Cover
Cover | 9 Months Ended |
Sep. 30, 2022 shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Sep. 30, 2022 |
Document Fiscal Period Focus | Q3 |
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 | Sep. 30, 2022 | Dec. 31, 2021 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 1,127 | $ 24 |
Trade receivables, net of allowance for doubtful accounts | 5,091 | 6,405 |
Retention credit receivable | 1,174 | 2,494 |
Notes receivable from related parties | 5,157 | 4,985 |
Prepaid expenses and other current assets | 366 | 331 |
Total current assets | 12,915 | 14,239 |
Property, plant, and equipment, net | 27 | 49 |
Total assets | 12,942 | 14,288 |
CURRENT LIABILITIES | ||
Factoring liability | 2,014 | 946 |
Accounts payable | 378 | 1,205 |
Accrued expenses | 344 | 404 |
Accrued payroll | 1,002 | 1,629 |
Deferred revenue | 176 | 176 |
Income taxes payable | 276 | 517 |
Other current liabilities | 1 | |
Total current liabilities | 4,190 | 4,878 |
Total liabilities | 4,190 | 4,878 |
Commitment and contingencies (Note 6) | ||
Subsequent events (Note 10) | ||
SHAREHOLDERS’ EQUITY | ||
Additional paid-in capital | 750 | 750 |
Retained earnings | 8,002 | 8,660 |
Total shareholders’ equity | 8,752 | 9,410 |
Total liabilities and shareholders’ equity | $ 12,942 | $ 14,288 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - shares | Sep. 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 ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue earned | ||||
Service revenue | $ 6,464 | $ 6,941 | $ 18,729 | $ 17,809 |
Cost of revenue | ||||
Cost of revenue | 5,573 | 6,138 | 16,222 | 15,542 |
Gross profit | 891 | 803 | 2,507 | 2,267 |
Selling, general, and administrative expenses | 941 | 866 | 3,343 | 2,554 |
Operating loss | (50) | (63) | (836) | (287) |
Other income (expense) | ||||
Interest income | 86 | 81 | 196 | 235 |
Interest expense | (46) | (15) | (111) | (78) |
Other income | 210 | 1,813 | 210 | 9,855 |
Income (loss) before income tax expense | 200 | 1,816 | (541) | 9,725 |
Income tax expense | (91) | (405) | (117) | (1,075) |
Consolidated net income (loss) | $ 109 | $ 1,411 | $ (658) | $ 8,650 |
Net income per share: | ||||
Basic | $ 0 | $ 0.01 | $ 0 | $ 0.03 |
Diluted | $ 0 | $ 0.01 | $ 0 | $ 0.03 |
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) | 8,650 | 8,650 | ||
Balance at Sep. 30, 2021 | 10,167 | 750 | 9,417 | |
Balance, shares at Sep. 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) | (658) | (658) | ||
Balance at Sep. 30, 2022 | $ 8,752 | $ 750 | $ 8,002 | |
Balance, shares at Sep. 30, 2022 | 300,000,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (658) | $ 8,650 |
Adjustments to reconcile net (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 23 | 16 |
Accrued interest | (172) | (246) |
(Gain)/loss on disposal of property and equipment | 38 | |
Gain on forgiveness of PPP loan payable | (5,216) | |
Changes in operating assets and liabilities: | ||
Trade receivables | 2,634 | (1,441) |
Prepaid expenses and other current assets | (35) | 48 |
Accounts payable | (828) | (260) |
Accrued payroll | (627) | 350 |
Accrued expenses | (59) | (59) |
Deferred revenue | 2 | |
Other liabilities | (1) | (2) |
Income taxes payable | (241) | 738 |
Net cash provided by (used in) operating activities | 36 | 2,618 |
Cash flows from investing activities: | ||
Purchase of fixed assets | (1) | (6) |
Net cash provided by (used in) investing activities | (1) | (6) |
Cash flows from financing activities: | ||
Net borrowing/(repayment) of factoring liability | (2,061) | |
Borrowing of note payable | 1,068 | (37) |
Advances to Related Parties | (480) | |
Net cash provided by (used in) financing activities | 1,068 | (2,578) |
Net increase in cash and cash equivalents | 1,103 | 34 |
Cash and cash equivalents, beginning of year | 24 | 70 |
Cash and cash equivalents, end of year | 1,127 | 104 |
Supplemental disclosures of cash flow information: | ||
Interest | 111 | 78 |
Income taxes | 735 | 344 |
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 | 9 Months Ended |
Sep. 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, 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. 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 individuals, included but were not limited to Dr. Doki, Mrs. Janumpally, Mr. Pathuri, and Mrs. 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 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. Upon purchasing MMG and thereafter, Vivos Holdings, LLC and their affiliates (collectively the “Vivos Group”) began borrowing monies from MMG starting with $ 1,400 3,418 3,000 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. