Change of Control · Executive Change

8-K/A 1 form8-ka.htm UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A (Amendment No. 1) CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 29, 2019 Reliability Incorporated (Exact name of registrant as specified in its charter) Texas 000-07092 75-0868913 (State or other jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification Number) 22 Baltimore Road Rockville, Maryland 20850 (Address of principal executive offices) (Zip Code) (202) 965-1100 (Registrant’s telephone number, including area code) 53 Forest Avenue, First Floor Old Greenwich, Connecticut (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.) [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CF$ 240.13©(c)) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered N/A N/A N/A Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). 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. [ ] Explanatory Statement This Form 8-K/A is being filed as an amendment (“Amendment No. 1”) to the Current Report on Form 8-K filed by Reliability Incorporated on October 30, 2019 (the “Original 8-K”). The purpose of this Amendment No. 1 is to revise the Original 8-K disclosure to: (i) Amend “Item 2.01. Completion of Acquisition or Disposition of Assets—Merger—Additional Actions at the Closing” to disclose Reliability Incorporated’s waiver of the Merger Agreement requirement that each of Mrs. Janumpally, Federal Systems (a company owned and controlled by Mrs. Janumpally), Mrs. Pathuri and Mr. Eberwein enter into a Lock-Up Agreement; (ii) Amend “Item 2.01. Completion of Acquisition or Disposition of Assets—Form 10 Disclosures—Directors, Executive Officers, Promoters and Control Persons” to disclose that Nick Tsahalis was appointed as a member of Reliability Incorporated’s Board of Directors on October 30, 2019; (iii) Amend “Item 2.01. Completion of Acquisition or Disposition of Assets—Form 10 Disclosures—Management’s Discussion and Analysis of Financial Condition and Results of Operations” to include disclosure regarding the three and nine months ended September 30, 2019; (iv) Amend “Item 9.01. Exhibits” to include (a) the unaudited financial statements of The Maslow Media Group, Inc. for the nine months ended September 30, 2019 and 2018 as Exhibit 99.5, and (b) the September 30, 2019 unaudited pro forma balance sheet and statement of operations of Reliability Incorporated and The Maslow Media Group, Inc. and notes thereto as Exhibit 99.6; and (v) Correct certain typographical errors in the Original 8-K. No other information has been revised. Cautionary Note Regarding Forward-Looking Statements This Current Report on Form 8-K, including the sections entitled “Description of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements in this Current Report on Form 8-K include, but are not limited to, statements about: ● the implementation of our strategic plans for our business; ● our financial performance; ● developments relating to our competitors and our industry, including the impact of government regulation; ● estimates of our expenses, future revenues, capital requirements and our needs for additional financing; and ● other risks and uncertainties, including those listed under the captions “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In some cases, forward-looking statements can be identified by terminology such as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “could,” “project,” “intend,” “will,” “will be,” “would,” or the negative of these terms or other comparable terminology and expressions. However, this is not an exclusive way of identifying such statements. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section entitled “Risk Factors” and elsewhere in this Current Report on Form 8-K. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Current Report on Form 8-K and the documents that we reference in this Current Report on Form 8-K and have filed with the Securities and Exchange Commission (“SEC”) as exhibits hereto completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements. The forward-looking statements in this Current Report on Form 8-K represent our views as of the date of this Current Report on Form 8-K. We anticipate that subsequent events and developments will cause our views to change. Except as expressly required under federal securities laws and the rules and regulations of the SEC, we do not undertake any obligation to update any forward-looking statements to reflect events or circumstances arising after the date of this Current Report on Form 8-K, whether as a result of new information or future events or otherwise. