RLBY Reliability Incorporated (PK)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2023

 

Or

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________to ____________.

 

Commission File Number 0-7092

 

 

RELIABILITY INCORPORATED

(Exact name of registrant as specified in its charter)

 

texas		75-0868913
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

 

22505 Gateway Center Drive, P.O. Box 71,
Clarksburg, Maryland		20871
(Address of principal executive offices)		(Zip Code)

 

(202) 965-1100

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name each exchange on which registered
Common Stock, no par value		RLBY		OTC Pink Sheets

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ YES ☐ NO

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ YES ☐ NO

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ YES ☒ NO

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 300,000,000 shares of Common Stock, no par value, as of September 30, 2023.

 

 

 

RELIABILITY INCORPORATED

Quarterly Report on Form 10-Q

As of and For the Three and Nine Months Ended September 30, 2023

 

INDEX

 

PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
	Unaudited Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	3
	Unaudited Consolidated Statements of Operations for the Three Months Ended September 30, 2023 and 2022	4
	Unaudited Consolidated Statements of Operations for the Nine Months Ended September 30, 2023 and 2022	5
	Unaudited Consolidated Statements of Changes in Equity for the Nine Months Ended September 30, 2023 and 2022	6
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	7-8
	Notes to Unaudited Consolidated Financial Statements	9-17
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18-21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Risk Controls and Procedures	22
PART II. OTHER INFORMATION		23
Item 1.	Legal Proceedings	23
Item 1a.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
Signatures		26
Exhibits		27

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

RELIABILITY INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share data)

 

		2023				2022
		September 30,				December 31,
		2023				2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	751				227
Trade receivables, net of allowance for doubtful accounts			3,094				6,337
Retention credit receivable			10				1,219
Notes receivable from related parties			5,417				5,251
Prepaid expenses and other current assets			358				430
Total current assets			9,630				13,464
Property, plant, and equipment, net			16				26
Other intangible assets			3				-
Total assets		$	9,649				13,490
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Factoring liability		$	-				2,619
Accounts payable			414				698
Accrued expenses			318				339
Accrued payroll			677				981
Deferred revenue			176				176
Income taxes payable			5				6
Total current liabilities			1,590				4,819
Total liabilities			1,590				4,819
Commitment and contingencies (Note 6)			-				-
Subsequent events (Note 10)			-				-
SHAREHOLDERS’ EQUITY
Common stock, without par value, 300,000,000 shares authorized, 300,000,000 issued and outstanding as of September 30, 2023 and as of December 31, 2022
Additional paid-in capital			750				750
Retained earnings			7,309				7,921
Total shareholders’ equity			8,059				8,671
Total liabilities and shareholders’ equity		$	9,649				13,490

 

The accompanying notes are an integral part of these statements.

 

 

RELIABILITY INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

 

		2023				2022
		For the Three Months Ended September 30,
		2023				2022
Revenue earned
Service revenue		$	5,341				6,464
Cost of revenue
Cost of revenue			4,569				5,573
Gross profit			772				891
Selling, general, and administrative expenses			998				941
Operating loss			(226)				(50)
Other income (expense)
Interest income from related parties			68				23
Interest income			7				63
Interest expense			(12)				(46)
Other income (expense)			(13)				210
Income (loss) before income tax expense			(176)				200
Income tax expense			-				(91)
Consolidated net income (loss)		$	(176)				109
Net loss per share:
Basic		$	0.00				0.00
Diluted		$	0.00				0.00
Share used in per share computation:
Basic			300,000,000				300,000,000
Diluted			300,000,000				300,000,000

 

The accompanying notes are an integral part of these statements.

 

 

RELIABILITY INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

 

		2023				2022
		For the Nine Months Ended September 30,
		2023				2022
Revenue earned
Service revenue		$	15,992				18,729
Cost of revenue
Cost of revenue			13,769				16,222
Gross profit			2,223				2,507
Selling, general, and administrative expenses			2,843				3,343
Operating loss			(620)				(836)
Other income (expense)
Interest income from related parties			200				196
Interest income			21				-
Interest expense			(77)				(111)
Other income (expense)			(133)				210
Loss before income tax expense			(609)				(541)
Income (loss) before income tax expense			(609	)			(541	)
Income tax expense			(3)				(117)
Consolidated net loss		$	(612)				(658)
Consolidated net income (loss)		$	(612	)			(658	)
Net loss per share:
Basic		$	0.00			$	0.00
Diluted		$	0.00			$	0.00
Shares used in per share computation:
Basic			300,000,000				300,000,000
Diluted			300,000,000				300,000,000

 

The accompanying notes are an integral part of these statements.

 

 

RELIABILITY INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY

For the Nine months Ended September 30, 2023 and 2022

(amounts in thousands, except per share data)

 

		Shares				Amount				Capital				Earnings				Equity
										Additional
		Common Stock								Paid-in				Retained				Total
		Shares				Amount				Capital				Earnings				Equity
Balance, December 31, 2021			300,000,000			$	-			$	750			$	8,660			$	9,410
Net Loss			-				-				-				(658)				(658)
Balance, September 30, 2022			300,000,000			$	-			$	750			$	8,002			$	8,752
Balance, December 31, 2022			300,000,000			$	-			$	750			$	7,921			$	8,671
Balance			300,000,000			$	-			$	750			$	7,921			$	8,671
Net Loss			-				-				-				(612)				(612)
Balance, September 30, 2023			300,000,000			$	-			$	750			$	7,309			$	8,059
Balance			300,000,000			$	-			$	750			$	7,309			$	8,059

 

The accompanying notes are an integral part of these statements.

 

 

RELIABILITY INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

 

		2023				2022
		For the Nine Months Ended September 30,
		2023				2022
Cash flows from operating activities:
Net loss		$	(612)				(658)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			14				23
Accrued interest			(165)				(172)
Changes in operating assets and liabilities:
Trade receivables			3,243				2,634
Retention credit receivable			1,195				-
Other receivable			14				-
Prepaid expenses and other current assets			72				(35)
Accounts payable			(284)				(828)
Accrued payroll			(304)				(627)
Accrued expenses			(21)				(59)
Other liabilities			-				(1)
Income taxes payable			(1)				(241)
Net cash provided by operating activities		$	3,151				36
Cash flows from investing activities:
Purchase of fixed assets			(8)				(1)
Net cash used in investing activities		$	(8)				(1)
Cash flows from financing activities:
Net borrowing/(repayment) of line-of-credit			(2,619)				1,068
Net cash provided by (used in) financing activities		$	(2,619)				1,068
Net increase in cash and cash equivalents			524				1,103
Cash and cash equivalents, beginning of year			227				24
Cash and cash equivalents, end of year		$	751				1,127

 

The accompanying notes are an integral part of these statements.

 

 

RELIABILITY INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

(amounts in thousands)

 

		For the Nine Months Ended September 30,
Supplemental disclosures of cash flow information:		2023				2022
Cash paid during the year for:
Interest		$	77				111
Income taxes		$	5				735

 

 

RELIABILITY INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(amounts in thousands, except per share data)

 

NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

Nature of Operations

 

Reliability, Inc. is a leading provider of employer workforce management solutions 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, Direct Placements, and Video and Multimedia Production Services, 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. Video Production involves assembling and providing staff and/or crews with equipment for live or taped programming. This service can be provided within client facilities or on location across the globe and cover pre-production planning to post-production services.

 

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 down 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. (“MMG”) in March 1992.

 

On November 9, 2016, MMG was sold 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 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 (“Mrs. Janumpally”), wife of Dr. Doki, and Kalyan Pathuri (“Mr. Pathuri”), husband of Silvija Valleru.

 

These individuals included, but were not limited to, Dr. Doki, Mrs. Janumpally, Mr. Pathuri, 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% of the issued and outstanding shares of Reliability, which were distributed by Vivos Holdings, LLC.

 

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.

 

9

 

 

RELIABILITY INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(amounts in thousands, except per share data)

 

Upon 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. Naveen Doki. (See Note 8 for more details).

 

The attempted collection of the guarantee and debt from the Vivos Group set off a chain of legal events culminating in an arbitration hearing and award in 2022. (See below and Item 1 for complete summary). We refer below to the disputes between Reliability and the Vivos Group as the “Vivos Matter.”

 

A series of legal actions and hearings took place starting in March 2020 through September 2021. At that time, arbitration was agreed to by both the Vivos Group and MMG. The proceedings began in February 2022 and were completed in March 2022.

 

On August 31, 2022, the Arbitrator issued an award (the “Award”) with the Company prevailing on their claims. The Company was 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, with interest thereon from September 30, 2022 at the rate of 4.5% per year;
	●	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, with interest thereon from September 30, 2022 at the rate of 2.5% per year, plus collection costs, including reasonable attorneys’ fees, incurred in the effort to collect Note III;
	●	an award in favor of MMG against Dr. Doki under the Personal Guaranty (as defined in the Award) in the amount of $2,309, plus interest thereon at the rate of 6% per year from the date of the Award;
	●	an award in favor of the Company against Dr. Doki, Mrs. Valleru, Mrs. Janumpally, individually and as Trustee of Judos Trust, and Mr. Pathuri, as Trustee of Igly Trust, jointly and severally, for contract damages 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, valued as of the date of the Award, in accordance with the provisions of Section 9.06(d) of the Merger Agreement;
	●	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.

 

With respect to the receivership, the owners or holders of all of the shares of common stock of the Company received as a result of the conversion of 1,600 shares of common stock of MMG owed by Dr. Doki and Mrs. Valleru under the Merger Agreement shall not be entitled to vote any of those shares at any annual or special meeting of the shareholders of the Company during the period of the receivership. Upon the completion of the receiver’s primary function of collecting damages due to the Company, the receivership shall terminate and the restrictions on the rights of the shareholders of the Company imposed by the Award shall be lifted.