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 (amounts in thousands, except per share data) 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”). We refer below to the disputes between Reliability and the Vivos Group as the “Vivos Matter.” On 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 On 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. On August 24 , On August 31, 2022, the Arbitrator issued an award (the “Award”) with the Company and MMG prevailing on their claims. The Company and MMG were awarded the following: ● an award in favor of MMG against Vivos Holdings LLC under Note I (as defined in the Award) in the amount of $ 3,458,377 4.5 ● no 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; ● an award in favor of MMG against Vivos Holdings, LLC under Note III (as defined in the Award) in the amount of $ 800,448 2.5 ● an award in favor of MMG against Naveen under the Personal Guaranty (as defined in the Award) in the amount of $ 2,309,449 6% ● 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 contract damages of $ 1,000,000 1,000,000 ● 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 6% ● an 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 award; and ● declaratory relief in favor of the Company and its officers and directors. Section 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 RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 (amounts in thousands, except per share data) The 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. 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. Concentration of Credit Risk For the nine months ended September 30, 2022, 20.3% of revenue came 13.5% 12.2% 10.8% 56.7% 18.1% 15.7% 13.8% 11% 8.6% 67.1% No other client has exceeded 10% of revenues |
LIQUIDITY AND GOING CONCERN
LIQUIDITY AND GOING CONCERN | 9 Months Ended |
Sep. 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 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 ● operating 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; ● Commitments and Contingencies, described further in Note 6. All these conditions noted and factored above, and if the $ 5,157 RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 (amounts in thousands, except per share data) Additionally, from an operational view the underlying business has yet to fully recover from COVID-19 with current quarterly comparative revenue levels down 36% 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.” |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended |
Sep. 30, 2022 | |
Credit Loss [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 3. ACCOUNTS RECEIVABLE Accounts receivable are broken down as follows SCHEDULE OF ACCOUNTS RECEIVABLE September 30, 2022 December 31, 2021 Accounts Receivable Trade receivables $ 4,581 5,592 Unbilled receivables 510 813 Less allowance for doubtful accounts - - Total trade accounts receivable 5,091 6,405 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 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 | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 5. DEBT Tax Liabilities When 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. This triggered an accelerated tax event, a $ 215 860 300 As of September 30, 2022, the Company no longer has a federal tax liability related to tax periods prior to 2020. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 (amounts in thousands, except per share data) Factoring Facility Gulf Coast Bank and Trust On 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 th 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 September 30, 2022, the required amount was 7% Accounts receivables were sold with full recourse. Proceeds from the sale of receivables were $ 3,429 1,756 10,388 2,453 2,014 946 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 September 30, 2022, and 2021 totaled $ 46 15 111 78 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 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 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. 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, “[a]s of March 2, 2022, the total indebtedness due and owing under the Loan (the ‘‘Debt’’) is $ 1,743 1,703 7 20 12 16 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, 2022. On August 2, 2022, VREH filed for Chapter 11 bankruptcy in the District Court of Maryland. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 (amounts in thousands, except per share data) Maslow 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. On 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. On 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. In 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 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 | 9 Months Ended |
Sep. 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 | 9 Months Ended |
Sep. 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 As of September 30, 2022, and December 31, 2021, the receivable totaled $ 5,157 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. On 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. On 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. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 (amounts in thousands, except per share data) 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. On August 31, 2022, the Arbitrator issued an award (the “Award”) with the Company with MMG prevailing on their claims. (See Note 1) for more details. The 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
