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<p id="xdx_80F_eus-gaap--OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock_zlf4Pmt4HQ8e" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify">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 <span id="xdx_90E_ecustom--SharesIssuedAndOutstandingPercentage_pid_dp_uPure_c20191027__20191029__dei--LegalEntityAxis__custom--VivosHoldingsLLCMember_zje7ldYCOuui" title="Shares issued and outstanding percentage">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 June 30, 2023 (amounts in thousands, except per share data) Upon purchasing MMG and thereafter, the “Vivos Group”) began borrowing monies from MMG starting with $<span id="xdx_907_eus-gaap--ProceedsFromPreviousAcquisition_pn3n3_c20161108__20161109__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember_zXTOqYbI8JS2" title="Proceeds from Previous Acquisition">1,400 in 2016 and by the end of 2019 the balance had reached $<span id="xdx_90D_eus-gaap--NotesPayable_iI_pn3n3_c20191231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember_zw6qo7ou5PT" title="Notes payable">3,418, which included a $<span id="xdx_90C_eus-gaap--NotesPayable_iI_pn3n3_c20191231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember__us-gaap--GuaranteeObligationsByNatureAxis__us-gaap--PaymentGuaranteeMember_zbznJSrZmiyl" title="Notes payable">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 3 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 of 2020 through September of 2021. At that time, arbitration was agreed 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 and MMG prevailing on their claims. The Company and MMG were awarded the following: <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">an award in favor of MMG against Vivos Holdings LLC under Note I (as defined in the Award) in the amount of $<span id="xdx_900_eus-gaap--LitigationSettlementAmountAwardedFromOtherParty_pn3n3_c20220830__20220831__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCUnderNoteOneMember_zgSu8aoN2cc8" title="Arbitrator issued value">3,458, with interest thereon from June 30, 2022, at the rate of <span id="xdx_901_ecustom--LitigationSettlementAmountAwardedPercentage_iI_pid_dp_c20220831__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCUnderNoteOneMember_zYc6M0lD2Hx9" title="Arbitrator issued value, Pecentage">4.5% per year;</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">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;</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">an award in favor of MMG against Vivos Holdings, LLC under Note III (as defined in the Award) in the amount of $<span id="xdx_900_eus-gaap--LitigationSettlementAmountAwardedFromOtherParty_pn3n3_c20220830__20220831__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCUnderNoteThreeMember_ztW3k9xIFwOl" title="Arbitrator issued value">800, with interest thereon from June 30, 2022, at the rate of <span id="xdx_90E_ecustom--LitigationSettlementAmountAwardedPercentage_iI_pid_dp_c20220831__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCUnderNoteThreeMember_zKCbyQ6k9GPj" title="Arbitrator issued value, Pecentage">2.5% per year, plus collection costs, including reasonable attorneys’ fees, incurred in the effort to collect Note III;</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">an award in favor of MMG against Naveen under the Personal Guaranty (as defined in the Award) in the amount of $<span id="xdx_90A_eus-gaap--LitigationSettlementAmountAwardedFromOtherParty_pn3n3_c20220830__20220831__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__srt--TitleOfIndividualAxis__custom--NaveenDokiMember_zhMVIcNAHy1d" title="Arbitrator issued value">2,309, plus interest thereon at the rate of <span id="xdx_901_ecustom--LitigationSettlementAmountAwardedPercentage_iI_pid_dp_uPure_c20220831__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__srt--TitleOfIndividualAxis__custom--NaveenDokiMember_zm3eBvMMBpm1" title="Arbitrator issued value, Pecentage">6% per year from the date of the Award; </td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">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 $<span id="xdx_909_eus-gaap--LossContingencyDamagesSoughtValue_pn3n3_c20220830__20220831__srt--TitleOfIndividualAxis__custom--NaveenValleruJanumpallyMember__us-gaap--TypeOfArrangementAxis__custom--MergerAgreementMember_zzOVIhIvxrc8" title="Loss contingency damages sought value">1,000, to be satisfied by the transfer of their shares of the Company common stock to the Company equal in value to $<span id="xdx_90B_ecustom--LossContingencyValueInCommonStock_iI_pn3n3_c20220831__srt--TitleOfIndividualAxis__custom--NaveenValleruJanumpallyMember__us-gaap--TypeOfArrangementAxis__custom--MergerAgreementMember_zymEN22X9eDj" title="Loss contingency value in common stock">1,000, valued as of the date of the Award, in accordance with the provisions of Section 9.06(d) of the Merger Agreement; </td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">an award in favor of the Company against Naveen, Valleru, Janumpally, individually and as Trustee of Judos Trust, and Pathuri, as Trustee of Igly Trust, jointly and severally, for fraud damages in the amount of $4,327, plus interest thereon at the rate of <span id="xdx_905_ecustom--LitigationSettlementAmountAwardedPercentage_iI_pid_dp_uPure_c20220831__srt--TitleOfIndividualAxis__custom--NaveenValleruJanumpallyMember_zxJRn8GG8cmf" title="Arbitrator