $ 5 .

Settlement Agreements

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

MMG received a net advance of $ 487

in exchange for $ 705 of MMG’s accounts receivable.

Included in this loan is a fee of $ 218 .

The agreement was refinanced on November

15, 2017, when Vivos, and Vivos Acquisitions, LLC, via Dr.

Naveen Doki and Dr.

Silvija Valleru entered into an agreement with CC Business

Solutions, a division of Credit Cash NJ, LLC (“Credit Cash”) pursuant to which Credit Cash advanced to the Company $ 600 in

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

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 MMG, Vivos Holdings, Vivos Acquisitions,

Naveen Doki and Mrs.

Silvija Valleru guaranteed the HCRN Credit Facility.

To secure repayment of their guaranteed 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 were accelerated, with the full balance for each becoming immediately due and payable.

On December 10, 2018, the Company,

Vivos Holdings, Vivos Acquisitions, LLC, Mr.

Doki, and Mrs.

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.

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 September 30, 2019.

The HCRN Credit Facility is still being repaid by Vivos Holdings, and as of October

29, 2019, had an outstanding balance of approximately $ 635 .

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

Kinetic for $ 475 .

March 6, 2022, MMG 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.

INCORPORATED AND SUBSIDIARY

1 unchanged sentence

in thousands, except per share data)

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 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.

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

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

So, on July 21, 2021, as explained in Note 7, Maslow

signed a settlement agreement with Kinetic Direct Funding, LLC and Libertas Funding, LLC for $ 475 in order to remove MMG from the remaining

obligation owed by the Vivos Group which we were informed was $ 1,773 .

Vivos Group that are the counterparties to the Liquidation Agreement are not cooperating with the Company to liquidate the shares subject

thereto as contemplated thereby.

The anticipated arbitration process could have this matter settled in the first quarter 2022.

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

Having made the payment may

at some point present a liquidity issue for the Company.

August 9 th , 2021, Reliability filed an additional claim in the Debt Collection Suit and Vivos Default Counterclaim in the

Circuit Court of Montgomery County, Maryland against Doki, Valleru, Pathuri, Janumpally, Igly, and Judos, that the Respondents breached

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

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.

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.

October 29, 2019, prior to the Merger, pursuant to the Merger Agreement, Dr.

Doki and Silvija Valleru became beneficial owners

of 206,606,528

and 51,652,908

shares of RLBY Common Stock, respectively, equal

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, MMG entered into a Securities Purchase Agreement with Hawkeye Enterprises, Inc., a company owned

5 unchanged sentences

The note bore interest at 12 % per year, with the balance of $ 56 paid in full on June 26,

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

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

4 unchanged sentences

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 a 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.

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

5 unchanged sentences

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 RLBY as a result of the Merger.

The terms of all Warrants

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

The Warrant may be exercised at any time or from time to time during

the period commencing at 10:00 a.m.

Eastern time on first business day following the completion of the Qualified Financing (as defined

below) and expiring at 5:00 p.m.

reimbursement took place on May 8, 2020, totalling $ 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”).

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”).

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.

BUSINESS SEGMENTS

Company operates within four industry segments:

EOR, Recruiting and Staffing, Permanent (Direct) Placements 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 Placements

was added as a segment this quarter as the Company took on clients who will have the Company source candidates for permanent hire on

a regular basis.

The Video and Multimedia Production segment provides Script to Screen services for corporate, government and non-profit

clients, globally.

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.

INCORPORATED AND SUBSIDIARY

1 unchanged sentence

in thousands, except per share data)

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

September 30, 2021, and 2020, respectively:

the three months ended September 30:

September 7, 2021, the Company entered in Arbitration and Tolling Agreements with alleged shareholder Dr.

Doki, 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

BUSINESS SEGMENTS

Company operates within four

industry segments:

EOR, Recruiting and Staffing, Permanent

(Direct) Placements 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.

Permanent Placements was added as a segment in the second quarter 2021 as the Company began

to take on clients who desired the Company source candidates for permanent hire on a regular basis.

The Video and Multimedia

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

following table provides a reconciliation of revenue by reportable segment to consolidated results for the three months ended March 31,

2022, and 2021, respectively:

the three months ended March 31:

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

Recruiting and Staffing

Permanent Placement

Video and Multimedia Production

the Nine months ended September 30:

Recruiting and Staffing

Permanent Placement

Video and Multimedia Production

and Multimedia Production

SUBSEQUENT EVENTS

Company has evaluated subsequent events through November 15, 2021, the date on which the unaudited condensed consolidated financial statements

Company has evaluated subsequent events through May 15, 2022, the date on which the unaudited condensed consolidated financial statements

were available to be issued.

1 unchanged sentence

would require recognition in or disclosures in the accompanying unaudited condensed consolidated financial statements, except as follows:

November 5, 2021, Congress passed H.R.

3684) infrastructure bill which terminated early the ERC program, making wages paid after

30, 2021, ineligible for the credit.

It is expected that monies the Company has been credited in the 4 th quarter

will reduce the 941 refund portions owed.

The Company awaits IRS guidance on how this will be handled, given the retroactive nature of

the legislation.

signed a 1-year extension with AT&T (until 3/31/2023) and a 2-year extension with DirecTV (until 3/31/2024).

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

What changed 10-Q

Item 1. Financial Statements