What changed in this filing

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Item 1. Financial Statements

2024-08-13 compared with 2024-05-15 · 138 added, 134 removed, 326 unchanged (45% of the section changed)

6 unchanged sentences

Trade receivables, net of credit losses

Retention credit receivable

Other receivables

16 unchanged sentences

SHAREHOLDERS’ EQUITY

Common stock, without par value, 300,000,000 shares authorized, 300,000,000 issued and outstanding as of March 31, 2024 and as of December 31, 2023

Common stock, without par value, 300,000,000 shares authorized, 300,000,000 issued and outstanding as of June 30, 2024 and as of December 31, 2023

Additional paid-in capital

1 unchanged sentence

Total shareholders’ equity

Total liabilities and shareholders’

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 March 31,

For the Three Months Ended June 30,

Revenue earned

9 unchanged sentences

Other expense

Loss before income tax (expense) benefit

Income tax (expense) benefit

Income (loss) before income tax expense

Income tax expense

Consolidated net loss

2 unchanged sentences

accompanying notes are an integral part of these statements.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

in thousands, except per share data)

For the Six Months Ended June 30,

Revenue earned

Service revenue

Cost of revenue

Selling, general, and administrative expenses

Operating loss

Other income (expense)

Interest income from related parties

Interest income

Interest expense

Other income (expense)

Loss before income tax (expense) benefit

Income tax (expense) benefit

Consolidated net loss

Net loss per share:

Shares used in per share computation:

accompanying notes are an integral part of these statements.

INCORPORATED AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

the Three Months Ended March 31, 2024 and 2023

the Six Months Ended June 30, 2024 and 2023

in thousands, except per share data)

Balance, December 31, 2022

Balance, March 31, 2023

Balance, June 30, 2023

Balance, December 31, 2023

Balance, March 31, 2024

Balance, June 30, 2024

accompanying notes are an integral part of these statements.

2 unchanged sentences

in thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from operating activities:

13 unchanged sentences

Net cash provided by (used in) operating activities

Cash flows from Investing activities:

Purchase of fixed assets

Net Cash used in investing activities

Cash flows from financing activities:

3 unchanged sentences

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

accompanying notes are an integral part of these statements.

2 unchanged sentences

in thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Supplemental disclosures of cash flow information:

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Recruiting and Staffing, Direct Hire, and Video and Multimedia Production, which provides script-to-screen services.

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

Our Staffing segment

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

Video Production

18 unchanged sentences

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

As a result of the Merger, on October 29, 2019, MMG became a wholly owned subsidiary of Reliability,

and 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.

purchasing MMG and thereafter, 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.

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

Doki are collectively referred to as

“Vivos Debtors.”

a result of the Merger, on October 29, 2019, MMG became a wholly owned subsidiary of Reliability, and the Vivos Group (Vivos Holdings,

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

purchasing MMG and thereafter, 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.

Vivos Holdings, LLC, Vivos Real Estate Holdings, LLC, and

Doki are collectively referred to as “Vivos Debtors.”

Additionally,

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Summarily, MMG was awarded the totals of all notes the Vivos Group had with MMG for its borrowings,

the contracted interest, attorneys’ fees and expenses of $ 1,209 ,

and a contract damage of $ 1,000

to be satisfied by the transfer of their shares

of the Company common stock to the Company equal in value to $ 1,000 .

the contracted interest, attorneys’ fees and expenses of $ 1,209 , and a contract damage of $ 1,000 to be satisfied by the transfer

of their shares of the Company common stock to the Company equal in value to $ 1,000 .

INCORPORATED AND SUBSIDIARY

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With respect to the receivership, the Vivos Group owners

or holders of all of the shares of common stock of the Company were declared not be entitled to vote any of those shares at any annual

or holders of all the shares of common stock of the Company were declared not be entitled to vote any of those shares at any annual

or special meetings of the shareholders of the Company during the period of the receivership.

On October 10, 2023, the Arbitrator issued a Supplemental Award appointing

the Receiver to assist the Company in collecting the awarded amounts.

October 10, 2023, the Arbitrator issued a Supplemental Award appointing the Receiver to assist the Company in collecting the awarded

In the award, the Arbitrator established the powers of the Receiver.

6 unchanged sentences

the Receiver is now eligible to pursue.

Maryland law, the enrolling of judgements enables MMG to apply 10 % interest to the Vivos Debtor balance beginning December 29, 2023.