issued value, percentage">6% per year from the date of the Award, together with any out-of-pocket fees and expenses, including attorneys’ and accountants’ fees; </td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">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</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">declaratory relief in favor of the Company and its officers and directors. </td></tr> </table> Section 11.404(a)(1)(B) of the Texas Business Organizations Code provides for the appointment of a rehabilitative receiver when “the governing persons of the entity are deadlocked in the management of the entity’s affairs, the owners or members of the entity are unable to break the deadlock, and irreparable injury to the entity is being suffered or is threatened because of the deadlock.” With respect to the receivership, the owners or holders of all of the shares of common stock of the Company received as a result of the conversion of 1,600 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. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 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: <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">the Arbitrator will appoint a rehabilitative receiver under Maryland law in a Supplemental Award Appointing Rehabilitative Receiver;</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">an award in favor of MMG and against VREH under Note II in the amount of $<span id="xdx_906_eus-gaap--LitigationSettlementAmountAwardedFromOtherParty_pn3n3_c20230101__20230630__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VREHUnderNoteTwoMember_zhf4BaDeeJJ6" title="Arbitrator issued value">835,156 as of June 30, 2022, with interest thereafter at the rate of <span id="xdx_908_ecustom--LitigationSettlementAmountAwardedPercentage_iI_pid_dp_c20230630__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VREHUnderNoteTwoMember_zD8gc6iT1Zkc" title="Arbitrator issued value, Pecentage">5.5% per year; and</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">because the loss sustained by Reliability, Inc. in fraud damages (Award 6) is the same as the loss sustained by Reliability, Inc.’s wholly-owned subsidiary, Maslow Media Group, Inc., in the nonpayment of Notes I, II, and the Personal Guaranty (Awards 1, 2, and 4), there can be only one recovery.</td></tr> </table> On May 31, 2023, the Arbitrator appointed a Rehabilitative Receiver in the above case, an assignment which the appointee accepted. We now await the Supplemental Order Appointing the Rehabilitative Receiver. On June 16, 2023, we learned that the principal amount due on 22 Baltimore Road had been satisfied via sale and thus the Fairfax, Virginia court released the VREH confessed judgement; meaning MMG was no longer listed as a guarantor. On July 21, 2023, MMG filed a petition for attorneys’ fees, as requested by the Arbitrator. The Arbitrator set the following remaining schedule for submitting petitions for attorneys’ fees: Vivos Holdings, LLC response on August 21, 2023 and our reply on September 6, 2023. Upon a final resolution as to the underlying ownership and rights of certain shareholders, the Company intends to hold an annual meeting of shareholders within a reasonable time thereafter. As of June 30, 2023, the Vivos Debtor (“Vivos Debtor”) balance was $<span id="xdx_904_eus-gaap--NotesAndLoansReceivableNetCurrent_iI_pn3n3_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosDebtorMember_zqZlUPOd1DD9" title="Financing receivable after allowance for credit loss">5,348. 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 <span id="xdx_90A_eus-gaap--BusinessAcquisitionPercentageOfVotingInterestsAcquired_iI_pid_dp_uPure_c20230630__us-gaap--BusinessAcquisitionAxis__custom--MMGMember_zd8yH9QTIitb" title="Business acquisition percentage of voting interest acquired">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 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 six months ended June 30, 2023, <span id="xdx_90D_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20230101__20230630__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--CustomerOneMember_zJtexCmqsFV4" title="Concentration of credit risk">24.5% of revenue came from one customer, and <span id="xdx_906_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20230101__20230630__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--SecondCustomerMember_zK8UoebrAOl2" title="Concentration of credit risk">13.6% from a second customer. Combined, this totals <span id="xdx_90B_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20230101__20230630__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--TotalCustomersMember_zIpbA5g3Lk2a" title="Concentration of credit risk">38.1% of revenue. Last year, these two customers plus a third, accounted for <span id="xdx_90B_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_c20220101__20220630__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember__srt--MajorCustomersAxis__custom--ThreeCustomersMember_zONezFoedhAg" title="Concentration of credit risk">48.6% of revenue for the same period ended June 30, 2022. This year, the top five customers accounted for 60.6% of revenue versus a year ago, when the top five landed on 63.5%. No other client has exceeded 10% of revenues for the six months ended June 30, 2023 or 2022. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2023 (amounts in thousands, except per share data)