BUSINESS SEGMENTS | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | NOTE 9. BUSINESS SEGMENTS The Company operates within four RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2022 (amounts in thousands, except per share data) The 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: For the three months ended September 30: SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS 2022 2021 Revenue: EOR $ 5,494 5,705 Recruiting and Staffing 848 962 Direct Placement 60 38 Video and Multimedia Production 62 236 Total $ 6,464 6,941 For the nine months ended September 30: 2022 2021 Revenue: EOR $ 15,783 14,186 Recruiting and Staffing 2,671 2,658 Direct Placement 99 68 Video and Multimedia Production 176 897 Total $ 18,729 17,809 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10. SUBSEQUENT EVENTS The Company has evaluated subsequent events through November 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. A hearing has been scheduled for December 9, 2022. On 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. On 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. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 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) | 9 Months Ended |
Sep. 30, 2022 | |
Credit Loss [Abstract] | |
SCHEDULE OF ACCOUNTS RECEIVABLE | Accounts receivable are broken down as follows SCHEDULE OF ACCOUNTS RECEIVABLE September 30, 2022 December 31, 2021 Accounts Receivable Trade receivables $ 4,581 5,592 Unbilled receivables 510 813 Less allowance for doubtful accounts - - Total trade accounts receivable 5,091 6,405 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 9 Months Ended |
Sep. 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 nine months ended September 30, 2022, and 2021, respectively: For the three months ended September 30: SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS 2022 2021 Revenue: EOR $ 5,494 5,705 Recruiting and Staffing 848 962 Direct Placement 60 38 Video and Multimedia Production 62 236 Total $ 6,464 6,941 For the nine months ended September 30: 2022 2021 Revenue: EOR $ 15,783 14,186 Recruiting and Staffing 2,671 2,658 Direct Placement 99 68 Video and Multimedia Production 176 897 Total $ 18,729 17,809 |
NATURE OF OPERATIONS AND BASI_2
NATURE OF OPERATIONS AND BASIS OF PRESENTATION (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||||||||
Aug. 31, 2022 | Oct. 29, 2019 | Sep. 30, 2019 | Nov. 09, 2016 | Aug. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Mar. 21, 2022 | Dec. 31, 2021 | Dec. 31, 2019 | |
Product Information [Line Items] | ||||||||||
Loss contingency damages sought value | $ 402,500 | |||||||||
Common Stock, Shares, Issued | 300,000,000 | 300,000,000 | ||||||||
Revenue Benchmark [Member] | Revenue from Rights Concentration Risk [Member] | Customer [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Concentration Risk, Percentage | 20.30% | |||||||||
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] | ||||||||||
Concentration Risk, Percentage | 56.70% | 67.10% | ||||||||
MMG [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Business acquisition percentage of voting interest acquired | 100% | |||||||||
Naveen Valleru Janumpally [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Arbitrator issued value | $ 4,327,127,000 | |||||||||
Arbitrator issued value, Pecentage | 6% | 6% | ||||||||
Merger Agreement [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Common Stock, Shares, Issued | 1,600 | |||||||||
Merger Agreement [Member] | Naveen Valleru Janumpally [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Loss contingency damages sought value | $ 1,000,000,000 | |||||||||
Merger Agreement [Member] | Shirisha Janumpally [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Loss contingency value in common stock | 1,000,000,000 | $ 1,000,000,000 | ||||||||
Vivos Holdings LLC [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Shares issued and outstanding percentage | 84% | |||||||||
Maslow Media Group, Inc [Member] | Naveen Doki [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Arbitrator issued value | $ 2,309,449,000 | |||||||||
Arbitrator issued value, Pecentage | 6% | 6% | ||||||||
Maslow Media Group, Inc [Member] | Vivos Holdings LLC [Member] | Payment Guarantee [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Notes payable | $ 5,039,000 | |||||||||
Maslow Media Group, Inc [Member] | Vivos Holdings LLC [Member] | Stock Purchase Agreement [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Proceeds from Previous Acquisition | $ 1,400,000 | |||||||||
Notes payable | $ 350,000 | $ 3,418,000 | ||||||||
Maslow Media Group, Inc [Member] | Vivos Holdings LLC [Member] | Stock Purchase Agreement [Member] | Payment Guarantee [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Notes payable | $ 3,000,000 | |||||||||
Maslow Media Group, Inc [Member] | Vivos Holdings LLC Under Note One [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Arbitrator issued value | $ 3,458,377,000 | |||||||||
Arbitrator issued value, Pecentage | 4.50% | 4.50% | ||||||||