MMG began applying the additional interest in the second quarter 2024.

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 March 31, 2024, the Vivos Debtor balance was $ 5,571 .

of June 30, 2024, the Vivos Debtor balance was $ 5,766 .

The Award value in totality currently aggregates $ 7,975 , independent of legal

fees and interest.

fees after the award and interest.

of presentation

12 unchanged sentences

of Credit Risk

the three months ended March 31, 2024, 30.6 %

of revenue came from one customer, 15.5 %

from a second customer and 12.7 %

from a third.

Combined, this totals 58.8 %

In 2023, the top two companies were the only ones above the 10% mark and accounted for 25.2 %

respectively, which is 37.6 %

The aforementioned same three clients improved upon their combined concentration in 2023 when this group garnered 44.6 %

share of the revenue.

other client has exceeded 10% of revenues for

the three months ended March 31, 2024 or 2023.

the six months ended June 30, 2024, 27.2 % of revenue came from one customer, 21.7 % from a second customer and 13.5 % from a third.

this totals 62.4 % of revenue.

In 2023, the top two companies were the only ones above the 10% mark and accounted for 24.5 % and 13.6 %,

respectively, which is 38.1 % combined.

The aforementioned top three 2024 clients improved upon their combined concentration in 2023 when

this group garnered 45.7 % share of the revenue.

No other client has exceeded 10% of revenues for the three months ended June 30, 2024

INCORPORATED AND SUBSIDIARY

2 unchanged sentences

MANAGEMENT’S PLAN

the Company experienced net losses before taxes for the three months ended March 31, 2024 and in the years ended December 31, 2023

and 2022 of $ 262 , $ 726 , and $ 569 , respectively, management believes it has the ability to continue as a going concern and meet its financial

the Company experienced net losses after taxes for the six months ended June 30, 2024 and, in the years, ended December 31, 2023 and

2022 of $ 267 , $ 740 , and $ 739 , respectively, management believes it has the ability to continue as a going concern and meet its financial

obligation as they become due in 2024 and beyond.

The factors impacting this view include, but are not limited to, the following:

flow forecast showing sufficient cash and working capital 52 weeks from May 1, 2024;

expected reductions in continuing legal fees in 2024 given the Company has collectible judgments

that the Receiver is now eligible to pursue;

expectation that the notes receivable from related parties will be renumerated in cash and/or stock and that stock will provide

capital market access over the long term;

progress in sales, newer agreements that will begin fulfillment, and current larger clients

who have indicated increases in media activity for 2024 and in the first quarter these have

been realized;

Company has additional availability to use its factoring line to extend borrowing of up to

93 % of unfactored invoices which, as of May 2, 2024, was $ 2,936 .

flow forecast showing sufficient cash and working capital 52 weeks from August 3, 2024;

expected reductions in continuing legal fees in 2024 given the Company has collectible judgments that the Receiver is now eligible

expectation that the notes receivable from related parties will be renumerated in cash and/or stock and that stock will provide capital

market access over the long term;

progress in sales, newer agreements that will begin fulfillment, our current pipeline, and current larger clients who have indicated

increases in media activity for 2024 which in the first six months of 2024, have been realized;

Company has additional availability to use its factoring line to extend borrowing of up to 93 % of unfactored invoices which, as of

August 3, 2024, was $ 3,278 .

a result of the foregoing, the Company believes that it has sufficient cash to meet its financial obligations for the next 12 months

1 unchanged sentence

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting

Improvements to Reportable Segment Disclosures.

ASU enhances the disclosures related to segment reporting for public entities.

It requires entities to disclose significant segment expenses

for each reportable segment, providing greater transparency in segment performance.

The ASU is effective for fiscal years beginning after

December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

This ASU enhances the disclosures related to segment reporting for public

It requires entities to disclose significant segment expenses for each reportable segment, providing greater transparency in

segment performance.

The ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years

beginning after December 15, 2024.

Early adoption is permitted.

is currently evaluating how this ASU will impact its consolidated financial statements and disclosures.

December 2019, the FASB issued ASU No.

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

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

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

enactment date.

The amendments in this update were effective for us beginning with fiscal year 2022, with early adoption permitted.

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

or modified retrospective basis.

The adoption of the amendments did not have a material impact on our consolidated financial position

and results of operations as of and for the year ended December 31, 2023.