 

10

 

 

RELIABILITY INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(amounts in thousands, except per share data)

 

On May 17, 2023, the Arbitrator issued an Amended and Supplemental Arbitration Award (the “Amended Award”), which included the following:

 

	●	Arbitrator will appoint a Rehabilitative Receiver in a Supplemental Award under Maryland law;
	●	an award in favor of MMG and against VREH under Note II in the amount of $835 as of September 30, 2022 with interest thereafter at the rate of 5.5% per year; and

 

On June 16, 2023, we learned that the principal amount due on 22 Baltimore Road had been satisfied via bankruptcy sale and thus the Fairfax, Virginia court released the VREH confessed judgement, meaning MMG was no longer listed as a guarantor.

 

Subsequently, there were two supplemental awards issued by the Arbitrator on May 17, 2023 and October 10, 2023, the latter appointing a Rehabilitative Receiver whose primary purpose is to collect the Award, and who also has been granted specified powers as described in the 8-K released on October 19, 2023.

 

On October 27, 2023, the Arbitrator entered a third Supplemental Award of attorneys’ fees and expenses in favor of Reliability, Incorporated., individually and as agent for Maslow Media Group, Inc.; management and certain other named persons and parties against Naveen Doki; Silvija Valleru; Shirisha Janumpally, individually and as Trustee of Judos Trust; and Kaylan Pathuri, individually and as Trustee of Igly Trust, jointly and severally, in the amount of $1,209 (See Note 10).

 

Additionally, the Arbitrator stated the actual amounts of interest that would be due will depend on when and how much is collected by the Rehabilitative Receiver on each award and will leave the determination of such interest to the Rehabilitative Receiver at the time that payments are made subject to review thereof by the Arbitrator at the request of any party.

 

Upon 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.

 

As of September 30, 2023, the Vivos Debtor balance was $5,417. The arbitration award covering all bulleted items above currently totals $6,348 independent of legal fees, interest, and other fees (see Note 2 below). This amount represents a reduction in earlier estimates as a result of the clarifications issued by the Arbitrator in the Amended Award on May 17, 2023.

 

Basis of presentation

 

The unaudited condensed consolidated interim financial statements include the accounts of the Company and all wholly owned divisions, including its 100%-owned subsidiary, MMG. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

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

 

11

 

 

RELIABILITY INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(amounts in thousands, except per share data)

 

the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented herein 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, 2022.

 

Concentration of Credit Risk

 

For the nine months ended September 30, 2023, 24.6% of revenue came from one customer, and 13.8% from a second customer. Combined, this totals 38.4% of revenue. Last year, these two customers plus a third, accounted for 47.9% of revenue for the same period ended September 30, 2022. This year, the top five customers accounted for 61.8% of revenue versus a year ago, when the top five comprised 66.2%. No other client has exceeded 10% of revenues for the nine months ended September 30, 2023 or 2022.

 

NOTE 2. MANAGEMENT’S PLAN

 

Although the Company continues to experience net operating losses, management believes it has the ability to continue as a going concern and meet its financial obligation as they become due in 2023 and beyond. The factors impacting this view include, but are not limited to, the following:

 

	●	cash flow forecasts showing sufficient cash and working capital for at least the next 12 months;
	●	the prospect of receiving the amounts awarded in the arbitration hearing in 2023, which include $5,417 in notes receivable from related parties, plus awards for fraud, totaling $1,000 for contract damages, additional interest, and legal fees after the supplemental award is finalized;
	●	the reduction in legal fees associated with Vivos Matter year to date at $460 plus future savings compared to a year ago;
	●	new sales plan implementation by recently hired Vice President of Sales, who has experience and success in managing contingent and direct hire staffing organizations; and
	●	additional factoring line availability of up to 93% of unfactored invoices, which as of November 1, 2023, could be converted to approximately $2,468 in cash.

 

As a result of the foregoing, the Company believes that it has sufficient cash to meet its financial obligations for the next 12 months and beyond as they become due.

 

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Adopted Accounting Pronouncements

 

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.

 

12

 

 

RELIABILITY INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(amounts in thousands, except per share data)

 

NOTE 4. ACCOUNTS RECEIVABLE

 

Accounts receivable can be broken down as follows:

SCHEDULE OF ACCOUNTS RECEIVABLE 

		September 30, 2023				December 31, 2022
Accounts receivable, unfactored		$	2,653				3,131
Unbilled receivables			441				587
Accounts receivable, factored			-				2,619
Total Accounts Receivable		$	3,094				6,337

 

NOTE 5. DEBT

 

Tax Liabilities

 

As of September 30, 2023, the Company’s overall tax liability was $5 compared to $6 on December 31, 2022.

 

Factoring Facility

 

The Company has a factoring and security agreement with Gulf Coast Bank and Trust (“Gulf”), which enables the Company to receive advances on its accounts receivable (i.e., invoices) through Gulf to fund growth and operations. The proceeds of this agreement are most frequently used to pay operating costs of the business, which include employee salaries, vendor payments, and overhead expenses.

 

Our arrangement calls for interest at prime plus 2% and includes an advance rate of 18 basis points. The amount of an invoice eligible for sale to Gulf is 93%. This agreement is month-to-month. The Company continues to be obligated to meet certain financial covenants in respect to invoicing and reserve account balance.

 

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 August 1, 2023, the required amount was 10%. Any excess of the reserve amount is paid to the Company as requested. If a reserve shortfall exists for a period of ten days, the Company is required to make payment to Gulf for the shortage.

 

Accounts receivables were sold with full recourse. Proceeds from the sale of receivables were $0 for the three-month period ending September 30, 2023, compared to $3,429 for the same period ending on September 30, 2022, and $3,297 compared to $10,388 for the nine months ended September 30, 2023 and 2022, respectively. The total outstanding balance under the recourse contract was $0 on September 30, 2023, compared to $2,619 as of December 31, 2022.

 

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, 2023 and 2022 were $0 and $46, respectively. For the nine months ended September 30, 2023 and 2022, finance fees totaled $44 and $111, respectively.

 

13

 

 

RELIABILITY INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(amounts in thousands, except per share data)

 

NOTE 6. COMMITMENTS AND CONTINGENCIES

 

There are a number of debts and confessions of judgement (“COJ”) related to the Vivos Group that included Maslow 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. All known debts disclosed to Maslow management and Reliability prior to the Merger were addressed by various safeguards such as the Liquidation Agreement, and the Naveen Doki personal guarantee. However, there were certain non-disclosures by Vivos Holdings, LLC that are included below.

.

In September 2022, MMG learned that Vivos IT, LLC filed a lawsuit against Second Wind Consultants (“SWC”) in May 2019, which 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. SWC countersued all plaintiffs on September 30, 2019, seeking to collect the balance of $402 not paid by the Vivos Group. These suits were not disclosed to MMG management or to Reliability before the Merger closed on October 29, 2019. Maslow retained Counsel and filed a motion to include all original parties to the SWC agreement, as four of the original parties were not in the original filings (HCRN 360 IT, and US IT & Media Solutions). On September 11, 2023, we learned our motion was denied, however, on September 27, we filed a motion for reconsideration on grounds our counsel felt were compelling.  To date MMG has spent $55 on legal fees related to this matter.

 

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.

 

NOTE 7. EQUITY

 

The Company’s authorized capital stock consists of 300,000,000 shares of common stock, with no par value. All authorized shares of Company Common Stock are issued and outstanding.

 

NOTE 8. RELATED PARTY TRANSACTIONS

 

Stock Purchase Agreement

 

On November 9, 2016, Vivos Holdings, LLC, the former owner of MMG, acquired 100% of MMG through a stock acquisition exchange for a purchase price of $1,750, of which: (i) $1,400 was paid at settlement with proceeds from MMG and (ii) a promissory note to pay the remaining $350 (“Vivos/MMG Purchase Agreement”). The promissory note was to be paid in 24 equal installments, including interest at 4.5%, in the amount of approximately $15, commencing nine months after closing, with the last payment on March 1, 2019. These payments were paid by MMG on behalf of the Vivos Debtors. The Vivos Debtors subsequently entered into a promissory note receivable with MMG, described below, for the full stock purchase price. No payment has ever been made against this note and between 2018 to present, there has been $2,503 in additional borrowings.

 

As of September 30, 2023 and December 31, 2022, the receivable totaled $5,417 and $5,251, respectively. This is not inclusive of the additional amounts awarded in the arbitration.

 

14

 

 

RELIABILITY INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(amounts in thousands, except per share data)

 

Notes Receivable

 

The Company has notes receivable from Vivos Holdings, LLC and VREH, both related party affiliates due to their ownership percentage in the Company. Per Code of Virginia, the legal rate of interest shall be implied when there is an obligation to pay interest and no express contract to pay interest at a specified rate. However, it was determined in 2021 that the two notes had clauses capping the default interest at 4.5% and 5.5%, respectively. The rate adjustment for the periods allowed was made using the eligible agreement rates.

 

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. As defined by the Vivos/MMG Purchase Agreement, the loan consisted of two periods, whereby in the first period no principal or interest payments were required. During the second loan period, interest was supposed to have been paid in 20 equal consecutive payments, quarterly. Principal plus any unpaid interest was due September 20, 2023. As of September 30, 2023, the total outstanding balance was $3,698, which includes accrued interest receivable of $51 for the period.

 

On November 15, 2017, MMG executed an intercompany promissory note receivable with VREH in the amount of $772. There were two loan periods defined. During the first loan period, interest accrued monthly and a new loan amount of $781 was subject to a second loan period. As of September 30, 2023, the total outstanding balance was $893, which includes accrued interest receivable of $12 for the period.