0.84

1400000

3418000

3000000

3458000

0.045

800000

0.025

2309000

0.06

1000000

4327000

0.06

1600

835156000

0.055

5348000

6348000

0.245

0.136

0.381

0.486

the top five customers accounted for 60.6% of revenue versus a year ago, when the top five landed on 63.5%

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: <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"> </td> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">cash flow forecasts showing sufficient cash and working capital for at least 12 months from July 23, 2023;</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">the prospect of receiving the amounts awarded in the arbitration hearing in 2023, which include the $<span id="xdx_908_eus-gaap--NotesAndLoansReceivableNetCurrent_iI_pn3n3_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_z38tBTagr3We" title="Notes receivable related parties current">5,348 in notes receivable from related parties, plus awards for fraud, totaling $1,000 for contract damages, and additional interest, and legal fees, after the supplemental award is finalized;</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">the reduction in legal fees associated with Vivos Matter year to date at $460 plus future savings compared to a year ago;</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">new sales plan implementation by our recently hired Vice President of Sales who has experience and success in managing contingent and direct hire staffing organizations; and</td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif"> </td> <td style="font: 10pt Times New Roman, Times, Serif">●</td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">the Company has additional availability to use its factoring line to extend borrowings of up to 93% of unfactored invoices, which as of August 1, 2023, could be converted to approximately $2,347 in cash.</td></tr> </table> 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.

5348000

1000000

460000

0.93

2347000

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.

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.

NOTE 4. ACCOUNTS RECEIVABLE Accounts receivable can be broken down as follows: SCHEDULE OF ACCOUNTS RECEIVABLE <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 60%"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="padding-bottom: 1.5pt"> </td> <td colspan="2" id="xdx_497_20230630_zs0qMTxtfUCc" style="border-bottom: Black 1.5pt solid; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td> <td colspan="2" id="xdx_497_20221231_zbK1XlTEJnM3" style="border-bottom: Black 1.5pt solid; text-align: center">December 31, 2022</td><td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold"> </td><td> </td> <td colspan="2" style="text-align: right"> </td><td> </td><td> </td> <td colspan="2" style="text-align: right"> </td><td> </td></tr> <tr id="xdx_408_ecustom--AccountsReceivableUnfactored_iI_pn3n3_maANALRzNd4_zAf0yqnmarp4" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 10pt; width: 52%; text-align: left">Accounts receivable, unfactored</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 20%; text-align: right">1,549</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 20%; text-align: right">3,131</td><td style="width: 1%; text-align: left"> </td></tr> <tr id="xdx_401_eus-gaap--UnbilledReceivablesCurrent_iI_pn3n3_maANALRzNd4_zLHCrnFKonTb" style="vertical-align: bottom; background-color: White"> <td style="padding-left: 10pt; text-align: left">Unbilled receivables</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">851</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">587</td><td style="text-align: left"> </td></tr> <tr id="xdx_40E_eus-gaap--AccountsReceivableNetCurrent_iI_pn3n3_maANALRzNd4_zYFrtw9aPrqd" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt">Accounts receivable, factored</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">82</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,619</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr id="xdx_40E_eus-gaap--AccountsNotesAndLoansReceivableNetCurrent_iTI_pn3n3_mtANALRzNd4_zMSO5UweV8qi" style="vertical-align: bottom; background-color: White"> <td style="padding-left: 10pt; text-align: left; padding-bottom: 2.5pt">Total Accounts Receivable</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">2,482</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">6,337</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table>

