Cover
Cover | 6 Months Ended |
Jun. 30, 2022 shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Jun. 30, 2022 |
Document Fiscal Period Focus | Q2 |
Document Fiscal Year Focus | 2022 |
Current Fiscal Year End Date | --12-31 |
Entity File Number | 0-7092 |
Entity Registrant Name | RELIABILITY INCORPORATED |
Entity Central Index Key | 0000034285 |
Entity Tax Identification Number | 75-0868913 |
Entity Incorporation, State or Country Code | TX |
Entity Address, Address Line One | 22505 Gateway Center Drive |
Entity Address, Address Line Two | P.O. Box 71 |
Entity Address, City or Town | Clarksburg |
Entity Address, State or Province | MD |
Entity Address, Postal Zip Code | 20871 |
City Area Code | (202) |
Local Phone Number | 965-1100 |
Title of 12(b) Security | Common Stock, no par value |
Trading Symbol | RLBY |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 300,000,000 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 144 | $ 24 |
Trade receivables, net of allowance for doubtful accounts | 5,500 | 6,405 |
Retention credit receivable | 2,494 | 2,494 |
Notes receivable from related parties | 5,094 | 4,985 |
Prepaid expenses and other current assets | 354 | 331 |
Total current assets | 13,586 | 14,239 |
Property, plant, and equipment, net | 34 | 49 |
Total assets | 13,620 | 14,288 |
CURRENT LIABILITIES | ||
Factoring liability | 2,725 | 946 |
Accounts payable | 488 | 1,205 |
Accrued expenses | 343 | 404 |
Accrued payroll | 1,154 | 1,629 |
Deferred revenue | 175 | 176 |
Income taxes payable | 93 | 517 |
Other current liabilities | 1 | |
Total current liabilities | 4,978 | 4,878 |
Total liabilities | 4,978 | 4,878 |
SHAREHOLDERS’ EQUITY | ||
Additional paid-in capital | 750 | 750 |
Retained earnings | 7,892 | 8,660 |
Total shareholders’ equity | 8,642 | 9,410 |
Total liabilities and shareholders’ equity | $ 13,620 | $ 14,288 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - shares | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 300,000,000 | 300,000,000 |
Common stock, shares, outstanding | 300,000,000 | 300,000,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue earned | ||||
Service revenue | $ 6,481 | $ 5,074 | $ 12,264 | $ 10,868 |
Cost of revenue | ||||
Cost of revenue | 5,594 | 4,357 | 10,648 | 9,404 |
Gross profit | 887 | 717 | 1,616 | 1,464 |
Selling, general, and administrative expenses | 1,097 | 878 | 2,402 | 1,688 |
Operating loss | (210) | (161) | (786) | (224) |
Other income (expense) | ||||
Interest income | 55 | 79 | 109 | 154 |
Interest expense | (36) | (18) | (66) | (63) |
Other income (expense) | 1 | 8,042 | 8,042 | |
Income (loss) before income tax (expense) benefit | (190) | 7,942 | (743) | 7,909 |
Income tax (expense) benefit | (24) | (675) | (25) | (669) |
Consolidated net income (loss) | $ (214) | $ 7,267 | $ (768) | $ 7,240 |
Net income per share: | ||||
Basic | $ 0 | $ 0.02 | $ 0 | $ 0.02 |
Diluted | $ 0 | $ 0.02 | $ 0 | $ 0.02 |
Shares used in per share computation: | ||||
Basic | 300,000,000 | 300,000,000 | 300,000,000 | 300,000,000 |
Diluted | 300,000,000 | 300,000,000 | 300,000,000 | 300,000,000 |
Consolidated Statements of Chan
Consolidated Statements of Change in Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] |
Balance at Dec. 31, 2020 | $ 1,517 | $ 750 | $ 767 | |
Balance, shares at Dec. 31, 2020 | 300,000,000 | |||
Net Income (Loss) | 7,240 | 7,240 | ||
Balance at Jun. 30, 2021 | 8,757 | 750 | 8,007 | |
Balance, shares at Jun. 30, 2021 | 300,000,000 | |||
Balance at Dec. 31, 2021 | 9,410 | 750 | 8,660 | |
Balance, shares at Dec. 31, 2021 | 300,000,000 | |||
Net Income (Loss) | (768) | (768) | ||
Balance at Jun. 30, 2022 | $ 8,642 | $ 750 | $ 7,892 | |
Balance, shares at Jun. 30, 2022 | 300,000,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (768) | $ 7,240 |
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 17 | (2) |
Accrued interest | (109) | (165) |
(Gain)/loss on disposal of property and equipment | 37 | |
Gain on forgiveness of PPP loan payable | (5,216) | |
Changes in operating assets and liabilities: | ||
Trade receivables | 906 | 719 |
Prepaid expenses and other current assets | (24) | 73 |
Accounts payable | (717) | (519) |
Accrued payroll | (474) | 424 |
Accrued expenses | (61) | (87) |
Deferred revenue | (1) | (6) |
Other liabilities | (1) | (2) |
Income taxes payable | (425) | 461 |
Net cash provided by (used in) operating activities | (1,657) | 2,957 |
Cash flows from investing activities: | ||