 

On June 12, 2019, MMG entered into a Personal Guaranty agreement with Dr. Doki, pursuant to which Dr. Doki personally guaranteed to MMG repayment of $3,000 of the balance of the Promissory Note issued to Vivos Debtors on November 15, 2017, within the 2019 calendar year via cash, stock, or other business assets acceptable to the Company. Dr. Doki is a 5% or greater beneficial holder of the Company’s Common Stock, and therefore is a related party.

 

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 receivable.

 

Between November 2016 and September 30, 2023, the Vivos Group borrowed an additional $2,547, included in the note receivable, totaling $3,647.

 

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. The note bears interest at 2.5% per year and requires the Vivos Group to make monthly payments to MMG of $10 beginning December 1, 2019, with balance due and payable on November 1, 2026. Upon an event of default, MMG has the right to declare the entire unpaid balance of the note due and payable. The note was secured by 30,000,000 shares of Company Common Stock, was due and payable upon a default by Vivos. In addition, both Naveen Doki and Silvija Valleru personally guaranteed the repayment of the note by the Vivos Group. Naveen Doki and Silvija Valleru were beneficial owners of Vivos and are also 5% or greater beneficial owners of Company Common Stock, which is qualified by the Merger Arbitration complaint. As of September 30, 2023, the total outstanding balance was $825, which includes 2023 interest of $5 for the period.

 

Debt Settlement Agreements

 

On July 21, 2022, Maslow settled the obligation which Vivos Holdings, LLC had obligated Maslow to a note in July 2018, with Libertas Funding, LLC and Kinetic which a portion was paid and subsequently included in the additional borrowing cited above.

 

15

 

 

RELIABILITY INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(amounts in thousands, except per share data)

 

Related Party Relationships

 

On October 29, 2019, prior to the Merger, pursuant to the Merger Agreement, Naveen Doki and Silvija Valleru became beneficial owners of 206,606,528 and 51,652,908 shares of RLBY Common Stock, respectively, equal to 68.9% and 17.2% of the total number of shares of RLBY Common Stock outstanding after giving effect to the Merger, respectively. The Company’s arbitration award thus far includes relinquishment of shares of the Company common stock equal in value to $1,000, valued as of the date of the Award, in accordance with the provisions of Section 9.06(d) of the Merger Agreement.

 

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 shares each of common stock.

 

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. The exercise price per full share of the Company common stock shall be 120% of the average sale price of the Company common stock across all transactions constituting a part of the Qualified Financing, with equitable adjustments being made for any splits, combinations or dividends relating to the Company common stock, or combinations, recapitalization, reclassifications, extraordinary distributions and similar events, that occur following one transaction constituting a part of the Qualified Financing and prior to one or more other transactions constituting a part of the Qualified Financing (the “Exercise Price”). Convertible note warrants were not valued and included as liability on the balance sheet because of uncertainty around their pricing, value, and low probability at this juncture in receiving the $5,000 trigger.

 

NOTE 9. BUSINESS SEGMENTS

 

The Company operates within four industry segments: EOR, Recruiting and Staffing, Direct Hire, and Video Production. The EOR segment provides media field talent to a host of large corporate customers in all 50 states. The Recruiting and Staffing segment provides skilled Media, IT, accounting and finance, human resources (HR), and general administrative talent on a nationwide basis for customers in a myriad of industries. Direct Hire fulfills direct placement requests by MMG clients for a wide variety of posts, including administrative, media, and IT professionals. The Video and Multimedia Production segment provides script-to-screen services for corporate, government, and non-profit clients, globally.

 

The following table provides a reconciliation of revenue by reportable segment to consolidated results for the three months ended September 30, 2023 and 2022, respectively:

 

SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS 

		2023				2022
Revenue:
EOR		$	4,467				5,494
Recruiting and Staffing			710				848
Direct Hire			64				60
Video and Multimedia Production			100				62
Total Revenue		$	5,341				6,464

 

16

 

 

RELIABILITY INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(amounts in thousands, except per share data)

 

 

The following table provides a reconciliation of revenue by reportable segment to consolidated results for the nine months ended September 30, 2023 and 2022, respectively:

 

		2023				2022
Revenue:
EOR		$	13,240				15,783
Recruiting and Staffing			2,338				2,671
Direct Hire			115				99
Video and Multimedia Production			299				176
Total		$	15,992				18,729

 

NOTE 10. SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events through November 14, 2023, the date on which the unaudited condensed 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:

 

On October 10, 2023, the Arbitrator issued a Supplemental Award appointing Rehabilitative Receiver who is appointed to collect the Award.

 

On October 27, 2023, the Arbitrator entered a third Supplemental Award of attorneys’ fees and expenses in favor of Reliability, Incorporated., individually and as agent for Maslow Media Group, Inc.; management and certain other named persons and parties against Naveen Doki; Silvija Valleru; Shirisha Janumpally, individually and as Trustee of Judos Trust; and Kaylan Pathuri, individually and as Trustee of Igly Trust, jointly and severally, in the amount of $1,209.

 

Additionally, the Arbitrator stated the actual amounts of interest that would be due will depend on when and how much is collected by the Rehabilitative Receiver on each award and will leave the determination of such interest to the Rehabilitative Receiver at the time that payments are made subject to review thereof by the Arbitrator at the request of any party.

 

On November 7, 2023 MMG filed a petition to confirm the arbitration award with Montgomery County Circuit Court in Rockville, Maryland.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

FORWARD-LOOKING STATEMENTS

 

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. This section includes several forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect our current views with respect to future events and financial performance. All statements that address expectations or projections about the future, including, but not limited to, statements about our plans, strategies, adequacy of resources and future financial results (such as revenue, gross profit, operating profit, cash flow), are forward-looking statements. Some of the forward-looking statements can be identified by words like “anticipates,” “believes,” “expects,” “may,” “will,” “can,” “could,” “should,” “intends,” “project,” “predict,” “plans,” “estimates,” “goal,” “target,” “possible,” “potential,” “would,” “seek,” and similar references to future periods. These statements are not a guarantee of future performance and involve a number of risks, uncertainties and assumptions that are difficult to predict. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. Important factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to: the impact of the COVID-19 pandemic on us and our clients; our ability to access the capital markets by pursuing additional debt and equity financing to fund our business plan and expenses on terms acceptable to the Vivos Group or at all; negative outcome of pending and future claims and litigation and our ability to comply with our contractual covenants, including in respect of our debt; potential loss of clients and possible rejection of our business model and/or sales methods; weakness in general economic conditions and levels of capital spending by customers in the industries we serve; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of our customers’ projects or the inability of our customers to pay our fees; delays or reductions in U.S. government spending; credit risks associated with our customers; competitive market pressures; the availability and cost of qualified labor; our level of success in attracting, training and retaining qualified management personnel and other staff employees; changes in tax laws and other government regulations, including the impact of health care reform laws and regulations; the possibility of incurring liability for our business activities, including, but not limited to, the activities of our temporary employees; our performance on customer contracts; and government policies, legislation or judicial decisions adverse to our businesses. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We assume no obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by law. We recommend readers to carefully review the entirety of this Quarterly Report, the “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and the other reports and documents we file from time to time with the Securities and Exchange Commission (“SEC”), particularly our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K.

 

The following discussion and analysis of our financial condition and results of operations, our expectations regarding the future performance of our business and the other non-historical statements in the discussion and analysis are forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors including those described in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, with the SEC. Our actual results may differ materially from those contained in any forward-looking statements. You should read the following discussion together with our financial statements and related notes thereto and other financial information included in this Quarterly Report on Form 10-Q.

 

CRITICAL ACCOUNTING POLICIES AND COMMENTS RELATED TO OPERATIONS

 

This discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these unaudited consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

 

 

There have been no material changes or developments in the Company’s evaluation of the accounting estimates and the underlying assumptions or methodologies that it believes to be Critical Accounting Policies and Estimates as disclosed in its Form 10-K for the year ended December 31, 2022.

 

Management’s Discussion included in the Form 10-K for the year ended December 31, 2022, includes discussion of various factors and items related to the Company’s results of operations and liquidity. There have been no other significant changes in most of the factors discussed in the Form 10-K and many of the items discussed in the Form 10-K are relevant to 2023 operations; thus, the reader of this report should read Management’s Discussion included in Form 10-K for the year ended December 31, 2022.

 

RESULTS OF OPERATIONS

 

Revenues

 

Revenues for the three months ended September 30, 2023 were $5,341, which was $1,123 or 17.4% less than for the same period in 2022 with revenue at $6,464. 18.7% or $1,027 of the drop can be attributed to the EOR business segment as its third quarter revenues dropped to $4,467 from $5,494. The primary reasons for the EOR downturn were four clients that were down $1,339 in aggregate revenue for reasons of: one losing a high-profile sports television rights to a competitive bid process, one converting more than ten of our employees from our payroll to theirs, and two reducing their programming due to budgetary reasons.

 

Recruiting and Staffing revenues dipped by $138 from $848 in the period ending September 30, 2022 to $710 comparatively in 2023, while Video Production and Direct Hire revenues were up a combined $42 in the quarter ending September 30, 2023 to the comparable period a year ago. IT Staffing was up $10 to $83 while Media Staffing dipped $148 to $627 in the third quarter 2023. The Media Staffing decline was related in part to the EOR client fall off and the loss of a client with whom we acted in a subcontractor capacity, when our client, the incumbent, failed to win a renewal bid by the end customer.

 

For the nine-month period ending September 30, 2023, revenues at $15,992 in 2023 are $2,737 or 14.6% off of 2022’s nine-month $18,729 performance. The decline paradigm has been somewhat consistent throughout the year as the reasons cited for the third quarter variance can be cited with the programming declines by most corporate clients widened. Overall, seven larger clients accounted for a 2023 year-to-date negative revenue variance of $3,162 due to the combination of employee conversions, lost programming and decisions to reduce same, and in one case a lost bid by the primary.

