What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-08-15 · 241 added, 277 removed, 269 unchanged (66% of the section changed)

3 unchanged sentences

in thousands, except per share data)

September 30,

CURRENT ASSETS

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SHAREHOLDERS’ EQUITY

Common stock, without par value, 300,000,000 shares authorized, 300,000,000 issued and outstanding as of June 30, 2022 and as of December 31, 2021

Common stock, without par value, 300,000,000 shares authorized, 300,000,000 issued and outstanding as of September 30, 2022, and as of December 31, 2021

Additional paid-in capital

6 unchanged sentences

in thousands, except per share data)

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Revenue earned

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Other income (expense)

Income (loss) before income tax (expense) benefit

Income tax (expense) benefit

Consolidated net income (loss)

Income before income tax expense

Income tax expense

Consolidated net income

Net income per share:

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in thousands, except per share data)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Revenue earned

1 unchanged sentence

Cost of revenue

Selling, general, and administrative expenses

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Interest expense

Other income (expense)

Income (loss) before income tax (expense) benefit

Income tax (expense) benefit

Income (loss) before income tax expense

Income tax expense

Consolidated net income (loss)

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CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY

the Six Months Ended June 30, 2022 and 2021

the Nine Months Ended September 30, 2022 and 2021

in thousands, except per share data)

Balance, December 31, 2020

Balance, June 30, 2021

Balance, September 30, 2021

Balance, December 31, 2021

Net Income (Loss)

Balance, June 30, 2022

Income (Loss)

Balance, September 30, 2022

accompanying notes are an integral part of these statements.

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in thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities:

Net income (loss)

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

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

Depreciation and amortization

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Borrowing of note payable

Advances to Related Parties

Net cash provided by (used in) financing activities

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in thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Supplemental disclosures of cash flow information:

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of Operations

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

along with its wholly owned subsidiary, The Maslow Media Group, Inc (“MMG”), (collectively, “Reliability” or

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

Employer of Record (“EOR”),

Recruiting and Staffing, Permanent Direct Placements, and Video and Multimedia Production, which provides script to screen media talent.

Our Staffing segment provides skilled field talent on a nationwide basis for Media, IT, and finance and accounting client partner projects.

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.

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 in 2007.

Incorporated is a leading provider of Workforce Management & Staffing Solutions, along with its wholly owned subsidiary, The Maslow Media

Group, Inc (“MMG”), (collectively, “Reliability” or the “Company”), primarily within the United States

of America in four industry segments:

Employer of Record (“EOR”), Recruiting and Staffing, Direct Placements, and Video and

Multimedia Production Services.

Our Staffing segment provides skilled field talent on a nationwide basis for Media, Video Production,

IT, and Finance and Accounting client partner projects.

Our Staffing segment occasionally receives requests for direct placements.

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

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

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Pathuri”), husband of Silvija Valleru.

4 individuals, Dr.

individuals, included but were not limited to Dr.

Janumpally, Mr.

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”).

Valleru, Igly Trust, and Judos Trust 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

reverse merger was consummated on October 29, 2019.

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approximately 84 % of the issued and outstanding shares of Reliability which were distributed by Vivos Holdings, LLC.

On 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.

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.

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

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in control” of Reliability.

Upon purchasing MMG and thereafter, Vivos Holdings,

LLC and their affiliates (collectively the “Vivos Group”) began borrowing monies from MMG starting with $ 1,400 in 2016 and

by the end of 2019 the balance had reached $ 3,418 which included a $ 3,000 guarantee from Dr.

(See Note 8 for more details).

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

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

On or about May 6, 2020, the Vivos Debtors filed

a counterclaim and third-party complaint for damages, declaratory and injunctive relief, and jury demand (the “Counterclaim”).

RELIABILITY INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(amounts in thousands, except per share data)

or about May 6, 2020, the Vivos Debtors filed a counterclaim and third-party complaint for damages, declaratory and injunctive relief,

and jury demand (the “Counterclaim”).

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

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

Among several claims, MMG sought remedy on three notes, plus a guarantee totaling approximately $ 5,039 when the arbitration

hearing began.

August 2, 2022, VREH filed for Chapter 11 Bankruptcy Protection in the District Court of Maryland.