Accounts receivable can be broken down as follows: SCHEDULE OF ACCOUNTS RECEIVABLE <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 60%"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td><td style="padding-bottom: 1.5pt"> </td> <td colspan="2" id="xdx_497_20230630_zs0qMTxtfUCc" style="border-bottom: Black 1.5pt solid; text-align: center">June 30, 2023</td><td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt"> </td> <td colspan="2" id="xdx_497_20221231_zbK1XlTEJnM3" style="border-bottom: Black 1.5pt solid; text-align: center">December 31, 2022</td><td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold"> </td><td> </td> <td colspan="2" style="text-align: right"> </td><td> </td><td> </td> <td colspan="2" style="text-align: right"> </td><td> </td></tr> <tr id="xdx_408_ecustom--AccountsReceivableUnfactored_iI_pn3n3_maANALRzNd4_zAf0yqnmarp4" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 10pt; width: 52%; text-align: left">Accounts receivable, unfactored</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 20%; text-align: right">1,549</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 20%; text-align: right">3,131</td><td style="width: 1%; text-align: left"> </td></tr> <tr id="xdx_401_eus-gaap--UnbilledReceivablesCurrent_iI_pn3n3_maANALRzNd4_zLHCrnFKonTb" style="vertical-align: bottom; background-color: White"> <td style="padding-left: 10pt; text-align: left">Unbilled receivables</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">851</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">587</td><td style="text-align: left"> </td></tr> <tr id="xdx_40E_eus-gaap--AccountsReceivableNetCurrent_iI_pn3n3_maANALRzNd4_zYFrtw9aPrqd" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 10pt; text-align: left; padding-bottom: 1.5pt">Accounts receivable, factored</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">82</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,619</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr id="xdx_40E_eus-gaap--AccountsNotesAndLoansReceivableNetCurrent_iTI_pn3n3_mtANALRzNd4_zMSO5UweV8qi" style="vertical-align: bottom; background-color: White"> <td style="padding-left: 10pt; text-align: left; padding-bottom: 2.5pt">Total Accounts Receivable</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">2,482</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">6,337</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table>

1549000 3131000

851000

587000

82000

2619000

2482000

6337000

NOTE 5. DEBT Tax Liabilities As of June 30, 2023, the Company’s overall tax liability was $5 compared to $6 on December 31, 2022. Factoring Facility The Company is in 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 <span id="xdx_909_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20230630__us-gaap--TypeOfArrangementAxis__custom--FactoringAndSecurityAgreementMember__us-gaap--VariableRateAxis__us-gaap--PrimeRateMember_z99m9hdj8vle" title="Debt instrument, interest rate">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. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2023 (amounts in thousands, except per share data) 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 $<span id="xdx_902_eus-gaap--ProceedsFromSaleAndCollectionOfReceivables_pn3n3_c20230401__20230630__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember_zhzOaMC069hc" title="Proceeds from sale of receivables">681 for the three-month period ending June 30, 2023, compared to $<span id="xdx_905_eus-gaap--ProceedsFromSaleAndCollectionOfReceivables_pn3n3_c20220401__20220630__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember_zmGCDbY4zaE8" title="Proceeds from sale of receivables">4,149 for the same period ending on June 30, 2022, and $<span id="xdx_90A_eus-gaap--ProceedsFromSaleAndCollectionOfReceivables_pn3n3_c20230101__20230630__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember_zdrKDYE9Oie1" title="Proceeds from sale of receivables">3,297 compared to $<span id="xdx_904_eus-gaap--ProceedsFromSaleAndCollectionOfReceivables_pn3n3_c20220101__20220630__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--AccountsReceivableMember_zZ19ZqfSJm41" title="Proceeds from sale of receivables">6,960 for the six months ended June 30, 2023 and 2022. The total outstanding balance under the recourse contract was $82 on June 30, 2023, compared to $2,619 as of December 31, 2022 and $2,725 on June 30, 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 six months ended June 30, 2023 and 2022 totaled $44 and $29, respectively.