 

Although for the nine-month period ending September 30, 2023, EOR and Staffing revenues were down comparatively to the same period in 2022, by $2,543 and $33, respectively, Video Production revenues have increased by $123 to $299 or 69% and Direct Hire by $16 to $115 or 16.8%. Both increases have played a part in the continuing increase in the overall business’ gross margin as explained in the next section.

 

Cost of Revenue / Gross Profit

 

Gross profit for the three-month period ending September 30, 2023 was $772 representing 14.5% of revenues, which was $119 lower than the $891 in gross profit MMG earned in 2022’s third quarter when the gross margin was at 13.8%.

 

The margin improvement can be attributed to EOR client mix increasing its contribution percentage, several Staffing clients delivering over twice their normal volume of business at 24% margins, and the overall mix shifted to Media and IT Staffing as opposed to EOR, which has peaked at 12.5% for the quarter.

 

Year-to-date through September 30, 2023, our gross profit margins exceed those of 2022 over the same period 13.9% to 13.4% for a variety of reasons. Renewed agreements have enabled pricing increases, especially impacting EOR which YTD is up to 12.2% as compared with 11.6% through the first nine months a year ago.

 

 

EOR margins tend to be lower at the beginning of the year as variable costs, such as federal and state unemployment taxes, reset at the beginning of the year compressing margins. EOR margins tend to increase throughout the year as these variable costs are exhausted. This coupled with EOR segment mix decline means a higher percentage of our revenue is subject to the higher margin Media and IT Staffing, Video Production, and Direct Hire businesses. Both Video Production and Direct Hire combine for $33 in year-to-date improvement in gross profit in 2023 over 2022, garnering an average of 39.8% in gross margin percentage in 2023.

 

General and Administrative (“G&A”)

 

General and administrative expenses for the three months ended September 30, 2023 were $998 compared to $941 in the same period in 2022, representing a $57 or 6.1% increase. Loaded salaries had an $84 unfavorable comparison to Q3 2022. Commissions, however, were down $14. $35 of the $84 wage increase is in the area of Sales where we have bolstered our team. The other force driving an increase in payroll is bonus accruals, which are artificially higher because a year ago at this time, we credited back $62 in over accrued bonuses from 2021.

 

Otherwise, non-salary SG&A total of $168 was $25 favorable (14%) to $193 a year ago. The most significant positive variance in the third quarter 2023 versus 2022 were legal expenses, which were down by $32.

 

In the nine months ended September 30, 2023, SG&A costs are $2,842, which are $501 (15%) lower than they were in the same period in 2022 when they landed on $3,343. The cost savings of $501 were derived mostly as a result of the reduction in arbitration related costs by $452. Other major favorable variances were loaded wages $80, with $87 coming from a lower bonus accrual in part because of write back of over accrued 2022 bonuses, and $35 derived from our business insurance package. Conversely, there were cost increases of $69 for a mostly marketing related costs, $56 for staff events and development, when comparing the period ending September 30, 2023 with the same period in 2022.

 

We expect increases in payroll as certain roles have been contracted and Sales and Sales Support continue to evolve.

 

Interest Expense

 

The Company incurred $12 in interest charges for financing specific client invoices in the third quarter 2023 compared with $46 in factoring the same period a year ago. The Company satisfied its factoring obligations in early July, due to a strong cash position, but engaged the Buyer Initiated Payment Agreement (“BIP”) with American Express (“Amex”) because the average APR has been an estimated 6.8% (dependent on days clients actually pay their invoice) compared with the prime rate having risen to 8.5% and the factoring cost at a contractual 11.22%.

 

For the nine months ended September 30, 2023, the combined interest and factoring costs are $77 compared with $111 a year ago.

 

Other Income (Expense)

 

Other Income/Expense in the third quarter was ($13) compared with $210 in the third quarter 2022. The $13 growth was due to legal expenses related to restructuring layoffs. Prior to the third quarter, $55 of the Other Expenses have been to contest the SWC lawsuit, and $65 to address another non-operating related legal matter that has now been settled. Thus, in the nine months ending September 30, 2023, Other Expenses total $133. Comparatively, a year ago when receiving the first quarter 2021 ERC payment, the Company recorded an additional $210 in what was thought to be an ineligible portion of the ERC calculation, which in fact was not and received by the IRS during the third quarter 2022.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Our working capital requirements are driven predominantly by EOR field talent payments, G&A salaries, public company costs, interest associated with factoring, and client accounts receivable receipts. Since receipts from client payments are on average 70 days behind payments to field talent, working capital requirements can be periodically challenged. We have a Factoring Facility with Gulf, whereas Gulf advances 93% of our eligible receivables at an advance rate of 15 basis points, an interest rate of prime plus 2%., and our prime floor rate at 4%. Our Days Outstanding (DSO) for the trailing 12 months ending September 30, 2023 has improved to 53 compared to 57 in the second quarter 2022, and a DSO of 66 for the trailing twelve months ending March 31, 2022.

 

 

Our 12-month DSO has averaged 65 since June 2021 through the first quarter 2023, as some of our largest clients have 60 to 90-day terms. Delays in receipt of purchase orders also has had an adverse impact on DSO. However, in April 2023, we entered into a BIP with Amex which enables MMG to be advanced 100% of purchase order approved invoices minus a flat interest rate percentage that is based on that day’s submitted invoice volume. The greater the volume the lower the interest rate charged.

 

Additionally, we have had an increase over the past 12 months in client advances which averaged approximately $211 a month.

 

These events have a profound impact on improving our working capital and lowering our DSO which is now at 53, as this combination of pre-pays and arrangement enabling bank debits and credits to roll straight to A/R as opposed to credits to our factoring liability, have bolstered our quick and current ratios as well.

 

The BIP program has also lowered our cost of capital in that our effective APR for the period ending September 30, 2023 was estimated at 6.8% versus the 11.22% Gulf can now charge on an annualized basis.

 

When looking at A/R aging in relation to payments to due date, as of September 30, 2023, 78.6% of our $2,653 in total trade A/R was current and only 4.2% is past 60 days aged, compared to 73.6% and 8.7% a year ago, respectively. We continue to collect our aged invoices, not having to account for bad debt > $200 in the past 5 years.

 

Our federal and state tax liability is $5 as of September 30, 2023 compared to $6 as of December 31, 2022.

 

Our primary sources of liquidity are cash generated from operations via accounts receivable and borrowings under our BIP agreement with Amex and our Factoring Facility with Gulf enabling access to the 7% unfactored portion. The BIP agreement enables MMG to accelerate cash on accounts with 90-day terms.

 

Our primary uses of cash are for payments to field talent, corporate and staff employees, related payroll liabilities, operating expenses, public company costs, including but not limited to, general and professional liability and directors and officer’s liability insurance premiums, legal fees, filing fees, auditor and accounting fees, stock transfer services, and board compensation; followed by cash factoring and other borrowing interest; cash taxes; and debt payments.

 

Since we are an Employer of Record with the majority of contracted talent paid as W-2 employees who are paid known amounts, but on inconsistent schedules; our cash inflows do not typically align with these required payments, resulting in temporary cash challenges, which is why we employ factoring.

 

Vivos Debtors as of September 30, 2023 had notes receivable totaling $5,417, including default on a $3,000 promissory note and on a $750 tax obligation in December 2019.

 

It was also anticipated that following the Merger, the Company would both access the capital markets by selling additional shares of Company Common Stock and use shares of Company Common Stock as currency to acquire other business revenues. However, all 300 million authorized shares of Company Common Stock were issued in connection with the Merger. No shares are expected to become available to the Company until the legal dispute with the Vivos Debtors and Vivos Group is resolved. At that point, the Board and/or the shareholders can decide whether to amend the Company’s Certificate of Formation to increase the number of authorized shares of Company Common Stock or approve a reverse-split of the outstanding shares of Company Common Stock to provide additional shares for these purposes. Under the Arbitration Award, it is possible that shares may be returned to MMG treasury which may give the Board greater flexibility in selling shares or using shares to acquire other businesses. No timetable has been set as to when any of these events might take place.

 

Over the past three years MMG received eligible ERC cash of $4,676, which has bolstered working capital enabling us to invest in software and hire needed resources for operations. On April 29, 2023, we received our final ERC check from the IRS for $1,203 which was for our second quarter 2021’s eligible ERC 941X submission and eligible interest.

 

Overall, these programs bolstered our working capital and enabled us to bring back employees and continue to serve our clients.

 

 

As of September 30, 2023, our working capital was $8,040, compared to $8,645 at the end of December 2022. Our adjusted working capital at the end of September 2023, excluding the notes receivable related to the Vivos Debtors totals $2,623 compared to 3,394 at the end of 2022.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

Item 4. Risk Controls and Procedures

 

(a)

Evaluation of Disclosure Controls and Procedures. The Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the President and Chief Financial Officer concluded that the disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

 

(b)

Changes in Internal Control over Financial Reporting. There were no changes in the Company’s internal controls over financial reporting, known to the Chief Executive Officer and Chief Financial Officer that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

RELIABILITY INC.

OTHER INFORMATION

September 30, 2023

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

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, to enforce Maslow’s rights under certain promissory notes and a personal guarantee made by the defendants.

 

On August 9, 2021, Reliability filed an additional claim in the Debt Collection Suit and Vivos Default Counterclaim in the Circuit Court of Montgomery County, Maryland against Doki, Valleru, Pathuri, Janumpally, Igly, and Judos, that the Respondents breached the Merger Agreement in a number of significant respects and committed fraud in connection with the Merger.