December 14, 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):

The Company is currently evaluating how this ASU will impact its consolidated

financial statements and disclosures.

December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09) .

The ASU focuses on income tax disclosures around effective tax rates and cash income

ASU 2023-09 largely follows the proposed ASU issued earlier in 2023 with several important modifications and clarifications

discussed below.

ASU 2023-09 is effective for public business entities for annual periods beginning after Dec.

15, 2024 (generally, calendar

year 2025) and effective for all other business entities one year later.

Entities should adopt this guidance on a prospective basis,

though retrospective application is permitted.

The Company is currently evaluating how this ASU will impact its consolidated financial

statements and disclosures.

The ASU focuses on income tax disclosures around effective tax rates and cash income taxes paid.

ASU 2023-09 largely follows the proposed

ASU issued earlier in 2023 with several important modifications and clarifications discussed below.

ASU 2023-09 is effective for public

business entities for annual periods beginning after December 15, 2024 (generally, calendar year 2025) and effective for all other business

entities one year later.

Entities should adopt this guidance on a prospective basis, though retrospective application is permitted.

Company is currently evaluating how this ASU will impact its consolidated financial statements and disclosures.

Accounting Pronouncements

5 unchanged sentences

ACCOUNTS RECEIVABLE

receivable can be broken down as follows:

receivable consist of the following:

OF ACCOUNTS RECEIVABLE

Accounts receivable, unfactored

Unbilled receivables

Accounts receivable, factored

Total Accounts Receivable

of March 31, 2024, the Company’s overall tax liability was $ 0 compared to $ 5 at end of same period in 2023.

Facility & Insurance Financing

12 unchanged sentences

Proceeds from the sale of receivables were $ 1,405

for the three-month period ended March 31, 2024,

compared to $ 2,971

for the same period ended on March 31, 2023.

The total outstanding

balance under the recourse contract was $ 149

on March 31, 2024, compared to $ 174

as of December 31, 2023, and $ 924

on March 31, 2023.

for the six-month period ended June 30, 2024, compared to $ 2,627

for the same period ended on June 30, 2023.

The total outstanding balance under the recourse contract was $ 217

on June 30, 2024, compared to $ 174

as of December 31, 2023.

factoring facility is collateralized by substantially all the assets of the Company.

1 unchanged sentence

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

MMG also enters into short term 10-month loan agreements

annually to finance advance payments on crime, E&O, and D&O insurances.

In 2023, MMG entered into two loans totaling $ 143 with finance

charges over 10 months totaling approximately $ 7 .

Total finance fees for all loans for the three months ended March 31, 2024

and 2023 totaled $ 16 and $ 44 , respectively.

The insurance portion of both periods was approximately $ 2 .

also enters into short term 10-month loan agreements annually to finance advance payments on crime, E&O, and D&O insurances.

In 2023, MMG entered into two loans totaling $ 143 with finance charges over 10 months totaling approximately $ 7 .

finance fees for all loans for the three months ended June 30, 2024 and 2023 totaled $ 16 and $ 44 , respectively.

The insurance portion

of both periods was approximately $ 2 .

COMMITMENTS AND CONTINGENCIES

18 unchanged sentences

to be satisfied by the transfer of their shares of the Company Common Stock to the Company equal in value to $ 1,000 .

The aggregate amount of the Awards totaled $ 7,710 .

The aggregate amount of the Awards, which are now court judgements, totals $ 7,795 as

interest continues to accrue on these awarded balances.

1 unchanged sentence

and fees provided in the awards.

On October 10, 2023, the Arbitrator issued a Supplemental Award appointing

the Receiver to assist the Company in collecting the awarded amounts.

October 10, 2023, the Arbitrator issued a Supplemental Award appointing the Receiver to assist the Company in collecting the awarded

In the award, the Arbitrator established the powers of the Receiver.

6 unchanged sentences

the Receiver is now eligible to pursue.

September 2022, MMG learned that a Vivos IT, LLC lawsuit against Second Wind Consulting (“SWC”), in May 2019 included MMG as a plaintiff.

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

MMG, Health Care Resources Network, Inc., Mettler & Michael, Inc., 360 IT Professionals, Inc., and

US IT Solutions, Inc.

