What changed in this filing

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Item 1. Legal Proceedings

2022-11-14 compared with 2022-08-15 · 49 added, 78 removed, 45 unchanged (74% of the section changed)

4 unchanged sentences

a personal guarantee made by the defendants.

The case is proceeding.

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

MMG intends to continue to vigorously pursue this litigation.

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

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

has no merit.

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

Company’s organizational documents.

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

and the Counterclaim stayed pending the outcome of the Arbitration which began March 21, 2022, described below.

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

with the American Arbitration Association in New York, and to the Respondents thereto:

Silvija Valleru;

Shirisha Janumpally

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

Kalyan Pathuri (individually in his capacity as trustee of Igly Trust)

and Federal Systems (the “Respondents”).

The Arbitration alleges that the Respondents breached the Merger Agreement in a

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

The Company is seeking damages which if granted will

likely be the remedy set forth within the Merger Agreement which is in whole or in part shares of Company common stock received by the

Respondents in connection with the Merger.

The Company has brought a motion to compel the Arbitration which is currently being decided

by the Federal Courts in New York.

On August 4, 2021, the US District Court, Southern District

of New York, denied the Respondents motion to dismiss.

June 12, 2020, Igly Trust, a Vivos Group 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 Group 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.

This matter has since been moved into a single binding arbitration proceeding in Maryland.

an extension was granted to Reliability’s “reply brief,” on June 2, 2021, Reliability Incorporated, MMG Media Group,

Inc, Nick Tsahalis and Mark Speck filed an appellant’s brief in the Fourteenth District of Texas, Houston Texas to challenge the

court’s prior ruling granting a special appearance to Igly Trust and to the Doki Shareholders.

A response to the filed appellant

brief has not yet been received.

This matter has since been moved into a single binding arbitration proceeding in Maryland.

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

The judge agreed with the Company that permitting the Vivos Group to vote their shares at a meeting of shareholders could

materially harm the interests of the Company as a whole, its employees and minority shareholders.

judge also commented that, based on the evidence presented, management was performing its fiduciary duties to protect the Company despite

adverse circumstances.

A full trial to address the Company’s lawsuit to enforce the repayment of notes and the Vivos Group counterclaim,

was scheduled to commence in early October 2021 but was pre-empted by an agreement by both sides to go to arbitration in March 2022.

January 20, 2021, Defendants and Counter/Third-Party Plaintiffs, Vivos Holdings, LLC (“Vivos”), Vivos Real Estate Holdings,

LLC (“VREH”), Dr.

Pathuri, Igly Trust (“Igly”), Judos Trust (“Judos”), by counsel, filed

a Notice of Appeal with the Circuit Court for Montgomery County, Maryland denying their Motion for Preliminary Injunction signed on December

However, the deadline to pursue the appeal lapsed absent additional filings by the Vivos Group.

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

14 unchanged sentences

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

hearing portion of the binding Arbitration formally began on March 21, 2022, and has since concluded.

A decision is anticipated in the third quarter 2022.

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 with 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% per year;

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;

an 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’ fees;

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.

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.

following legal proceedings where Vivos Group borrowings impacting MMG:

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

Valleru (the “Parties”)

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 “DNJ Action”).

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

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

December 10, 2018, the Parties entered into a settlement agreement for the purpose of settling certain claims related to the DNJ Action

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

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

parties in relation to the November 15, 2017, agreement.

Certain of the Vivos 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 such Vivos Group pledged to MMG the shares of Company common stock they received in the Merger to provide the capital required

to satisfy the Parties’ obligations under the Settlement Agreements.

Vivos Group misrepresented upon the execution of the Liquidation

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

To date these Vivos

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

The Company took appropriate

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

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

MMG needs to confirm whether this matter has been settled and if so whether MCA lenders and HCRN remitted payments to Credit Cash, and

if so, which liens have been removed.

Resource Network Complaint:

21 unchanged sentences

Debtors refuse to comply with.

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

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. Legal Proceedings