Purchase of fixed assets | (2) | (3) |
Net cash provided by (used in) investing activities | (2) | (3) |
Cash flows from financing activities: | ||
Net borrowing/(repayment) of factoring liability | 1,779 | (2,913) |
Borrowing of note payable | (37) | |
Net cash provided by (used in) financing activities | 1,779 | (2,950) |
Net increase in cash and cash equivalents | 120 | 4 |
Cash and cash equivalents, beginning of year | 24 | 70 |
Cash and cash equivalents, end of year | 144 | 74 |
Supplemental disclosures of cash flow information: | ||
Interest | 66 | 40 |
Income taxes | 733 | 217 |
Supplemental disclosures of non-cash investing and financing activities: | ||
The Company received forgiveness from the SBA of its PPP loan payable | $ 5,216 |
NATURE OF OPERATIONS AND BASIS
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION Nature of Operations Reliability, Inc. 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. Reliability 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. The Company completed a reverse merger with MMG (the “Merger”) on October 29, 2019. Company Background Linda Maslow founded Maslow Group initially in 1988 and incorporated the firm under the name the Maslow Media Group Inc., in March 1992. On November 9, 2016, Linda Maslow sold the business to Vivos Holdings, LLC (“Vivos Holdings”) owned by Dr. Naveen Doki (“Dr. Doki”) and Silvija Valleru (“Ms. Valleru”). In 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 , wife of Dr. Doki, and Kalyan Pathuri (“Mr. Pathuri”), husband of These 4 individuals, Dr. Doki, Mrs. 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”). The reverse merger was consummated on October 29, 2019. As a result of the Merger, the Vivos Group (Vivos Holdings LLC, officially) acquired approximately 84 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. The 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. On or about February 25, 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 Dr. Doki (collectively “Vivos Debtors”), to enforce Maslow’s rights under certain promissory notes and a personal guarantee made by the Dr. Doki. 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 June 30, 2022 (amounts in thousands, except per share data) The 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. On 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. Doki, Mr. 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. On 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 On 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. On 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. We refer below to the disputes between Reliability and the Vivos Group as the “Vivos Matter.” Upon 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. Basis of presentation The unaudited consolidated interim financial statements include the accounts of the Company and all wholly owned divisions, including its 100 The 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. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2021. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2022 (amounts in thousands, except per share data) Concentration of Credit Risk For the six months ended June 30, 2022, 22.5 21.1 13.2 56.8 24.1 16.3 11.2 13.5 65.1 No other client has exceeded 10% of revenues |
LIQUIDITY AND GOING CONCERN
LIQUIDITY AND GOING CONCERN | 6 Months Ended |
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
LIQUIDITY AND GOING CONCERN | NOTE 2. LIQUIDITY AND GOING CONCERN Going Concern Management considers on a regular basis, the Company’s ability to continue as a going concern. The factors which have impacted the business 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; ● Operating losses in nine of the last ten quarters starting with the first quarter of 2020 through the second quarter of 2022 ending June 30, 2022, totaling in aggregate $ 2,081 ● 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 ● Commitments and Contingencies, described further in Note 6. All 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 Additionally, from an operational view the underlying business has yet to fully recover from COVID-19 with current quarterly comparative revenue levels down 32% from 2019 standards Therefore, 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 consolidated financial statements do not include any adjustments that might result from the outcome from these uncertainties. The Company is quoted on the OTC Marketplace under the symbol “RLBY.” RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2022 (amounts in thousands, except per share data) |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 6 Months Ended |