 

On September 7, 2021, the Company entered in Arbitration and Tolling Agreements with alleged shareholder Naveen Doki, M.D., 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.

 

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, 2022, the Company filed a motion to stay the VREH Bankruptcy filing to allow the Arbitrator to rule on the claims against VREH. The motion to lift the stay was granted by the court on September 16, 2022 after the initial award by the Arbitrator.

 

On August 31, 2022, the Arbitrator issued an award (the “Award”) with the Company with MMG prevailing on their claims. The Company and MMG were awarded the following:

 

	●	an award in favor of MMG against Vivos under Note I (as defined in the Award) in the amount of $3,458, with interest thereon from September 30, 2022, at the rate of 4.5% per year;
	●	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 under Note III (as defined in the Award) in the amount of $800, with interest thereon from September 30, 2022, at the rate of 2.5% per year, plus collection costs, including reasonable attorneys’ fees, incurred in the effort to collect Note III;
	●	an award in favor of MMG against Naveen under the Personal Guaranty (as defined in the Award) in the amount of $2,309, plus interest thereon at the rate of 6% per year from the date of the Award;
	●	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, to be satisfied by the transfer of their shares of the Company common stock to the Company equal in value to $1,000, valued as of the date of the Award, in accordance with the provisions of Section 9.06(d) of the Merger Agreement;
	●	an award 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.

 

 

With respect to the receivership, the owners or holders of all of the shares of common stock of the Company received as a result of the conversion of 1,600 shares of common stock of MMG owed by Naveen and Valleru under the Merger Agreement shall not be entitled to vote any of those shares at any annual or special meeting of the shareholders of the Company during the period of the receivership. Upon the completion of the receiver’s primary function of collecting damages due to the Company, the receivership shall terminate and the restrictions on the rights of the shareholders of the Company imposed by the Award shall be lifted.

 

On May 17, 2023, the Arbitrator issued an Amended and Supplemental Arbitration Award (the “Amended Award”), which included the following:

 

	●	Arbitrator will appoint a Rehabilitative Receiver in a Supplemental Award under Maryland law; and
	●	an award in favor of MMG and against VREH under Note II in the amount of $835 as of September 30, 2022 with interest thereafter at the rate of 5.5% per year.

 

On June 16, 2023, we learned that the principal amount due on 22 Baltimore Road had been satisfied via bankruptcy sale and thus the Fairfax, Virginia court released the VREH confessed judgement, meaning MMG was no longer listed as a guarantor.

 

Subsequently, there were two supplemental awards issued by the Arbitrator on May 17, 2023 and October 10, 2023, the latter appointing a Rehabilitative Receiver whose primary purpose is to collect the Award, and who also has been granted specified powers as described in the 8-K released on October 19, 2023 as follows:

 

	●	appoint Board members at each annual meeting, until such time the receiver’s appointment terminates,
	●	appoint or approve the auditor,
	●	approve reasonable compensation and incentive plans for employees, except officers, of Reliability, and
	●	approve any other matter that is in the ordinary course of business.

 

The Receiver shall vote in accordance with the Board’s recommendations for all actions taken by it in the ordinary course of business.

 

The Receiver shall not have power to take any action to alter or change:

 

	●	the Board of Directors of Reliability,
	●	the corporate governance or structure of Reliability or Maslow, and
	●	the authorized or issued stock of Reliability.

 

On October 27, 2023, the Arbitrator entered a third Supplemental Award of attorneys’ fees and expenses in favor of Reliability, Incorporated., individually and as agent for Maslow Media Group, Inc.; management and certain other named persons and parties against Naveen Doki; Silvija Valleru; Shirisha Janumpally, individually and as Trustee of Judos Trust; and Kaylan Pathuri, individually and as Trustee of Igly Trust, jointly and severally, in the amount of $1,209.

 

The following legal proceedings where Vivos Group borrowings impact MMG:

 

In September 2022, MMG learned that Vivos IT, LLC lawsuit against Second Wind Consultants (“SWC”) in May 2019 included MMG as a plaintiff. The lawsuit brought claims of Fraud in the inducement, unjust enrichment and other monetary claims against SWC. The 5 parties suing SWC, included Vivos IT, LLC, 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., SWC countersued all plaintiffs on September 30, 2019 seeking to collect the balance of $403 not paid by the Vivos Group. This was not disclosed to Maslow Management or to Reliability before the Merger closed on October 29, 2019.

 

 

Maslow retained Counsel and filed a motion to include all original parties to the SWC agreement, as four of the original parties were not in the original filings (HCRN 360 IT, and US IT & Media Solutions). On September 11, 2023, we learned our motion was denied, however, on September 27, we filed a motion for reconsideration on grounds our counsel felt were compelling. The motion is currently being considered by the court. To date MMG has spent $65 on legal fees related to this matter.

 

Item 1a. Risk Factors

 

In addition to the other information set forth in this Quarterly Report, shareholders should carefully consider the factors discussed in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2022, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

 

We are currently engaged in substantial and complex litigation and arbitration with the Vivos Group, the outcome of which could materially harm our business and financial results.

 

As more fully described in Note 6 (Commitments and Contingencies) of the Notes to Unaudited Consolidated Financial Statements, we are currently engaged in litigation and arbitration with the Vivos Group. The arbitration was brought by the Company to enforce its rights under the Merger Agreement.

 

The litigation and arbitration are substantial and complex, and they have caused and could continue to cause us to incur significant costs, as well as distract our management over an extended period. The arbitration process may continue to substantially disrupt our business and we cannot assure you that we will be able to resolve the litigation on terms favorable to us in any definitive time frame.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits:

 

The following exhibits are filed as part of this report:

 

31.1		CEO Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
31.2		CFO Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
32.1		CEO and CFO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Cash Flows and (iv) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail (XBRL).
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	RELIABILITY INCORPORATED
	(Registrant)
November 14, 2023	/s/ Nick Tsahalis
	Reliability President and Chief Executive Officer
	/s/ Mark Speck
	Secretary and Chief Financial Officer

 

 

Index to Exhibits

 

Exhibit No.		Description
31.1		CEO Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
31.2		CFO Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
32.1		CEO and CFO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Cash Flows and (iv) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail (XBRL).
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections

 

 

 

Exhibit 31.1

 

CERTIFICATIONS UNDER SECTION 302

 

I, Nick Tsahalis, certify that:

 

1. I have reviewed this annual report on Form 10-Q of Reliability Incorporated;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 14, 2023
/s/ Nick Tsahalis
President and Chief Executive Officer

 

 

 

Exhibit 31.2

 

CERTIFICATIONS UNDER SECTION 302

 

I, Mark Speck, certify that:

 

1. I have reviewed this annual report on Form 10-Q of Reliability Incorporated;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 14, 2023
/s/ Mark R. Speck
Chief Financial Officer

 

 

 

Exhibit 32.1

 

CERTIFICATIONS UNDER SECTION 906

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Reliability Incorporated, a Texas corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

 

The Quarterly Report for the quarter ended September 30, 2023 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: November 14, 2023	/s/ Nick Tsahalis
	President and Chief Executive Officer
Dated: November 14, 2023	/s/ Mark Speck
	Chief Financial Officer

 

 

v3.23.3

Cover	9 Months Ended
	Sep. 30, 2023 shares
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
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

v3.23.3

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
CURRENT ASSETS
Cash and cash equivalents	$ 751	$ 227
Trade receivables, net of allowance for doubtful accounts	3,094	6,337
Retention credit receivable	10	1,219
Prepaid expenses and other current assets	358	430
Total current assets	9,630	13,464
Property, plant, and equipment, net	16	26
Other intangible assets	3
Total assets	9,649	13,490
CURRENT LIABILITIES
Factoring liability		2,619
Accounts payable	414	698
Accrued expenses	318	339
Accrued payroll	677	981
Deferred revenue	176	176
Income taxes payable	5	6
Total current liabilities	1,590	4,819
Total liabilities	1,590	4,819
Commitment and contingencies (Note 6)
Subsequent events (Note 10)
SHAREHOLDERS’ EQUITY
Additional paid-in capital	750	750
Retained earnings	7,309	7,921
Total shareholders’ equity	8,059	8,671
Total liabilities and shareholders’ equity	9,649	13,490
Related Party [Member]
CURRENT ASSETS
Notes receivable from related parties	$ 5,417	$ 5,251

v3.23.3

Consolidated Balance Sheets (Unaudited) (Parenthetical) - shares	Sep. 30, 2023	Dec. 31, 2022
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

v3.23.3

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue earned
Service revenue	$ 5,341	$ 6,464	$ 15,992	$ 18,729
Cost of revenue
Cost of revenue	4,569	5,573	13,769	16,222
Gross profit	772	891	2,223	2,507
Selling, general, and administrative expenses	998	941	2,843	3,343
Operating loss	(226)	(50)	(620)	(836)
Other income (expense)
Interest income from related parties	68	23	200	196
Interest income	7	63	21
Interest expense	(12)	(46)	(77)	(111)
Other income (expense)	(13)	210	(133)	210
Income (loss) before income tax expense	(176)	200	(609)	(541)
Income tax expense		(91)	(3)	(117)
Consolidated net income (loss)	$ (176)	$ 109	$ (612)	$ (658)
Net loss per share:
Basic	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Diluted	$ 0.00	$ 0.00	$ 0.00	$ 0.00
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

v3.23.3

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, 2021	$ 9,410		$ 750	$ 8,660
Balance, shares at Dec. 31, 2021		300,000,000
Net Loss	(658)			(658)
Balance at Sep. 30, 2022	8,752		750	8,002
Balance, shares at Sep. 30, 2022		300,000,000
Balance at Dec. 31, 2022	8,671		750	7,921
Balance, shares at Dec. 31, 2022		300,000,000
Net Loss	(612)			(612)
Balance at Sep. 30, 2023	$ 8,059		$ 750	$ 7,309
Balance, shares at Sep. 30, 2023		300,000,000