This action prevented the Arbitrator

from providing any ruling relating to Note II in the arbitration case at the time of his award.

August 24 , 2022, the Company filed a motion to stay the VREH Bankruptcy filing to allow the Arbitrator to rule on the claims

against VREH.

The motion to lift the stay was granted by the court on September 16, 2022, after the initial award by the Arbitrator.

August 31, 2022, the Arbitrator issued an award (the “Award”) with the Company and MMG prevailing on their claims.

and MMG were awarded the following:

award in favor of MMG against Vivos Holdings LLC under Note I (as defined in the Award) in the amount of $ 3,458,377 ,

with interest thereon from June 30, 2022, at the rate of 4.5 %

award as to Note II (as defined in the Award) until and at such time as the automatic stay imposed by the United States Bankruptcy

Court as a result of the filing of a petition in bankruptcy by VREH is lifted or the bankruptcy proceeding is terminated;

award in favor of MMG against Vivos Holdings, LLC under Note III (as defined in the Award) in the amount of $ 800,448 ,

with interest thereon from June 30, 2022, at the rate of 2.5 %

per year, plus collection costs, including reasonable attorneys’ fees, incurred in the effort to collect Note III;

award in favor of MMG against Naveen under the Personal Guaranty (as defined in the Award) in the amount of $ 2,309,449 , plus interest

thereon at the rate of 6 % per year from the date of the Award;

award in favor of the Company against Naveen, Valleru, Janumpally, individually and as Trustee of Judos Trust, and Pathuri, as Trustee

of Igly Trust, jointly and severally, for contract damages of $ 1,000,000 , to be satisfied by the transfer of their shares of the

Company common stock to the Company equal in value to $ 1,000,000 , valued as of the date of the Award, in accordance with the provisions

of Section 9.06(d) of the Merger Agreement;

award in favor of the Company against Naveen, Valleru, Janumpally, individually and as Trustee of Judos Trust, and Pathuri, as Trustee

of Igly Trust, jointly and severally, for fraud damages in the amount of $ 4,327,127 , plus interest thereon at the rate of 6 % per

year from the date of the Award, together with any out-of-pocket fees and expenses, including attorneys’ and accountants’

award appointing a rehabilitative receiver for the Company under the deadlock situation provisions of Section 11.404(a)(1)(B) of

the Texas Business Organizations Code, the primary function of which is to collect the contract and fraud damages, including costs,

expenses and fees provided in the Award, due to the Company, with matters regarding such receivership to be set forth in a supplemental

relief in favor of the Company and its officers and directors.

11.404(a)(1)(B) of the Texas Business Organizations Code provides for the appointment of a rehabilitative receiver when “the governing

persons of the entity are deadlocked in the management of the entity’s affairs, the owners or members of the entity are unable

to break the deadlock, and irreparable injury to the entity is being suffered or is threatened because of the deadlock.” With respect

to the receivership, the owners or holders of all of the shares of common stock of the Company received as a result of the conversion

of 1,600 shares of common stock of MMG owed by Naveen and Valleru under the Merger Agreement shall not be entitled to vote any of those

shares at any annual or special meeting of the shareholders of the Company during the period of the receivership.

Upon the completion

of the receiver’s

primary function of collecting damages due to the Company, the receivership shall terminate and the restrictions on the rights of the

shareholders of the Company imposed by the Award shall be lifted.

INCORPORATED AND SUBSIDIARY

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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 multiple 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.” 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.

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

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.”

parties to the Arbitration had until September 19, 2022 to submit their requests related to the Supplemental Award to be filed by the

Arbitrator relating to the assignment of a Receiver.

An extension was granted until October 6, 2022 at which point all parties submitted

their requests to the Arbitrator.

The parties now have until November 23, 2022 to respond to the submissions received by the Arbitrator

on October 6, 2022.

The Company does not have a definitive date by which it will receive the supplemental award identified in the Arbitration

Award dated August 31, 2022, but hopes it will be received before the end of the year.

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

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on Form 10-K for the year ended December 31, 2021.

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

Concentration

of Credit Risk

the six months ended June 30, 2022, 22.5 % of revenue came from AT&T Services, Inc.