Maslow Media Group, Inc [Member] | Vivos Holdings LLC Under Note Three [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Arbitrator issued value | $ 800,448,000 | |||||||||
Arbitrator issued value, Pecentage | 2.50% | 2.50% | ||||||||
ATT Services, Inc [Member] | Revenue [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Concentration Risk, Percentage | 13.50% | 18.10% | ||||||||
Janssen Pharmaceuticals [Member] | Revenue [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Concentration Risk, Percentage | 12.20% | 13.80% | ||||||||
Direc TV [Member] | Revenue [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Concentration Risk, Percentage | 10.80% | |||||||||
Goldman Sachs [Member] | Revenue [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Concentration Risk, Percentage | 15.70% | |||||||||
Morgan Stanley [Member] | Revenue [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Concentration Risk, Percentage | 11% | |||||||||
Direct TV [Member] | Revenue [Member] | Customer Concentration Risk [Member] | Customer [Member] | ||||||||||
Product Information [Line Items] | ||||||||||
Concentration Risk, Percentage | 8.60% |
LIQUIDITY AND GOING CONCERN (De
LIQUIDITY AND GOING CONCERN (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Operating income loss | $ 50 | $ 63 | $ 836 | $ 287 |
Note receivable net | 5,157 | $ 5,157 | ||
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 36% from 2019 standards | |||
Eleven Quarters Starting With First Quarter Of Twenty Twenty Through Third Quarter Twenty Twenty Two [Member] | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Operating income loss | $ 2,131 |
SCHEDULE OF ACCOUNTS RECEIVABLE
SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Credit Loss [Abstract] | ||
Trade receivables | $ 4,581 | $ 5,592 |
Unbilled receivables | 510 | 813 |
Less allowance for doubtful accounts | ||
Total trade accounts receivable | $ 5,091 | $ 6,405 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2016 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Defined Benefit Plan Disclosure [Line Items] | ||||||
Payment of final estimated portion | $ 300 | |||||
Reserve interest percentage | 7% | |||||
Accounts receivable factored | $ 2,014 | $ 2,014 | 946 | |||
Finance line fees | 46 | $ 15 | 111 | $ 78 | ||
Accounts Receivable [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Proceeds from sale of accounts receivable | $ 3,429 | $ 1,756 | $ 10,388 | $ 2,453 | ||
Vivos group [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Deferred income tax liabilities | $ 860 | |||||
Vivos Holdings LLC [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Estimated annual impact | $ 215 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | Mar. 02, 2022 | Sep. 30, 2019 |
Loss Contingency, Damages Sought, Value | $ 402,500 | |
Maslow Media Group, Inc [Member] | ||
Loans payable | $ 1,743,000 | |
Loan unpayable | 1,703,000 | |
Unpaid interest | 7,000 | |
Deferred cost current and non current | 20,000 | |
Debt instrument fee amount | 12,000 | |
Set off fees | $ 16,000 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Equity [Abstract] | ||
Common stock, shares authorized | 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 | 9 Months Ended | 57 Months Ended | |||||
Oct. 29, 2019 | Nov. 09, 2016 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Jul. 21, 2021 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | |||||||
Notes Receivable, Related Parties, Current | $ 5,157 | $ 5,157 | $ 4,985 | ||||
Proceeds from related party debt | $ 5,000 | ||||||
Average sale price percentage | 120% | ||||||
Convertible Note Warrants [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Convertible note warrants trigger value | $ 5,000 | 5,000 | |||||
Warrant [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Issuance of warrants to purchase, shares | 163,232 | ||||||
Agreement [Member] | Vivos Holdings LLC [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Settlement obligation | $ 475 | ||||||
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 | $ 3,418 | |||||
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 | ||||||
Vivos Holdings LLC [Member] | Maslow Media Group, Inc [Member] | Stock Purchase Agreement [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Business combination step acquisition, percentage | 100% | ||||||
Transaction costs | $ 1,750 | ||||||
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 | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Total | $ 6,464 | $ 6,941 | $ 18,729 | $ 17,809 |
E O R [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total | 5,494 | 5,705 | 15,783 | 14,186 |
Recruiting And Staffing [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total | 848 | 962 | 2,671 | 2,658 |
Direct Placement [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total | 60 | 38 | 99 | 68 |
Video And Multimedia Production [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total | $ 62 | $ 236 | $ 176 | $ 897 |
BUSINESS SEGMENTS (Details Narr
BUSINESS SEGMENTS (Details Narrative) | 9 Months Ended |
Sep. 30, 2022 Integer | |
Segment Reporting [Abstract] | |
Number of operating segments | 4 |