v3.23.3

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net loss	$ (612)	$ (658)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	14	23
Accrued interest	(165)	(172)
Changes in operating assets and liabilities:
Trade receivables	3,243	2,634
Retention credit receivable	1,195
Other receivable	14
Prepaid expenses and other current assets	72	(35)
Accounts payable	(284)	(828)
Accrued payroll	(304)	(627)
Accrued expenses	(21)	(59)
Other liabilities		(1)
Income taxes payable	(1)	(241)
Net cash provided by operating activities	3,151	36
Cash flows from investing activities:
Purchase of fixed assets	(8)	(1)
Net cash used in investing activities	(8)	(1)
Cash flows from financing activities:
Net borrowing/(repayment) of line-of-credit	(2,619)	1,068
Net cash provided by (used in) financing activities	(2,619)	1,068
Net increase in cash and cash equivalents	524	1,103
Cash and cash equivalents, beginning of year	227	24
Cash and cash equivalents, end of year	751	1,127
Cash paid during the year for:
Interest	77	111
Income taxes	$ 5	$ 735

v3.23.3

NATURE OF OPERATIONS AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2023
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 workforce management solutions 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, Direct Placements, and Video and Multimedia Production Services, 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. Video Production involves assembling and providing staff and/or crews with equipment for live or taped programming. This service can be provided within client facilities or on location across the globe and cover pre-production planning to post-production services.   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 down 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. (“MMG”) in March 1992.   On November 9, 2016, MMG was sold 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 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 (“Mrs. Janumpally”), wife of Dr. Doki, and Kalyan Pathuri (“Mr. Pathuri”), husband of Silvija Valleru.   These individuals included, but were not limited to, Dr. Doki, Mrs. Janumpally, Mr. Pathuri, 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% of the issued and outstanding shares of Reliability, which were distributed by Vivos Holdings, LLC.   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.     RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2023 (amounts in thousands, except per share data)   Upon 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. Naveen Doki. (See Note 8 for more details).   The attempted collection of the guarantee and debt from the Vivos Group set off a chain of legal events culminating in an arbitration hearing and award in 2022. (See below and Item 1 for complete summary). We refer below to the disputes between Reliability and the Vivos Group as the “Vivos Matter.”   A series of legal actions and hearings took place starting in March 2020 through September 2021. At that time, arbitration was agreed to by both the Vivos Group and MMG. The proceedings began in February 2022 and were completed in March 2022.   On August 31, 2022, the Arbitrator issued an award (the “Award”) with the Company prevailing on their claims. The Company was 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, with interest thereon from September 30, 2022 at the rate of 4.5% per year;   ● 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, with interest thereon from September 30, 2022 at the rate of 2.5% per year, plus collection costs, including reasonable attorneys’ fees, incurred in the effort to collect Note III;   ● an award in favor of MMG against Dr. Doki under the Personal Guaranty (as defined in the Award) in the amount of $2,309, plus interest thereon at the rate of 6% per year from the date of the Award;   ● an award in favor of the Company against Dr. Doki, Mrs. Valleru, Mrs. Janumpally, individually and as Trustee of Judos Trust, and Mr. Pathuri, as Trustee of Igly Trust, jointly and severally, for contract damages 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, valued as of the date of the Award, in accordance with the provisions of Section 9.06(d) of the Merger Agreement;   ● 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.   With respect to the receivership, the owners or holders of all of the shares of common stock of the Company received as a result of the conversion of 1,600 shares of common stock of MMG owed by Dr. Doki and Mrs. Valleru under the Merger Agreement shall not be entitled to vote any of those shares at any annual or special meeting of the shareholders of the Company during the period of the receivership. Upon the completion of the receiver’s primary function of collecting damages due to the Company, the receivership shall terminate and the restrictions on the rights of the shareholders of the Company imposed by the Award shall be lifted.     RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2023 (amounts in thousands, except per share data)   On May 17, 2023, the Arbitrator issued an Amended and Supplemental Arbitration Award (the “Amended Award”), which included the following:     ● Arbitrator will appoint a Rehabilitative Receiver in a Supplemental Award under Maryland law;   ● an award in favor of MMG and against VREH under Note II in the amount of $835 as of September 30, 2022 with interest thereafter at the rate of 5.5% per year; and   On June 16, 2023, we learned that the principal amount due on 22 Baltimore Road had been satisfied via bankruptcy sale and thus the Fairfax, Virginia court released the VREH confessed judgement, meaning MMG was no longer listed as a guarantor.   Subsequently, there were two supplemental awards issued by the Arbitrator on May 17, 2023 and October 10, 2023, the latter appointing a Rehabilitative Receiver whose primary purpose is to collect the Award, and who also has been granted specified powers as described in the 8-K released on October 19, 2023.   On October 27, 2023, the Arbitrator entered a third Supplemental Award of attorneys’ fees and expenses in favor of Reliability, Incorporated., individually and as agent for Maslow Media Group, Inc.; management and certain other named persons and parties against Naveen Doki; Silvija Valleru; Shirisha Janumpally, individually and as Trustee of Judos Trust; and Kaylan Pathuri, individually and as Trustee of Igly Trust, jointly and severally, in the amount of $1,209 (See Note 10).   Additionally, the Arbitrator stated the actual amounts of interest that would be due will depend on when and how much is collected by the Rehabilitative Receiver on each award and will leave the determination of such interest to the Rehabilitative Receiver at the time that payments are made subject to review thereof by the Arbitrator at the request of any party.   Upon 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.   As of September 30, 2023, the Vivos Debtor balance was $5,417. The arbitration award covering all bulleted items above currently totals $6,348 independent of legal fees, interest, and other fees (see Note 2 below). This amount represents a reduction in earlier estimates as a result of the clarifications issued by the Arbitrator in the Amended Award on May 17, 2023.   Basis of presentation   The unaudited condensed consolidated interim financial statements include the accounts of the Company and all wholly owned divisions, including its 100%-owned subsidiary, MMG. All significant intercompany accounts and transactions have been eliminated in consolidation.   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     RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2023 (amounts in thousands, except per share data)   the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented herein 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, 2022.   Concentration of Credit Risk   For the nine months ended September 30, 2023, 24.6% of revenue came from one customer, and 13.8% from a second customer. Combined, this totals 38.4% of revenue. Last year, these two customers plus a third, accounted for 47.9% of revenue for the same period ended September 30, 2022. This year, the top five customers accounted for 61.8% of revenue versus a year ago, when the top five comprised 66.2%. No other client has exceeded 10% of revenues for the nine months ended September 30, 2023 or 2022.

v3.23.3

MANAGEMENT’S PLAN	9 Months Ended
	Sep. 30, 2023
Managements Plan
MANAGEMENT’S PLAN	NOTE 2. MANAGEMENT’S PLAN   Although the Company continues to experience net operating losses, management believes it has the ability to continue as a going concern and meet its financial obligation as they become due in 2023 and beyond. The factors impacting this view include, but are not limited to, the following:     ● cash flow forecasts showing sufficient cash and working capital for at least the next 12 months;   ● the prospect of receiving the amounts awarded in the arbitration hearing in 2023, which include $5,417 in notes receivable from related parties, plus awards for fraud, totaling $1,000 for contract damages, additional interest, and legal fees after the supplemental award is finalized;   ● the reduction in legal fees associated with Vivos Matter year to date at $460 plus future savings compared to a year ago;   ● new sales plan implementation by recently hired Vice President of Sales, who has experience and success in managing contingent and direct hire staffing organizations; and   ● additional factoring line availability of up to 93% of unfactored invoices, which as of November 1, 2023, could be converted to approximately $2,468 in cash.   As a result of the foregoing, the Company believes that it has sufficient cash to meet its financial obligations for the next 12 months and beyond as they become due.

v3.23.3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Adopted Accounting Pronouncements   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.     RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2023 (amounts in thousands, except per share data)

v3.23.3

ACCOUNTS RECEIVABLE	9 Months Ended
	Sep. 30, 2023
Receivables [Abstract]
ACCOUNTS RECEIVABLE	NOTE 4. ACCOUNTS RECEIVABLE   Accounts receivable can be broken down as follows: SCHEDULE OF ACCOUNTS RECEIVABLE      September 30, 2023     December 31, 2022                 Accounts receivable, unfactored   $ 2,653       3,131   Unbilled receivables     441       587   Accounts receivable, factored     -       2,619   Total Accounts Receivable   $ 3,094       6,337

v3.23.3

DEBT	9 Months Ended
	Sep. 30, 2023
Debt Disclosure [Abstract]
DEBT	NOTE 5. DEBT   Tax Liabilities   As of September 30, 2023, the Company’s overall tax liability was $5 compared to $6 on December 31, 2022.   Factoring Facility   The Company has a factoring and security agreement with Gulf Coast Bank and Trust (“Gulf”), which enables the Company to receive advances on its accounts receivable (i.e., invoices) through Gulf to fund growth and operations. The proceeds of this agreement are most frequently used to pay operating costs of the business, which include employee salaries, vendor payments, and overhead expenses.   Our arrangement calls for interest at prime plus 2% and includes an advance rate of 18 basis points. The amount of an invoice eligible for sale to Gulf is 93%. This agreement is month-to-month. The Company continues to be obligated to meet certain financial covenants in respect to invoicing and reserve account balance.   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 August 1, 2023, the required amount was 10%. Any excess of the reserve amount is paid to the Company as requested. If a reserve shortfall exists for a period of ten days, the Company is required to make payment to Gulf for the shortage.   Accounts receivables were sold with full recourse. Proceeds from the sale of receivables were $0 for the three-month period ending September 30, 2023, compared to $3,429 for the same period ending on September 30, 2022, and $3,297 compared to $10,388 for the nine months ended September 30, 2023 and 2022, respectively. The total outstanding balance under the recourse contract was $0 on September 30, 2023, compared to $2,619 as of December 31, 2022.   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, 2023 and 2022 were $0 and $46, respectively. For the nine months ended September 30, 2023 and 2022, finance fees totaled $44 and $111, respectively.     RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2023 (amounts in thousands, except per share data)