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

21.1 % from Goldman Sachs, and 13.2 % from Janssen Pharmaceuticals (which includes workforce partner Johnson & Johnson).

this totals 56.8 % of revenue.

AT&T, Goldman Sachs, Janssen, and Morgan Stanley accounted for 24.1 %, 16.3 %, 11.2 % and 13.5 %, respectively,

65.1 % in aggregate revenue for the same period ended June 30, 2021.

No other client has exceeded 10% of revenues in 2022 or 2021.

the nine months ended September 30, 2022, 20.3 %

of revenue came from Goldman Sachs, 13.5 %

from AT&T Services Inc (“AT&T”), and 12.2 %

from Janssen Pharmaceuticals (which includes workforce partner Johnson & Johnson) and 10.8 %

from DirecTV.

Combined, this totals 56.7 %

AT&T, Goldman Sachs, Janssen, Morgan Stanley and DirectTV accounted for 18.1 % ,

respectively, 67.1 %

in aggregate revenue for the same period ended September 30, 2021.

other client has exceeded 10% of revenues in 2022 or 2021.

LIQUIDITY AND GOING CONCERN

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and our liquidity are:

Uncertainty in outcome

of the arbitration hearing with Vivos Group which will likely have decision rendered in the third quarter 2022;

losses in nine of the last ten quarters starting with the first quarter of 2020 through the second quarter of 2022 ending June 30,

of the timing or form of recovery of the of the arbitration award., with some of the award being collected in in the form of shares

losses in ten of the last eleven quarters starting with the first quarter of 2020 through the third quarter of 2022 ending September

30, 2022, totaling in aggregate $ 2,131

The 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;

Inability to realize approximately

$ 5,094 in notes receivables from Vivos Group;

Commitments and Contingencies,

described further in Note 6.

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

favor, and the $ 5,094 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.

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

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

and Contingencies, described further in Note 6.

these conditions noted and factored above, and if the $ 5,157

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

as a going concern.

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

Additionally,

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

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

ACCOUNTS RECEIVABLE

receivable can be broken down as follows

OF ACCOUNTS RECEIVABLE

receivable are broken down as follows

SCHEDULE OF ACCOUNTS RECEIVABLE

September 30, 2022

December 31, 2021

Accounts Receivable

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effect on its present or future consolidated financial statements.

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

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

a C Corp due to its new ownership structure.

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

of June 30, 2022, the Company no longer has a federal tax liability related to tax periods prior to 2020, with the combined federal and

state tax liability at $ 93 .

of September 30, 2022, the Company no longer has a federal tax liability related to tax periods prior to 2020.

INCORPORATED AND SUBSIDIARY

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in thousands, except per share data)

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

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 50 basis points to 15 and the interest rate from prime plus 3.5 % 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

Coast Bank and Trust

August 24, 2022, we were notified by our factoring company Triumph Business Capital (“TBC”) that our factoring arrangement had been sold

to Gulf Coast Bank and Trust (“Gulf”), as TBC had decided to sell its non-transportation portfolio.

The transition took place between August

26 th and 28 th with new financing coming from Gulf.

However, until all open accounts receivable (“A/R”) managed by

TBC is collected, a portion of those funds plus non factored receivables continue to come to MMG from TBC.

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 June 30, 2022, the required amount was 7 %.

As of September 30, 2022, the required amount was

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 shortage.

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 $ 4,149 for the three-month period ending June 30,

2022, compared to $ 1,131 for the same period ending on June 30, 2021, and $ 6,960 compared to $ 2,453 for the six months ended June

30, 2022 and 2021, respectively.

The total outstanding balance under the recourse contract was $ 2,725 on June 30, 2022, compared to $ 946

as of December 31, 2021.

The 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 June 30, 2022 and 2021 totaled $ 36 and $ 18 , respectively and $ 66

and $ 63 for the six months ended June 30, 2022 and 2021, respectively.

Proceeds from the sale of receivables were $ 3,429 for the three-month period ending September

30, 2022, compared to $ 1,756 for the same period ending on September 30, 2021, and $ 10,388 compared to $ 2,453 for the nine months ended

September 30, 2022 and 2021, respectively.