Jun. 30, 2022 | |
Credit Loss [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 3. ACCOUNTS RECEIVABLE Accounts receivable can be broken down as follows SCHEDULE OF ACCOUNTS RECEIVABLE 6/30/2022 12/31/2021 Accounts Receivable Trade receivables $ 4,698 5,592 Unbilled receivables 802 813 Less allowance for doubtful accounts - - Total trade accounts receivable 5,500 6,405 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Adopted Accounting Pronouncements In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment The 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. |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 5. DEBT Tax Liabilities When 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 $ 215 860 300 As 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 RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2022 (amounts in thousands, except per share data) Factoring Facility Triumph Business Capital On 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. 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 2 In 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 Accounts receivables were sold with full recourse. Proceeds from the sale of receivables were $ 4,149 1,131 6,960 2,453 2,725 946 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 18 66 63 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6. COMMITMENTS AND CONTINGENCIES There 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. In 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. 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. On 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 1,703 7 20 12 16 RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2022 (amounts in thousands, except per share data) On 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 nd Maslow 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. On 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 On or about May 6, 2020, the Vivos Debtors and other Vivos Group members, specifically. Mr. 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. At the present time, the Company is uncertain as to whether any of the above items will have a material impact on their consolidated financial statements. |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
EQUITY | NOTE 7. EQUITY The Company’s authorized capital stock consists of 300,000,000 no |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 8. RELATED PARTY TRANSACTIONS On November 9, 2016, Vivos Holdings, LLC, the former owner of MMG, acquired 100 1,750 1,400 350 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 2,503 Notes Receivable The 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 4.5 5.5 RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2022 (amounts in thousands, except per share data) In 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 1,773 September 20, 2023 2.5 15 3,446 39 On November 15, 2017, MMG executed an intercompany promissory note receivable with VREH in the amount of $ 772 781 3.5 30 835 12 On 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 5 As 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. On 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 2.5 10 November 1, 2026 30,000,000 790 5 800 5 RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2022 (amounts in thousands, except per share data) Additionally, the Vivos Group had borrowings of $ 2,503 2,383 5,094 4,985 Debt Settlement Agreements On 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 On 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. Maslow 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. Related Party Relationships On October 29, 2019, prior to the Merger, pursuant to the Merger Agreement, Dr. Doki and Silvija Valleru became beneficial owners of 206,606,528 51,652,908 68.9 17.2 In 2019, the Company entered into transactions with two executive officers, Nick Tsahalis and Mark Speck, of the Company, resulting in the issuance of warrants to purchase 163,232 The term “warrant” herein refers to warrants issued by MMG and assumed by the Company 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. Eastern time on the fifth annual anniversary thereof (the “Exercise Period”). 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 $ 5,000 120 5,000 On 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 litigation. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2022 (amounts in thousands, except per share data) |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 6 Months Ended |