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Current Report on Form 8-K. You should not place undue reliance on the forward-looking statements included in this Current Report on Form 8-K. All forward-looking statements attributable to use are expressly qualified by these cautionary statements. Industry Data This Current Report on Form 8-K includes industry and market data and other information, which we have obtained from, or is based upon, market research, independent industry publications, surveys and studies conducted by third parties or other publicly available information. Although we believe each such source to have been reliable as of its respective date, none guarantees the accuracy or completeness of such information. We have not independently verified the information contained in such sources. Any such data and other information are subject to change based on various factors, including those described below under the heading “Risk Factors” and elsewhere in this Current Report on Form 8-K. TABLE OF CONTENTS Item No. Description of Item Page No. Item 1.01 Entry Into a Material Definitive Agreement. 4 Item 2.01 Completion of Acquisition or Disposition of Assets. 4 Item 3.02 Unregistered Sales of Equity Securities. 46 Item 5.01 Change in Control of the Registrant. 45 Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers. 46 Item 5.06 Change in Shell Company Status. 47 Item 9.01 Financial Statements and Exhibits. 47 3 Item 1.01. Entry into a Material Definitive Agreement . Merger Agreement The disclosure set forth below under Item 2.01 (Completion of Acquisition of Disposition of Assets) is incorporated by reference into this Item 1.01. Item 2.01 Completion of Acquisition or Disposition of Assets. Merger On September 18, 2019, Reliability Incorporated, a Texas corporation (the “Company,” “Reliability,” “we,” “us,” or “our”), (ii) R-M Merger Sub, Inc., a Virginia corporation and a wholly owned subsidiary of Reliability (“Merger Sub”), (iii) The Maslow Media Group, Inc., a Virginia corporation (“Maslow”), (iv) Jeffrey Eberwein (“Mr. Eberwein”), (v) Naveen Doki (“Dr. Doki”) and (vii) Silvija Valleru (“Dr. Valleru” and, together with Dr. Doki, the “Shareholders”) entered into a Merger Agreement (the “Merger Agreement”). The Merger Agreement provided for, among other things, a business combination whereby Merger Sub will merge with and into Maslow, with Maslow as the surviving entity (the “Merger”). As a result of the Merger, the separate corporate existence of Merger Sub will cease and Maslow will continue as the surviving corporation and a wholly owned subsidiary of the Company. The Merger closed in accordance with the terms of the Merger Agreement on October 29, 2019. The Merger was consummated on October 29, 2019 by the filing of a Statement of Merger with the Secretary of the Commonwealth of Virginia and by making other filings or recordings required under the Virginia Stock Corporation Act in connection with the Merger. A copy of the Statement of Merger is filed as Exhibit 2.2 to this Form 8-K and is incorporated by reference. The Merger became effective on October 29, 2019. We refer to the effective time of the Merger as the “Effective Time” and to the closing of the Merger overall as the “Closing.” Reliability Actions Prior to Closing Prior to the Closing, as required by the Merger Agreement, Reliability undertook certain actions, including, but not limited to, the following: Debt Conversion Pursuant to a debt conversion agreement dated October 28, 2019 between Reliability and Lone Star Value Co-Invest I, LP and a debt conversion agreement dated October 28, 2019 between Reliability and Lone Star Value Investors, LP (together, the “Debt Conversion Agreements”), Reliability converted substantially all of its issued and outstanding liabilities and debts into 1,085,307 shares of its authorized, issued and outstanding common stock, no par value per share (“Reliability Common Stock”), pursuant to which $50,000 and $70,000 in principal and interest accrued through September 18, 2019, the date on which the Merger Agreement was signed, was converted into 514,893 and 570,414 shares of Reliability Common Stock for Lone Star Value Investors, LP and Lone Star Value Co-Invest I, LP respectively. As of the date of these agreements, each of Lone Star Value Investors, LP and Lone Star Value Co-Invest I, LP were significant shareholders of the Reliability’ s common stock, each owning greater than 5%, and therefore were related parties of Reliability. The foregoing description of the Debt Conversion Agreements are qualified in its entirety by reference to the Debt Conversion Agreements filed as Exhibit 10.22 and Exhibit 10.23 hereto and are incorporated herein by reference. 