The total outstanding balance under the recourse contract was $ 2,014 on September 30, 2022,

compared to $ 946 as of December 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 September

30, 2022, and 2021 totaled $ 46 and $ 15 , respectively, and $ 111 and $ 78 for the nine months ended September 30, 2022, and 2021, respectively.

COMMITMENTS AND CONTINGENCIES

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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

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

MMG leased this space on market terms.

obligation had not been disclosed by the Vivos Group to Reliability prior to the Merger and consequently not included in MMG’s

financial statements.

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

this space on market terms through April 30, 2020.

This obligation had not been disclosed by the Vivos Group to Reliability prior to

the Merger and consequently not included in MMG’s financial statements.

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

Per the default notice, “[a]s 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

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to contest it being a guarantor on the loan.

July 12, 2022, MMG was advised that a foreclosure sale of the 22 Baltimore Road property was scheduled to take place on Thursday August

4, 2022, at Montgomery County Circuit Court in Rockville, Maryland.

It was subsequently cancelled after VREH filed for bankruptcy on

August 2, 2022.

August 2, 2022, VREH filed for Chapter 11 bankruptcy in the District Court of Maryland.

INCORPORATED AND SUBSIDIARY

1 unchanged sentence

in thousands, except per share data)

July 12, 2022, MMG was advised that a foreclosure sale of the 22 Baltimore Road property was scheduled to take place on Thursday August

4, 2022, at Montgomery County Circuit Court in Rockville, Maryland.

It was subsequently cancelled after VREH filed for bankruptcy on August

has filed a Motion to Vacate Confessed Judgment entered against it by FVC Bank in the Circuit Court for Fairfax County and has requested

that the matter be heard before the end of 2022.

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

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 Group, Inc.

was not a party.

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 the Affidavit of COJ as a defendant.

As of August 10, 2022, we have not been contacted again

on this matter, nor have we been notified on any developments.

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 portion began on March 21,2022 and has since concluded.

A decision is not anticipated until the third

quarter 2022.

has filed a Motion to Vacate Confessed Judgment entered against it by FVC Bank in the Circuit Court for Fairfax County.

A hearing date

is set for December 9, 2022.

October 20, 2022, FVC bank filed a Motion to Dismiss Chapter 11 Case for Cause with respect to this pending proceeding filed by VREH.

A hearing date is set for November 16, 2022.

November 2, 2022, Maslow filed a “Response” to the Bank’s Motion to Dismiss, which in essence is a separate Motion for

court to dismiss VREH’s Chapter 11 protection filing.

October 2022, MMG learned that Vivos IT, LLC filed a lawsuit against Second Wind Consultants (“SWC”) in May 2019

included MMG as a plaintiff.

The lawsuit included claims of fraud in inducement and unjust enrichment against SWC.

The Five parties suing SWC, included Vivos LLC, The Maslow Media Group, Suresh Venkat Doki, Naveen

Doki and Silvija Valleru.

The lawsuit related to a debt restructuring services agreement secured by Suresh Doki, Naveen Doki and

Silvija Valleru to assist the following then owned Vivos entities:

Maslow Media Group, Inc., Health Care Resources Network, Inc.,

Mettler & Michael, Inc., 360 IT Professionals, Inc.

and US IT Solutions, Inc.

Second Wind countersued all plaintiffs on

September 30th, 2019, seeking to collect the balance of $ 402,500

not paid by the Vivos Group.

These suits were not disclosed to Maslow Management or to Reliability before the merger closed on October 29,

MMG is weighing its legal options at this time.

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

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RELATED PARTY TRANSACTIONS

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 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 borrowings.

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 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, 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.

As of June 30, 2022, the total outstanding balance on this note was

$ 3,446 which includes accrued interest for the period of $ 39 .

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

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.

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, LLC.

In addition, principal payments

totaling $ 30 were made by the Vivos Group.

As of June 30, 2022, the total outstanding balance was $ 835 which includes accrued interest

for period of $ 12 .

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.

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.

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.

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

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

On December 31, 2021, the total outstanding balance was $ 790 , which includes interest for period of $ 5 .

As of June 30, 2022,

the total outstanding balance was $ 800 , which includes interest for period of $ 5 .

