RELIABILITY INC 10-Q

Item 1. Legal Proceedings A series of legal actions and hearings began in February 2020 involving the Vivos Group in connection with alleged merger agreement violations and undisclosed debt obligations. In the fall of 2021, the Company’s subsidiary, MMG, and the Vivos Group agreed to resolve the disputes through arbitration, with proceedings commencing in February 2022. On August 31, 2022, the arbitrator issued an award in favor of the Company and MMG, which included findings of fraud damages. Supplemental awards were issued on May 17, 2023, October 10, 2023, and October 27, 2023. In total, MMG was awarded: ● All notes receivable from the Vivos Group for its borrowings, ● Contracted interest, ● Attorneys’ fees and expenses of $1,209, and ● Contract damages of $1,000, to be satisfied by the transfer of the Vivos Group’s shares of the Company’s common stock equal in value to $1,000. The aggregate amount of the awards, including principal and interest, totals approximately $8,649 as of September 30, 2025, with interest continuing to accrue. The May 17, 2023 award appointed a Receiver to collect the contract and fraud damages, including costs, expenses, and fees. On December 29, 2023, the Circuit Court for Montgomery County, Maryland entered all three arbitration awards as final judgments in favor of the Company. These judgments became final on January 29, 2024, upon expiration of the appeal period, and are enforceable for 12 years and may be enrolled in other states. On October 24, 2025, a non-evidentiary hearing was held in Bethesda, Maryland regarding the Receiver’s proposed order. Issuance of a written ruling from the arbitrator is expected in 2025. There can be no assurance as to the timing or amount of any recovery, or whether such recovery will be in cash, equity, or other assets.