v3.23.3

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2023
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 Maslow 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. All known debts disclosed to Maslow management and Reliability prior to the Merger were addressed by various safeguards such as the Liquidation Agreement, and the Naveen Doki personal guarantee. However, there were certain non-disclosures by Vivos Holdings, LLC that are included below. . In September 2022, MMG learned that Vivos IT, LLC filed a lawsuit against Second Wind Consultants (“SWC”) in May 2019, which 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. SWC countersued all plaintiffs on September 30, 2019, seeking to collect the balance of $402 not paid by the Vivos Group. These suits were not disclosed to MMG management or to Reliability before the Merger closed on October 29, 2019. Maslow retained Counsel and filed a motion to include all original parties to the SWC agreement, as four of the original parties were not in the original filings (HCRN 360 IT, and US IT & Media Solutions). On September 11, 2023, we learned our motion was denied, however, on September 27, we filed a motion for reconsideration on grounds our counsel felt were compelling.  To date MMG has spent $55 on legal fees related to this matter.   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.

v3.23.3

EQUITY	9 Months Ended
	Sep. 30, 2023
Equity [Abstract]
EQUITY	NOTE 7. EQUITY   The Company’s authorized capital stock consists of 300,000,000 shares of common stock, with no par value. All authorized shares of Company Common Stock are issued and outstanding.

v3.23.3

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2023
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	NOTE 8. RELATED PARTY TRANSACTIONS   Stock Purchase Agreement   On November 9, 2016, Vivos Holdings, LLC, the former owner of MMG, acquired 100% of MMG through a stock acquisition exchange for a purchase price of $1,750, of which: (i) $1,400 was paid at settlement with proceeds from MMG and (ii) a promissory note to pay the remaining $350 (“Vivos/MMG Purchase Agreement”). The promissory note was to be paid in 24 equal installments, including interest at 4.5%, in the amount of approximately $15, commencing nine months after closing, with the last payment on March 1, 2019. These payments were paid by MMG on behalf of the Vivos Debtors. The Vivos Debtors subsequently entered into a promissory note receivable with MMG, described below, for the full stock purchase price. No payment has ever been made against this note and between 2018 to present, there has been $2,503 in additional borrowings.   As of September 30, 2023 and December 31, 2022, the receivable totaled $5,417 and $5,251, respectively. This is not inclusive of the additional amounts awarded in the arbitration.     RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2023 (amounts in thousands, except per share data)   Notes Receivable   The Company has notes receivable from Vivos Holdings, LLC and VREH, both related party affiliates due to their ownership percentage in the Company. Per Code of Virginia, the legal rate of interest shall be implied when there is an obligation to pay interest and no express contract to pay interest at a specified rate. However, it was determined in 2021 that the two notes had clauses capping the default interest at 4.5% and 5.5%, respectively. The rate adjustment for the periods allowed was made using the eligible agreement rates.   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. As defined by the Vivos/MMG Purchase Agreement, the loan consisted of two periods, whereby in the first period no principal or interest payments were required. During the second loan period, interest was supposed to have been paid in 20 equal consecutive payments, quarterly. Principal plus any unpaid interest was due September 20, 2023. As of September 30, 2023, the total outstanding balance was $3,698, which includes accrued interest receivable of $51 for the period.   On November 15, 2017, MMG executed an intercompany promissory note receivable with VREH in the amount of $772. There were two loan periods defined. During the first loan period, interest accrued monthly and a new loan amount of $781 was subject to a second loan period. As of September 30, 2023, the total outstanding balance was $893, which includes accrued interest receivable of $12 for the period.   On June 12, 2019, MMG entered into a Personal Guaranty agreement with Dr. Doki, pursuant to which Dr. Doki personally guaranteed to MMG repayment of $3,000 of the balance of the Promissory Note issued to Vivos Debtors on November 15, 2017, within the 2019 calendar year via cash, stock, or other business assets acceptable to the Company. Dr. Doki is a 5% or greater beneficial holder of the Company’s Common Stock, and therefore is a related party.   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 receivable.   Between November 2016 and September 30, 2023, the Vivos Group borrowed an additional $2,547, included in the note receivable, totaling $3,647.   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. The note bears interest at 2.5% per year and requires the Vivos Group to make monthly payments to MMG of $10 beginning December 1, 2019, with balance due and payable on November 1, 2026. Upon an event of default, MMG has the right to declare the entire unpaid balance of the note due and payable. The note was secured by 30,000,000 shares of Company Common Stock, was due and payable upon a default by Vivos. In addition, both Naveen Doki and Silvija Valleru personally guaranteed the repayment of the note by the Vivos Group. Naveen Doki and Silvija Valleru were beneficial owners of Vivos and are also 5% or greater beneficial owners of Company Common Stock, which is qualified by the Merger Arbitration complaint. As of September 30, 2023, the total outstanding balance was $825, which includes 2023 interest of $5 for the period.   Debt Settlement Agreements   On July 21, 2022, Maslow settled the obligation which Vivos Holdings, LLC had obligated Maslow to a note in July 2018, with Libertas Funding, LLC and Kinetic which a portion was paid and subsequently included in the additional borrowing cited above.     RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2023 (amounts in thousands, except per share data)   Related Party Relationships   On October 29, 2019, prior to the Merger, pursuant to the Merger Agreement, Naveen Doki and Silvija Valleru became beneficial owners of 206,606,528 and 51,652,908 shares of RLBY Common Stock, respectively, equal to 68.9% and 17.2% of the total number of shares of RLBY Common Stock outstanding after giving effect to the Merger, respectively. The Company’s arbitration award thus far includes relinquishment of shares of the Company common stock equal in value to $1,000, valued as of the date of the Award, in accordance with the provisions of Section 9.06(d) of the Merger Agreement.   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 shares each of common stock.   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. The exercise price per full share of the Company common stock shall be 120% of the average sale price of the Company common stock across all transactions constituting a part of the Qualified Financing, with equitable adjustments being made for any splits, combinations or dividends relating to the Company common stock, or combinations, recapitalization, reclassifications, extraordinary distributions and similar events, that occur following one transaction constituting a part of the Qualified Financing and prior to one or more other transactions constituting a part of the Qualified Financing (the “Exercise Price”). Convertible note warrants were not valued and included as liability on the balance sheet because of uncertainty around their pricing, value, and low probability at this juncture in receiving the $5,000 trigger.

v3.23.3

BUSINESS SEGMENTS	9 Months Ended
	Sep. 30, 2023
Segment Reporting [Abstract]
BUSINESS SEGMENTS	NOTE 9. BUSINESS SEGMENTS   The Company operates within four industry segments: EOR, Recruiting and Staffing, Direct Hire, and Video Production. The EOR segment provides media field talent to a host of large corporate customers in all 50 states. The Recruiting and Staffing segment provides skilled Media, IT, accounting and finance, human resources (HR), and general administrative talent on a nationwide basis for customers in a myriad of industries. Direct Hire fulfills direct placement requests by MMG clients for a wide variety of posts, including administrative, media, and IT professionals. The Video and Multimedia Production segment provides script-to-screen services for corporate, government, and non-profit clients, globally.   The following table provides a reconciliation of revenue by reportable segment to consolidated results for the three months ended September 30, 2023 and 2022, respectively:   SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS      2023     2022   Revenue:                 EOR   $ 4,467       5,494   Recruiting and Staffing     710       848   Direct Hire     64       60   Video and Multimedia Production     100       62   Total Revenue   $ 5,341       6,464       RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2023 (amounts in thousands, except per share data)     The following table provides a reconciliation of revenue by reportable segment to consolidated results for the nine months ended September 30, 2023 and 2022, respectively:       2023     2022   Revenue:                 EOR   $ 13,240       15,783   Recruiting and Staffing     2,338       2,671   Direct Hire     115       99   Video and Multimedia Production     299       176   Total   $ 15,992       18,729

v3.23.3

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2023
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 10. SUBSEQUENT EVENTS   The Company has evaluated subsequent events through November 14, 2023, the date on which the unaudited condensed 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:   On October 10, 2023, the Arbitrator issued a Supplemental Award appointing Rehabilitative Receiver who is appointed to collect the Award.   On October 27, 2023, the Arbitrator entered a third Supplemental Award of attorneys’ fees and expenses in favor of Reliability, Incorporated., individually and as agent for Maslow Media Group, Inc.; management and certain other named persons and parties against Naveen Doki; Silvija Valleru; Shirisha Janumpally, individually and as Trustee of Judos Trust; and Kaylan Pathuri, individually and as Trustee of Igly Trust, jointly and severally, in the amount of $1,209.   Additionally, the Arbitrator stated the actual amounts of interest that would be due will depend on when and how much is collected by the Rehabilitative Receiver on each award and will leave the determination of such interest to the Rehabilitative Receiver at the time that payments are made subject to review thereof by the Arbitrator at the request of any party.   On November 7, 2023 MMG filed a petition to confirm the arbitration award with Montgomery County Circuit Court in Rockville, Maryland.