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

Additionally,

the Vivos Group had borrowings of $ 2,503 adding to the original notes;

with $ 2,383 between 2018 through 2021.

As of June 30, 2022 and

December 31, 2021, the receivable totaled $ 5,094 and $ 4,985 , respectively.

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 Debtors.

The Vivos Debtors subsequently entered into a promissory note receivable with 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 borrowings.

of September 30, 2022, and December 31, 2021, the receivable totaled $ 5,157

and $ 4,985 , respectively.

This is not inclusive of the additional amounts awarded in the arbitration.

Settlement Agreements

1 unchanged sentence

Kinetic for $ 475 .

March 6, 2022, MMG received a notice of default, acceleration, and demand for payment-in-full from FVC Bank due to incurable events

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

March 6, 2022, MMG received a notice of default, acceleration, and demand for payment-in-full from FVC Bank due to incurable events of

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

has filed a Motion to Vacate Confessed Judgment entered against it by FVC Bank in the Circuit Court for Fairfax County and has requested

that the matter be heard before the end of 2022.

October 20, 2022, FVC bank filed a Motion to Dismiss Chapter 11 Case for Cause with respect to this pending proceeding filed by VREH.

A hearing date is set for November 16, 2022.

November 2, 2022, Maslow filed a “Response” to the Bank’s Motion to Dismiss, which in essence is a separate Motion for

court to dismiss VREH’s Chapter 11 protection filing.

INCORPORATED AND SUBSIDIARY

TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in thousands, except per share data)

Party Relationships

29 unchanged sentences

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.

August 31, 2022, the Arbitrator issued an award (the “Award”) with the Company with MMG prevailing on their claims.

Note 1) for more details.

parties to the Arbitration had until September 19, 2022, to submit their requests related to the Supplemental Award to be filed by the

Arbitrator relating to the assignment of a Receiver.

An extension was granted until October 6, 2022, at which point all parties submitted

their requests to the Arbitrator.

The parties now have until November 23, 2022, to respond to the submissions received by the Arbitrator

on October 6, 2022.

The Company does not have a definitive date by which it will receive the supplemental award identified in the Arbitration

Award dated August 31, 2022, but hopes it will be received before the end of the year.

BUSINESS SEGMENTS

Company operates within four industry segments:

EOR, Recruiting and Staffing, Direct Placements, and Video Production.

The EOR segment

provides freelance 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.

Direct 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 direct hire needs on a

regular basis.

The Video and Multimedia Production segment provides crewing and Script to Screen services for corporate, government,

and non-profit clients, globally.

INCORPORATED AND SUBSIDIARY

1 unchanged sentence

in thousands, except per share data)

BUSINESS SEGMENTS

Company operates within four industry segments:

EOR, Recruiting and Staffing, Permanent (Direct) Placements, and Video Production.

EOR segment provides freelance 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 tables provides a reconciliation of revenue by reportable segment to consolidated results for the three and six months ended

June 30, 2022 and 2021, respectively:

the three months ended June 30:

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

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

September 30, 2022, and 2021, respectively:

the three months ended September 30:

SCHEDULE OF RECONCILIATION OF REVENUE AND

OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS

Recruiting and Staffing

Permanent Placement

Direct Placement

Video and Multimedia Production

the six months ended June 30:

the nine months ended September 30:

Recruiting and Staffing

Permanent Placement

Direct Placement

Video and Multimedia Production

SUBSEQUENT EVENTS

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

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

available to be issued.

1 unchanged sentence

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

has filed a Motion to Vacate Confessed Judgment entered against it by FVC Bank in the Circuit Court for Fairfax County and has requested

that the matter be heard before the end of 2022.

has filed a Motion to Vacate Confessed Judgment entered against it by FVC Bank in the Circuit Court for Fairfax County.

A hearing has

been scheduled for December 9, 2022.

October 20, 2022, FVC bank filed a Motion to Dismiss Chapter 11 Case for Cause with respect to this pending proceeding filed by Vivos

Real Estate Holdings, LLC (VREH).

A hearing date is set for November 16, 2022.

November 2, 2022, Maslow filed a “Response” to the Bank’s Motion to Dismiss, which in essence is a separate Motion for

court to dismiss VREH’s Chapter 11 protection filing.

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