5000

6000

0.02

0.10

681000

4149000

3297000

6960000

82000

2619000

2725000

44000

29000

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 described in Item 1. However, there were certain non-disclosures by Vivos Holdings, LLC that are included below which are completely covered in Note 8 and Item 3 Legal Proceedings. In December 2019, the Company’s executive management learned that prior to the Merger, in January 2018, one of the Company’s related parties, on behalf of Maslow, executed a guarantee of obligations of Vivos Real Estate Holdings, LLC (“VREH”), under a mortgage loan for the purchase of the property at 22 Baltimore Rd., Rockville, Maryland. Maslow leased this space on market terms. This obligation had not been included in Maslow’s consolidated financial statements and was not separately disclosed prior to the Merger. Maslow challenged this obligation and included the lack of disclosure in its arbitration complaint. This matter was finally resolved on June 16, 2023 with the sale of the building by VREH, which relieved MMG of any further obligation in regard to the building’s mortgage. In September 2022, MMG learned that Vivos IT, LLC filed a lawsuit against Second Wind Consultants (“SWC”) in May 2019 included MMG as a plaintiff. The lawsuit included claims of fraud in inducement and unjust enrichment against SWC. The five parties suing SWC, included Vivos LLC, The Maslow Media Group, Suresh Venkat Doki, Naveen Doki, and Silvija Valleru. The lawsuit related to a debt restructuring services agreement secured by Suresh Doki, Naveen Doki and Silvija Valleru to assist the following then owned Vivos entities: Maslow Media Group, Inc., Health Care Resources Network, Inc., Mettler & Michael, Inc., 360 IT Professionals, Inc., and US IT Solutions, Inc. SWC countersued all plaintiffs on September 30, 2019, seeking to collect the balance of $402,500 not paid by the Vivos Group. These suits were not disclosed to Maslow management or to Reliability before the Merger closed on October 29, 2019. MMG continues to weigh its legal options. The Company filed a motion in January 2023 to include all original parties to the SWC Agreement. The court has not yet issued its ruling on the motion filed. 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.

402500

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. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2023 (amounts in thousands, except per share data)