v3.23.3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
Adopted Accounting Pronouncements	Adopted Accounting Pronouncements   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.     RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2023 (amounts in thousands, except per share data)

v3.23.3

ACCOUNTS RECEIVABLE (Tables)	9 Months Ended
	Sep. 30, 2023
Receivables [Abstract]
SCHEDULE OF ACCOUNTS RECEIVABLE	Accounts receivable can be broken down as follows: SCHEDULE OF ACCOUNTS RECEIVABLE      September 30, 2023     December 31, 2022                 Accounts receivable, unfactored   $ 2,653       3,131   Unbilled receivables     441       587   Accounts receivable, factored     -       2,619   Total Accounts Receivable   $ 3,094       6,337

v3.23.3

BUSINESS SEGMENTS (Tables)	9 Months Ended
	Sep. 30, 2023
Segment Reporting [Abstract]
SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS	The following table provides a reconciliation of revenue by reportable segment to consolidated results for the three months ended September 30, 2023 and 2022, respectively:   SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS      2023     2022   Revenue:                 EOR   $ 4,467       5,494   Recruiting and Staffing     710       848   Direct Hire     64       60   Video and Multimedia Production     100       62   Total Revenue   $ 5,341       6,464       RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2023 (amounts in thousands, except per share data)     The following table provides a reconciliation of revenue by reportable segment to consolidated results for the nine months ended September 30, 2023 and 2022, respectively:       2023     2022   Revenue:                 EOR   $ 13,240       15,783   Recruiting and Staffing     2,338       2,671   Direct Hire     115       99   Video and Multimedia Production     299       176   Total   $ 15,992       18,729

v3.23.3

NATURE OF OPERATIONS AND BASIS OF PRESENTATION (Details Narrative) - USD ($) $ in Thousands					9 Months Ended
	Aug. 31, 2022	Oct. 29, 2019	Sep. 30, 2019	Nov. 08, 2016	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2019
Product Information [Line Items]
Loss contingency damages sought value			$ 402
Common stock, shares, issued					300,000,000		300,000,000
Concentration of credit risk					the top five customers accounted for 61.8% of revenue versus a year ago, when the top five comprised 66.2%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | One Customer [Member]
Product Information [Line Items]
Concentration of credit risk					24.60%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Second Customer [Member]
Product Information [Line Items]
Concentration of credit risk					13.80%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customers [Member]
Product Information [Line Items]
Concentration of credit risk					38.40%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Customers [Member]
Product Information [Line Items]
Concentration of credit risk						47.90%
MMG [Member]
Product Information [Line Items]
Business acquisition percentage of voting interest acquired					100.00%
Merger Agreement [Member]
Product Information [Line Items]
Loss contingency value in common stock		$ 1,000
Common stock, shares, issued					1,600
Merger Agreement [Member] | Naveen Valleru Janumpally [Member]
Product Information [Line Items]
Loss contingency damages sought value	$ 1,000
Loss contingency value in common stock	1,000
Vivos Debtor [Member]
Product Information [Line Items]
Financing receivable after allowance for credit loss					$ 5,417
Payments for other fees					$ 6,348
Vivos Holdings, LLC. [Member]
Product Information [Line Items]
Shares issued and outstanding percentage		84.00%
Maslow Media Group, Inc. [Member] | Naveen Doki [Member]
Product Information [Line Items]
Arbitrator issued value	$ 2,309
Arbitrator issued value, Pecentage	6.00%
Maslow Media Group, Inc. [Member] | Vivos Holdings, LLC. [Member] | Stock Purchase Agreement [Member]
Product Information [Line Items]
Borrowing from acquisition				$ 1,400
Notes payable								$ 3,418
Maslow Media Group, Inc. [Member] | Vivos Holdings, LLC. [Member] | Stock Purchase Agreement [Member] | Payment Guarantee [Member]
Product Information [Line Items]
Notes payable								$ 3,000
Maslow Media Group, Inc. [Member] | Vivos Holdings, LLC under Note I [Member]
Product Information [Line Items]
Arbitrator issued value	$ 3,458
Arbitrator issued value, Pecentage	4.50%
Maslow Media Group, Inc. [Member] | Vivos Holdings, LLC under Note III [Member]
Product Information [Line Items]
Arbitrator issued value	$ 800
Arbitrator issued value, Pecentage	2.50%
Maslow Media Group, Inc. [Member] | VREH Under Note II [Member]
Product Information [Line Items]
Arbitrator issued value						$ 835
Arbitrator issued value, Pecentage						5.50%

v3.23.3

MANAGEMENT’S PLAN (Details Narrative)		9 Months Ended
	Sep. 11, 2023 USD ($)	Sep. 30, 2023 USD ($)	Aug. 01, 2023 USD ($)	Dec. 31, 2022 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Awards for fraud		$ 1,000,000
Reduction in legal fees	$ 55	460,000
Extended borrowing percentage			0.93
Maximum borrowing capacity			$ 2,468,000
Related Party [Member]
Defined Benefit Plan Disclosure [Line Items]
Notes receivable related parties current		$ 5,417,000		$ 5,251,000

v3.23.3

SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Receivables [Abstract]
Accounts receivable, unfactored	$ 2,653	$ 3,131
Unbilled receivables	441	587
Accounts receivable, factored		2,619
Total Accounts Receivable	$ 3,094	$ 6,337

v3.23.3

DEBT (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Debt Instrument [Line Items]
Tax liabilities	$ 5		$ 5		$ 6
Reserve interest percentage			10.00%
Proceeds from sale of receivables	0	$ 3,429	$ 3,297	$ 10,388
Accounts receivable factored					$ 2,619
Finance line fees	$ 0	$ 46	$ 44	$ 111
Factoring and Security Agreement [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate	2.00%		2.00%

v3.23.3

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)			9 Months Ended
	Sep. 11, 2023	Sep. 30, 2019	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Loss contingency damages sought value		$ 402,000
Legal fees	$ 55		$ 460,000

v3.23.3

EQUITY (Details Narrative) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
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, no par value	$ 0	$ 0

v3.23.3

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands							9 Months Ended	69 Months Ended
	Dec. 02, 2019	Oct. 29, 2019	Sep. 05, 2019	Jun. 12, 2019	Nov. 09, 2016	Nov. 08, 2016	Sep. 30, 2023	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2019	Nov. 15, 2017
Related Party Transaction [Line Items]
Proceeds from related party debt							$ 5,000
Average sale price percentage							120.00%
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
Secured Promissory Note Agreement [Member] | Vivos [Member]
Related Party Transaction [Line Items]
Equity method ownership percentage			5.00%
Secured Promissory Note Agreement [Member] | Maslow Media Group, Inc. [Member] | Vivos [Member]
Related Party Transaction [Line Items]
Interest receivable							5	5
Outstanding balance							825	825
Merger Agreement [Member]
Related Party Transaction [Line Items]
Loss contingency value in common stock		$ 1,000
Vivos Holdings, LLC. [Member] | Maslow Media Group, Inc. [Member] | Notes One [Member]
Related Party Transaction [Line Items]
Interest rate										4.50%
Vivos Holdings, LLC. [Member] | Maslow Media Group, Inc. [Member] | Notes Two [Member]
Related Party Transaction [Line Items]
Interest rate										5.50%
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											$ 3,418
Vivos Holdings, LLC. [Member] | Vivos/MMG Purchase Agreement [Member]
Related Party Transaction [Line Items]
Notes payable							3,698	3,698
Notes receivable from related parties							3,647	3,647
Notes receivable, related parties							1,400	1,400
Interest receivable							51	51
Outstanding balance							2,547	2,547
Vivos Holdings, LLC. [Member] | Maslow Media Group, Inc. [Member] | Stock Purchase Agreement [Member]
Related Party Transaction [Line Items]
Business combination, equity interest percentage					100.00%
Business combination, equity interest percentage					$ 1,750
Proceeds from previous acquisition					1,400
Notes payable					$ 350
Debt instrument, description					The promissory note was to be paid in 24 equal installments, including interest at 4.5%, in the amount of approximately $15, commencing nine months after closing, with the last payment on March 1, 2019.
Additional borrowing								2,503
Related Party [Member]
Related Party Transaction [Line Items]
Notes receivable from related parties							5,417	5,417	$ 5,251
Vivos Real Estate [Member] | Vivos RE Promissory Note [Member]
Related Party Transaction [Line Items]
Notes payable							893	893				$ 772
Interest receivable							$ 12	$ 12
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				5.00%
Vivos [Member] | Secured Promissory Note Agreement [Member] | Maslow Media Group, Inc. [Member]
Related Party Transaction [Line Items]
Interest rate	2.50%
Outstanding balance			$ 750
Debt instrument, periodic payment	$ 10
Debt instrument, maturity date	Nov. 01, 2026
Conversion of shares issued			30,000,000
Naveen Doki [Member] | Merger Agreement [Member]
Related Party Transaction [Line Items]
Conversion of shares issued		206,606,528
Debt conversion converted instrument rate		68.90%
Silvija Valleru [Member] | Merger Agreement [Member]
Related Party Transaction [Line Items]
Conversion of shares issued		51,652,908
Debt conversion converted instrument rate		17.20%

v3.23.3

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, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue from External Customer [Line Items]
Total	$ 5,341	$ 6,464	$ 15,992	$ 18,729
EOR [Member]
Revenue from External Customer [Line Items]
Total	4,467	5,494	13,240	15,783
Recruiting and Staffing [Member]
Revenue from External Customer [Line Items]
Total	710	848	2,338	2,671
Direct Hire [Member]
Revenue from External Customer [Line Items]
Total	64	60	115	99
Video and Multimedia Production [Member]
Revenue from External Customer [Line Items]
Total	$ 100	$ 62	$ 299	$ 176

v3.23.3

SUBSEQUENT EVENTS (Details Narrative) $ in Thousands	Oct. 27, 2023 USD ($)
Subsequent Event [Member]
Subsequent Event [Line Items]
Fees and expenses	$ 1,209

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