SWC countersued all plaintiffs on September 30, 2019 seeking to collect the balance of $ 403 not paid by the Vivos

This was not disclosed to MMG management or to Reliability before the Merger which closed on October 29, 2019.

counsel filed a motion to include all original parties to the SWC agreement, as two of the original parties were not in the original

SWC filed a motion for summary judgement and MMG responded on March 18, 2024 opposing the motion.

The next status conference

related to SWC’s motion for Summary Judgement is scheduled for July 24, 2024.

September 2022, MMG learned that a Vivos IT, LLC lawsuit against Second Wind Consulting (“SWC”), in May 2019 included MMG

as a plaintiff.

SWC effectually countersued plaintiffs Suresh Doki, Naveen Doki, and Silvija Valleru on September 30, 2019 seeking to

collect the balance of $ 403 not paid by the Vivos Group.

This was not disclosed to MMG management or to Reliability before the Merger

which closed on October 29, 2019.

counsel filed a motion to add 4 parties to a counterclaim (HCRN, M&M, 360 IT and US IT).

The court approved our motion, and all 4

parties were added.

MMG has since released HCRN from the counterclaim.

On July 24, 2024 the court denied SWC’s motion for summary

judgement related to their counterclaim.

To date MMG has $ 110 in legal fees associated with this matter that have been booked to Other

the present time, the Company is uncertain as to whether the above item will have a material impact on their consolidated financial statements.

24 unchanged sentences

in thousands, except per share data)

table below is a summary of Vivos Group related party notes receivable which, as of March 31, 2024, totals $ 5,571 .

table below is a summary of Vivos Group related party notes receivable which, as of June 30, 2024, totals $ 5,766 .

OF RELATED PARTY NOTES RECEIVABLE

15 unchanged sentences

Accrued interest

Balance on March 31, 2024

Balance on June 30, 2024

Settlement Agreements

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 .

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 .

The $ 475 is included in the additional borrowings represented above.

5 unchanged sentences

debt to MMG by that amount.

As of March 21, 2024, MMG has not learned of any proceeds granted by the court.

As of June 30, 2024, MMG has not learned of any proceeds granted by the court.

Party Relationships

10 unchanged sentences

Tsahalis”), CFO Mark Speck (“Mr.

Speck”), both officers and then directors of the Company, and Hawkeye Enterprises

(“Hawkeye”), a company owned and controlled by Mr.

Speck”), both officers and then directors of the Company, and Hawkeye

Enterprises (“Hawkeye”), a company owned and controlled by Mr.

The convertible promissory notes signed by Mr.

Tsahalis and Mr.

Speck afforded them both common shares of Reliability based on the initial principal amounts of $ 100 each.

Tsahalis, Mr.

Hawkeye also received Warrants to purchase 16,323 , 81,616 , and 81,616 shares, respectively, (on a post-Merger basis) of the Company Common

Speck, and Hawkeye also received Warrants to purchase 16,323 , 81,616 , and 81,616 shares, respectively, (on a post-Merger basis) of the

Company Common Stock.

INCORPORATED AND SUBSIDIARY

1 unchanged sentence

in thousands, except per share data)

July 31, 2024 approximately 77 % of the warrant value associated with 2019 convertible promissory notes expired.

(See Subsequent Events).

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

9 unchanged sentences

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.

because of uncertainty around their pricing, value, and low probability in receiving the $ 5,000 trigger.

The five-year

10 unchanged sentences

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,

2024 and 2023, respectively:

the three months ended March 31:

SCHEDULE 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 six months ended

June 30, 2024 and 2023, respectively:

the Three Months Ended June 30:

OF RECONCILIATION OF REVENUE BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS

Recruiting and Staffing

Video and Multimedia Production

the Six Months Ended June 30:

Recruiting and Staffing

Video and Multimedia Production

SUBSEQUENT EVENTS

Company has evaluated subsequent events through May 10, 2024, the date on which the unaudited condensed consolidated financial statements

Company has evaluated subsequent events through August 13, 2024, 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:

On April 22, 2024, MMG received a refund of $288 from the IRS.

July 24, 2024, the court denied SWC’s motion for summary judgement related to their counterclaim.

July 31, 2024, approximately 77 %

of the warrant value associated with 2019 convertible promissory notes that were held by 7 entities including CEO Nick Tsahalis and CFO

Mark Speck, expired.

remaining warrants will expire on October 4 th if the Company fails to enter a transaction or series of related transactions ,

resulting in aggregate gross proceeds to the Company of at least $ 5,000 .

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