Jun. 30, 2022 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | NOTE 9. BUSINESS SEGMENTS The Company operates within four The 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: For the three months ended June 30: SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS 2022 2021 Revenue: EOR $ 5,515 3,981 Recruiting and Staffing 898 812 Permanent Placement - 30 Video and Multimedia Production 68 251 Total $ 6,481 5,074 For the six months ended June 30: 2022 2021 Revenue: EOR $ 10,288 8,478 Recruiting and Staffing 1,822 1,696 Permanent Placement 39 30 Video and Multimedia Production 115 664 Total $ 12,264 10,868 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10. SUBSEQUENT EVENTS The Company has evaluated subsequent events through August 15, 2022, the date on which the unaudited consolidated financial statements were available to be issued. Based upon this evaluation, management has determined that no material subsequent events have occurred that would require recognition in or disclosures in the accompanying unaudited condensed consolidated financial statements, except as follows: Maslow 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. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Adopted Accounting Pronouncements | Adopted Accounting Pronouncements In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment The 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. |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Credit Loss [Abstract] | |
SCHEDULE OF ACCOUNTS RECEIVABLE | Accounts receivable can be broken down as follows SCHEDULE OF ACCOUNTS RECEIVABLE 6/30/2022 12/31/2021 Accounts Receivable Trade receivables $ 4,698 5,592 Unbilled receivables 802 813 Less allowance for doubtful accounts - - Total trade accounts receivable 5,500 6,405 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Segment Reporting [Abstract] | |
SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS | The 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: For the three months ended June 30: SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS 2022 2021 Revenue: EOR $ 5,515 3,981 Recruiting and Staffing 898 812 Permanent Placement - 30 Video and Multimedia Production 68 251 Total $ 6,481 5,074 For the six months ended June 30: 2022 2021 Revenue: EOR $ 10,288 8,478 Recruiting and Staffing 1,822 1,696 Permanent Placement 39 30 Video and Multimedia Production 115 664 Total $ 12,264 10,868 |
NATURE OF OPERATIONS AND BASI_2
NATURE OF OPERATIONS AND BASIS OF PRESENTATION (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |||
Oct. 29, 2019 | Jun. 30, 2022 | Jun. 30, 2021 | Jul. 21, 2021 | |
Revenue [Member] | ||||
Product Information [Line Items] | ||||
Concentration risk, benchmark description | No other client has exceeded 10% of revenues | |||
Revenue [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||
Product Information [Line Items] | ||||
Percentage of revenue | 56.80% | 65.10% | ||
MMG [Member] | ||||
Product Information [Line Items] | ||||
Business acquisition percentage of voting interest acquired | 100% | |||
Vivos Holdings LLC [Member] | ||||
Product Information [Line Items] | ||||
Shares issued and outstanding percentage | 84% | |||
Long term debt | $ 475 | |||
ATT Services, Inc [Member] | Revenue [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||
Product Information [Line Items] | ||||
Percentage of revenue | 22.50% | 24.10% | ||
Goldman Sachs [Member] | Revenue [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||
Product Information [Line Items] | ||||
Percentage of revenue | 21.10% | 16.30% | ||
Janssen Pharmaceuticals [Member] | Revenue [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||
Product Information [Line Items] | ||||
Percentage of revenue | 13.20% | 11.20% | ||
Morgan Stanley [Member] | Revenue [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||
Product Information [Line Items] | ||||
Percentage of revenue | 13.50% |
LIQUIDITY AND GOING CONCERN (De
LIQUIDITY AND GOING CONCERN (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Operating income loss | $ 210 | $ 161 | $ 786 | $ 224 |
Note receivable net | 5,094 | $ 5,094 | ||