300000000

NOTE 8. RELATED PARTY TRANSACTIONS Stock Purchase Agreement On November 9, 2016, Vivos Holdings, LLC, the former owner of MMG, acquired <span id="xdx_906_eus-gaap--BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage_iI_pid_dp_uPure_c20161109__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__us-gaap--BusinessAcquisitionAxis__custom--MaslowMediaGroupIncMember__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember_zY4palZivDIc" title="Business combination step acquisition, percentage">100% of MMG through a stock acquisition exchange for a purchase price of $<span id="xdx_901_eus-gaap--BusinessAcquisitionCostOfAcquiredEntityTransactionCosts_iI_pn3n3_c20161109__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__us-gaap--BusinessAcquisitionAxis__custom--MaslowMediaGroupIncMember__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember_zNdzbZJis6V4" title="Transaction costs">1,750, of which: (i) $<span id="xdx_907_eus-gaap--ProceedsFromPreviousAcquisition_pn3n3_c20161108__20161109__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember_zuaxCuoVBkHl" title="Proceeds from previous acquisition">1,400 was paid at settlement with proceeds from MMG and (ii) a promissory note to pay the remaining $<span id="xdx_907_eus-gaap--NotesPayable_iI_pn3n3_c20161109__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember_zTFp79u8cV3h" title="Notes payable">350 (“Vivos/MMG Purchase Agreement”). <span id="xdx_902_eus-gaap--DebtInstrumentDescription_c20161108__20161109__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember_zO3WnGU3LL5b" title="Debt instrument, description">The promissory note was to be paid in twenty-four equal installments, including interest at 4.5%, in the amount of approximately $15, commencing six months after closing, with the last payment on March 1, 2019. 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 $<span id="xdx_90B_ecustom--AdditionalBorrowing_pn3n3_c20180101__20230331__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember_zwL8Ux128GC7" title="Additional borrowing">2,503 in additional borrowings. As of June 30, 2023 and December 31, 2022, the receivable totaled $5,348 and $5,251, respectively. This is not inclusive of the additional amounts awarded in the arbitration. Notes Receivable The Company has notes receivable from Vivos Holdings, LLC and VREH, a member of Vivos Group, both related party affiliates due to their ownership percentage in the Company. 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 <span id="xdx_90D_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__srt--RangeAxis__srt--MinimumMember_z6eYlOmRM8G5" title="Interest rate">4.5% and <span id="xdx_908_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20211231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__srt--RangeAxis__srt--MaximumMember_zHkHYChT6y8" title="Interest rate">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 $<span id="xdx_901_eus-gaap--NotesReceivableNet_iI_pn3n3_c20161115__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember_zR198IvNqjq6" title="Notes receivable, related parties">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 is due September 20, 2023. As of June 30, 2023, the total outstanding balance was $<span id="xdx_903_eus-gaap--NotesPayable_iI_pn3n3_c20230630__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember_zUMLPvm6qHB6" title="Notes payable">3,647, which includes accrued interest receivable of $<span id="xdx_90C_eus-gaap--InterestReceivable_iI_pn3n3_c20230630__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember_zkzyMBgcsUw" title="Interest receivable">63 for the period. On November 15, 2017, MMG executed an intercompany promissory note receivable with VREH in the amount of $<span id="xdx_902_eus-gaap--NotesPayable_iI_pn3n3_c20171115__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosRealEstateMember__us-gaap--DebtInstrumentAxis__custom--VivosREPromissoryNoteMember_zMiigXXjCNWg" title="Notes payable">772. There were two loan periods defined. During the first loan period, interest accrued monthly and a new loan amount of $<span id="xdx_906_eus-gaap--NotesPayable_iI_pn3n3_c20171115__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosRealEstateMember__us-gaap--DebtInstrumentAxis__custom--VivosREPromissoryNoteMember__us-gaap--TypeOfArrangementAxis__custom--NewLoanMember_zNkNeaD3nwD8">781 was subject to a second loan period. As of June 30, 2023, the total outstanding balance was $<span id="xdx_907_eus-gaap--NotesPayable_iI_pn3n3_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosRealEstateMember__us-gaap--DebtInstrumentAxis__custom--VivosREPromissoryNoteMember_zqIcXwNmmKyh">881, which includes accrued interest receivable of $<span id="xdx_908_eus-gaap--InterestReceivable_iI_pn3n3_c20230630__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosRealEstateMember__us-gaap--DebtInstrumentAxis__custom--VivosREPromissoryNoteMember_zLvLsBdi5aKc">24 for the period. On June 12, 2019, MMG entered into a Personal Guaranty agreement with Dr. Doki, pursuant to which Dr. Naveen Doki personally guaranteed to MMG repayment of $<span id="xdx_900_eus-gaap--RepaymentsOfRelatedPartyDebt_pn3n3_c20190611__20190612__us-gaap--TypeOfArrangementAxis__custom--PersonalGuarantyAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrNaveenDokiMember_zolp2IoZ3mUl" title="Repayments of debt">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 <span id="xdx_90D_eus-gaap--BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage_iI_pid_dp_uPure_c20190612__us-gaap--TypeOfArrangementAxis__custom--PersonalGuarantyAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--MrNaveenDokiMember__us-gaap--BusinessAcquisitionAxis__custom--MaslowMediaGroupIncMember_zGFhSOSUb0H5" title="Business combination, equity interest percentage">5% or greater beneficial holder of Company 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 June 30, 2023, the Vivos Group borrowed an additional $<span id="xdx_90D_eus-gaap--DebtInstrumentFaceAmount_iI_pn3n3_c20230331__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember_zyIQ5tUR0RH5" title="Additional borrowings">2,547, included in the note receivable, totaling $<span id="xdx_907_eus-gaap--NotesAndLoansReceivableNetCurrent_iI_pn3n3_c20230630__us-gaap--TypeOfArrangementAxis__custom--StockPurchaseAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember_zCU6TZ9GNUPf" title="Notes receivable, related party, current">3,647. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2023 (amounts in thousands, except per share data) 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 $<span id="xdx_907_eus-gaap--DebtInstrumentFaceAmount_iI_pn3n3_c20190905__us-gaap--TypeOfArrangementAxis__custom--SecuredPromissoryNoteAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember_zjMLehg1ErM6" title="Principal amount">750. The note bears interest at <span id="xdx_90E_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_dp_uPure_c20191202__us-gaap--TypeOfArrangementAxis__custom--SecuredPromissoryNoteAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember_zyHQhLN5dRog" title="Interest rate">2.5% per year and requires the Vivos Group to make monthly payments to MMG of $<span id="xdx_90E_eus-gaap--DebtInstrumentPeriodicPayment_pn3n3_c20191130__20191202__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember__us-gaap--TypeOfArrangementAxis__custom--SecuredPromissoryNoteAgreementMember_zv8f0VNQ0912" title="Debt instrument, periodic payment">10 beginning December 1, 2019, with balance due and payable on <span id="xdx_902_eus-gaap--DebtInstrumentMaturityDate_dd_c20191130__20191202__us-gaap--TypeOfArrangementAxis__custom--SecuredPromissoryNoteAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember_zNZdzhd8s5b3" title="Debt instrument, maturity date">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 <span id="xdx_900_eus-gaap--DebtConversionConvertedInstrumentSharesIssued1_pid_c20190904__20190905__us-gaap--TypeOfArrangementAxis__custom--SecuredPromissoryNoteAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember_zmC2f2iEeR8f" title="Shares issued for conversion">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 <span id="xdx_90C_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20190905__us-gaap--TypeOfArrangementAxis__custom--SecuredPromissoryNoteAgreementMember__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--VivosMember_zIElZNjfIGh8" title="Equity method ownership percentage">5% or greater beneficial owners of Company Common Stock, which is qualified by the Merger Arbitration complaint. As of June 30, 2023, the total outstanding balance was $<span id="xdx_90C_eus-gaap--DebtInstrumentFaceAmount_iI_pn3n3_c20230630__us-gaap--TypeOfArrangementAxis__custom--SecuredPromissoryNoteAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember_zTKMahyjJdL9" title="Principal amount">820, which includes 2023 interest of $<span id="xdx_90D_eus-gaap--InterestReceivable_iI_pn3n3_c20230630__us-gaap--TypeOfArrangementAxis__custom--SecuredPromissoryNoteAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosMember__dei--LegalEntityAxis__custom--MaslowMediaGroupIncMember_z4OVARXe7P4f" title="Interest receivable">10. Debt Settlement Agreements On July 21, 2022, Maslow settled the obligation which Vivos Holdings, LLC had obligated Maslow to in July 2018, with Libertas Funding, LLC and Kinetic for $<span id="xdx_909_ecustom--SettlementObligation_iI_pn3n3_uUSD_c20220721__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__us-gaap--TypeOfArrangementAxis__custom--AgreementMember_zQcLE0ixnoJ7" title="Settlement obligation">475. (see Section 1A). The $<span id="xdx_908_eus-gaap--DebtInstrumentFaceAmount_iI_pn3n3_c20220721__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--VivosHoldingsLLCMember__us-gaap--TypeOfArrangementAxis__custom--AgreementMember_zpBGkR3rO0j9" title="Outstanding balance">475 is included in the additional borrowing cited above. 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 <span id="xdx_903_eus-gaap--DebtConversionConvertedInstrumentSharesIssued1_pid_c20191028__20191029__us-gaap--TypeOfArrangementAxis__custom--MergerAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--NaveenDokiMember_zBkyKw97ynui" title="Conversion of shares issued">206,606,528 and <span id="xdx_90C_eus-gaap--DebtConversionConvertedInstrumentSharesIssued1_pid_c20191028__20191029__us-gaap--TypeOfArrangementAxis__custom--MergerAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SilvijaValleruMember_zgP25IUdqSj8" title="Conversion of shares issued">51,652,908 shares of RLBY Common Stock, respectively, equal to <span id="xdx_90C_eus-gaap--DebtConversionConvertedInstrumentRate_pid_dp_uPure_c20191028__20191029__us-gaap--TypeOfArrangementAxis__custom--MergerAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--NaveenDokiMember_zUt26f7ZYDuj" title="Debt conversion converted instrument rate">68.9% and <span id="xdx_90E_eus-gaap--DebtConversionConvertedInstrumentRate_pid_dp_uPure_c20191028__20191029__us-gaap--TypeOfArrangementAxis__custom--MergerAgreementMember__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--SilvijaValleruMember_z0UmsTSExTAc" title="Debt conversion converted instrument rate">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 (see Note 1). 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 <span id="xdx_90B_eus-gaap--ClassOfWarrantOrRightNumberOfSecuritiesCalledByWarrantsOrRights_iI_pid_c20191029__us-gaap--StatementEquityComponentsAxis__us-gaap--WarrantMember_zJVF53TCloW1" title="Issuance of warrants to purchase, shares">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 $<span id="xdx_908_ecustom--ConvertibleNoteWarrantsTriggerValue_iI_pn3n3_c20230630__us-gaap--DebtInstrumentAxis__custom--ConvertibleNoteWarrantsMember_zhfi5SxvgRyc" title="Convertible note warrants trigger value">5,000 trigger. RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2023 (amounts in thousands, except per share data)