Unusual risk by nature description | Additionally, from an operational view the underlying business has yet to fully recover from COVID-19 with current quarterly comparative revenue levels down 32% from 2019 standards | |||
Vivos group [Member] | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Proceeds for loans | $ 5,094 | |||
Ten Quarters Starting With First Quarter Of 2020 Through Second Quarter 2022 [Member] | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Operating income loss | $ 2,081 |
SCHEDULE OF ACCOUNTS RECEIVABLE
SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Credit Loss [Abstract] | ||
Trade receivables | $ 4,698 | $ 5,592 |
Unbilled receivables | 802 | 813 |
Less allowance for doubtful accounts | ||
Total trade accounts receivable | $ 5,500 | $ 6,405 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Jan. 31, 2020 | Dec. 31, 2016 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Jan. 19, 2018 | |
Debt Instrument [Line Items] | ||||||||
Deferred income tax liabilities | $ 93 | $ 93 | ||||||
Payment of final estimated portion | $ 300 | |||||||
Reserve interest percentage | 7% | |||||||
Accounts receivable factored | 2,725 | $ 2,725 | 946 | |||||
Finance line fees | 36 | $ 18 | 66 | $ 63 | ||||
Accounts Receivable [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from sale of accounts receivable | $ 4,149 | $ 1,131 | $ 6,960 | $ 2,453 | ||||
Factoring and Security Agreement [Member] | Prime Rate [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, description of variable rate basis | 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 2%. The amount of an invoice eligible for sale to Triumph went from 90% to 93% | |||||||
Factoring and Security Agreement [Member] | Prime Rate [Member] | Minimum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, interest rate | 3.50% | |||||||
Factoring and Security Agreement [Member] | Prime Rate [Member] | Maximum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, interest rate | 2% | |||||||
Vivos group [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Deferred income tax liabilities | $ 860 | |||||||
Vivos Holdings LLC [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Estimated annual impact | $ 215 | |||||||
Triumph Business Capital [Member] | Factoring and Security Agreement [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Increase in factoring fee | $ 5,500 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | Mar. 02, 2022 | Oct. 09, 2018 |
Maslow Media Group, Inc [Member] | ||
Loans payable | $ 1,743 | |
Loan unpayable | 1,703 | |
Unpaid interest | 7 | |
Deferred cost current and non current | 20 | |
Debt instrument fee amount | 12 | |
Set off fees | $ 16 | |
Hop Capital [Member] | ||
Loss contigency damages sought value | $ 400 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - $ / shares | Jun. 30, 2022 | Dec. 31, 2021 |
Equity [Abstract] | ||
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 300,000,000 | 300,000,000 |
Common stock, shares outstanding | 300,000,000 | 300,000,000 |
Common stock par or stated value, per share | $ 0 | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | 54 Months Ended | |||||||||||
Dec. 02, 2019 | Oct. 29, 2019 | Sep. 05, 2019 | Jun. 12, 2019 | Nov. 15, 2016 | Nov. 09, 2016 | Jun. 30, 2022 | Dec. 31, 2018 | Jun. 30, 2022 | Mar. 02, 2022 | Dec. 31, 2021 | Jul. 21, 2021 | Sep. 30, 2018 | Nov. 15, 2017 | |
Related Party Transaction [Line Items] | ||||||||||||||
Notes Receivable, Related Parties, Current | $ 5,094 | $ 5,094 | $ 4,985 | |||||||||||
Proceeds from related party debt | $ 5,000 | |||||||||||||
Average sale price percentage | 120% | |||||||||||||
Warrant [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Issuance of warrants to purchase, shares | 163,232 | |||||||||||||
Convertible Note Warrants [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Convertible note warrants trigger value | $ 5,000 | 5,000 | ||||||||||||
Maslow Media Group, Inc [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Interest payable | $ 7 | |||||||||||||
Debt Instrument, Face Amount | 800 | 800 | 790 | |||||||||||
Interest Receivable | $ 5 | $ 5 | $ 5 | |||||||||||
Agreement [Member] | Vivos Holdings LLC [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Settlement obligation | $ 475 | |||||||||||||
Vivos Holdings LLC [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Additional borrowing | $ 2,383 | |||||||||||||
Debt instrument periodic payment | $ 30 | |||||||||||||
Vivos Holdings LLC [Member] | Maslow Media Group, Inc [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Legal rate interest rate, percentage | 8% | |||||||||||||
Vivos Holdings LLC [Member] | Maslow Media Group, Inc [Member] | Minimum [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Debt instrument interest rate, stated percentage | 4.50% | 4.50% | ||||||||||||
Vivos Holdings LLC [Member] | Maslow Media Group, Inc [Member] | Maximum [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Debt instrument interest rate, stated percentage | 5.50% | 5.50% | ||||||||||||
Vivos Holdings LLC [Member] | Stock Purchase Agreement [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Notes payable | $ 3,446 | $ 3,446 | $ 1,773 | |||||||||||
Notes receivable, related parties | $ 1,400 | |||||||||||||
Debt instrument, maturity date | Sep. 20, 2023 | |||||||||||||
Debt instrument periodic payment | $ 15 | |||||||||||||
Interest payable | 39 | 39 | ||||||||||||
Vivos Holdings LLC [Member] | Stock Purchase Agreement [Member] | Second Loan [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Debt instrument interest rate, stated percentage | 2.50% | |||||||||||||
Vivos Holdings LLC [Member] | Stock Purchase Agreement [Member] | Maslow Media Group, Inc [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Proceeds from Previous Acquisition | $ 1,400 | |||||||||||||
Notes payable | $ 350 | |||||||||||||
Debt instrument, description | 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 | |||||||||||||
Additional borrowing | $ 2,503 | 2,503 | ||||||||||||
Vivos Holdings LLC [Member] | Maslow Media Group, Inc [Member] | Stock Purchase Agreement [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Business combination, equity interest percentage | 100% | |||||||||||||
Transaction costs | $ 1,750 | |||||||||||||
Vivos Real Estate [Member] | Second Loan [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Debt instrument interest rate, stated percentage | 3.50% | |||||||||||||
Vivos Real Estate [Member] | Vivos RE Promissory Note [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Notes payable | 835 | 835 | $ 772 | |||||||||||
Interest payable | $ 12 | $ 12 | ||||||||||||
Vivos Real Estate [Member] | New Loan [Member] | Vivos RE Promissory Note [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Notes payable | $ 781 | |||||||||||||
Mr. Naveen Doki [Member] | Personal Guaranty Agreement [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Repayments of debt | $ 3,000 | |||||||||||||
Mr. Naveen Doki [Member] | Maslow Media Group, Inc [Member] | Personal Guaranty Agreement [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Business combination, equity interest percentage | 5% | |||||||||||||
Vivos [Member] | Maslow Media Group, Inc [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Debt instrument periodic payment | $ 10 | |||||||||||||
Vivos [Member] | Secured Promissory Note Agreement [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Debt conversion, shares issued | 30,000,000 | |||||||||||||
Vivos [Member] | Secured Promissory Note Agreement [Member] | Maslow Media Group, Inc [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Debt instrument interest rate, stated percentage | 2.50% | |||||||||||||
Debt instrument, maturity date | Nov. 01, 2026 | |||||||||||||
Debt Instrument, Face Amount | $ 750 | |||||||||||||
Naveen Doki [Member] | Merger Agreement [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Debt conversion, shares issued | 206,606,528 | |||||||||||||
Debt conversion, rate | 68.90% | |||||||||||||
Silvija Valleru [Member] | Merger Agreement [Member] | ||||||||||||||
Related Party Transaction [Line Items] | ||||||||||||||
Debt conversion, shares issued | 51,652,908 | |||||||||||||
Debt conversion, rate | 17.20% |
SCHEDULE OF RECONCILIATION OF R
SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Total | $ 6,481 | $ 5,074 | $ 12,264 | $ 10,868 |
E O R [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total | 5,515 | 3,981 | 10,288 | 8,478 |
Recruiting And Staffing [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total | 898 | 812 | 1,822 | 1,696 |
Permanent Placement [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total | 30 | 39 | 30 | |
Video And Multimedia Production [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total | $ 68 | $ 251 | $ 115 | $ 664 |
BUSINESS SEGMENTS (Details Narr
BUSINESS SEGMENTS (Details Narrative) | 6 Months Ended |
Jun. 30, 2022 Integer | |
Segment Reporting [Abstract] | |
Number of Operating Segments | 4 |