1750000

1400000

350000

The promissory note was to be paid in twenty-four equal installments, including interest at 4.5%, in the amount of approximately $15, commencing six months after closing, with the last payment on March 1, 2019

2503000

5348000

5251000

0.045

0.055

1400000

3647000

63000

772000

781000

881000

24000

3000000

0.05

2547000

3647000

750000

0.025

10000

2026-11-01

30000000

0.05

820000

10000

475000

206606528

51652908

0.689

0.172

1000000

163232

5000000

1.20 5000000

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 fulfils 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 June 30, 2023 and 2022, respectively: SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-left: auto; border-collapse: collapse; width: 80%; margin-right: auto"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td> <td colspan="2" id="xdx_492_20230401__20230630_zHoM2b3cxMy1" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td> <td colspan="2" id="xdx_491_20220401__20220630_zmXxePP3y5t8" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Revenue:</td><td> </td> <td colspan="2" style="text-align: right"> </td><td> </td><td> </td> <td colspan="2" style="text-align: right"> </td><td> </td></tr> <tr id="xdx_40F_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_hsrt--ProductOrServiceAxis__custom--EORMember_zeDSxgWdtC59" style="vertical-align: bottom; background-color: White"> <td style="width: 60%">EOR</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">4,499</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 16%; text-align: right">5,515</td><td style="width: 1%; text-align: left"> </td></tr> <tr id="xdx_40F_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_hsrt--ProductOrServiceAxis__custom--RecruitingAndStaffingMember_zFw8jd2E9X1h" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Recruiting and Staffing</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">863</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">898</td><td style="text-align: left"> </td></tr> <tr id="xdx_40F_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_hsrt--ProductOrServiceAxis__custom--DirectHireMember_zAtM43aPH5Tg" style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Direct Hire</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">22</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr> <tr id="xdx_40C_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_hsrt--ProductOrServiceAxis__custom--VideoAndMultimediaProductionMember_zAMmSdok9yub" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt; text-align: left">Video and Multimedia Production</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">68</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">68</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr id="xdx_404_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_zyvc8XigS7be" style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,452</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">6,481</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr id="xdx_409_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_zMrnrHno5gq4" style="display: none; vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Revenue</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,452</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">6,481</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table>

The following table provides a reconciliation of revenue by reportable segment to consolidated results for the three months ended June 30, 2023 and 2022, respectively: SCHEDULE OF RECONCILIATION OF REVENUE AND OPERATING INCOME BY REPORTABLE SEGMENT TO CONSOLIDATED RESULTS <table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-left: auto; border-collapse: collapse; width: 80%; margin-right: auto"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td> <td colspan="2" id="xdx_492_20230401__20230630_zHoM2b3cxMy1" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td> <td colspan="2" id="xdx_491_20220401__20220630_zmXxePP3y5t8" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Revenue:</td><td> </td> <td colspan="2" style="text-align: right"> </td><td> </td><td> </td> <td colspan="2" style="text-align: right"> </td><td> </td></tr> <tr id="xdx_40F_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_hsrt--ProductOrServiceAxis__custom--EORMember_zeDSxgWdtC59" style="vertical-align: bottom; background-color: White"> <td style="width: 60%">EOR</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 16%; text-align: right">4,499</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left"> </td><td style="width: 16%; text-align: right">5,515</td><td style="width: 1%; text-align: left"> </td></tr> <tr id="xdx_40F_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_hsrt--ProductOrServiceAxis__custom--RecruitingAndStaffingMember_zFw8jd2E9X1h" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Recruiting and Staffing</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">863</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">898</td><td style="text-align: left"> </td></tr> <tr id="xdx_40F_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_hsrt--ProductOrServiceAxis__custom--DirectHireMember_zAtM43aPH5Tg" style="vertical-align: bottom; background-color: White"> <td style="text-align: left">Direct Hire</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">22</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr> <tr id="xdx_40C_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_hsrt--ProductOrServiceAxis__custom--VideoAndMultimediaProductionMember_zAMmSdok9yub" style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt; text-align: left">Video and Multimedia Production</td><td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">68</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">68</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr> <tr id="xdx_404_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_zyvc8XigS7be" style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,452</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">6,481</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr id="xdx_409_eus-gaap--RevenueFromContractWithCustomerExcludingAssessedTax_pn3n3_zMrnrHno5gq4" style="display: none; vertical-align: bottom; background-color: White"> <td style="padding-bottom: 2.5pt">Revenue</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">5,452</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; text-align: right">6,481</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table>

4499000

5515000

863000

898000

22000

68000

5452000

6481000

5452000

6481000

NOTE 10. SUBSEQUENT EVENTS The Company has evaluated subsequent events through August 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 July 21, 2023, MMG filed a petition for attorneys’ fees, as requested by the Arbitrator. The Arbitrator set the following remaining schedule for submitting petitions for attorneys’ fees: Vivos Holdings, LLC response on August 21, 2023 and our reply on September 6, 2023.