4 Effects of the Merger At the Effective Time, all the property, rights, privileges, powers and franchises of Maslow and Merger Sub vested in Maslow as the surviving corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of Maslow and Merger Sub became those of Maslow as the surviving corporation. In addition, at the Effective Time, the Articles of Incorporation and Bylaws of Maslow remained in place as the Articles of Incorporation and Bylaws of Maslow as the surviving corporation. As a result of the Merger, Reliability ceased to be a “shell” company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and by virtue of its ownership of Maslow became an indirect operating entity. Reference is made to Item 5.06 of this Current Report on Form 8-K which is incorporated in its entirety into this Item 2.01. The Merger also resulted in a “change in control” of Reliability. Reference is made to Item 5.01 of this Current Report on Form 8-K which is incorporated in its entirety into this Item 2.01. The Merger is intended to be a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and the Merger Agreement is intended to be a “plan of reorganization” within the meaning of the regulations promulgated under Section 368(a) of the Code and for the purpose of qualifying as a tax-free transaction for federal income tax purposes. The parties to the Merger Agreement agreed to report the Merger as a tax-free reorganization under the provisions of Section 368(a), and covenanted that none of them will take or cause to be taken any action which would prevent the transactions contemplated by the Merger Agreement from qualifying as a reorganization under Section 368(a). Conversion of Maslow Common Stock At the Effective Time, all shares of common stock, $1.00 par value per share, of Maslow (the “Maslow Common Stock”), issued and outstanding immediately prior to the Effective Time were converted into a number of shares of Reliability Common Stock constituting 94% of the total issued and outstanding shares of Reliability Common Stock, or 282,000,000 shares (the “Merger Consideration”). The shareholders of Reliability as of immediately prior to the Closing collectively retained a total aggregate number of shares of Reliability Common Stock constituting 6% of the issued and outstanding shares of Reliability Common Stock immediately following the Effective Time, or 18,000,000 shares of Reliability Common Stock. In addition, at the Effective Time, each share of Maslow Common Stock that was issued and outstanding immediately prior to the Effective Time that was owned by Maslow as treasury stock was canceled and retired without any payment or distribution with respect to such shares; any outstanding shares of Maslow Common Stock that were owned by Reliability, Merger Sub or any other direct or indirect wholly owned subsidiary of Reliability or Merger Sub, were cancelled and retired and ceased to exist and no cash or consideration was delivered in exchange for such shares; and all outstanding shares of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time were converted into and became, collectively, one share of Maslow Common Stock and constitute the only outstanding share of capital stock of Maslow. Additional Actions at the Closing At the Closing, the then-current members of the Reliability Board of Directors consisting of Hannah Bible, Shawn Miles, and Julia Dayton elected Mark Speck to serve on the Reliability Board of Directors, and subsequently each of Mr. Miles and Ms. Dayton resigned. Mr. Eberwein remained as a Board observer. Also, at the Closing, the officers of Reliability as of immediately before the Closing resigned, and the Reliability Board of Directors, as newly constituted as set forth above, elected new officers of Reliability, consisting of Nick Tsahalis (as President) and Mark Speck (as Chief Financial Officer and Secretary). Reference is made to Item 5.02 of this Current Report which is incorporated in its entirety into this Item 2.01. In addition, pursuant to the terms of the Merger Agreement, Reliability was to enter into a Lock-Up Agreement with each of Mr. Eberwein, Dr. Doki, Shirisha Janumpally (“Mrs. Janumpally”), Dr. Valleru, Igly Trust, a trust for which Kalyan Pathuri is sole trustee and beneficiary, and Judos Trust, a trust for which Mrs. Janumpally is the sole trustee and beneficiary (each a “Holder”) (each, a “Lock-Up Agreement”) pursuant to which each Holder agreed not to (i) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Reliability Common Stock; (ii) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of Reliability Common Stock, whether any such transaction is to be settled by delivery of shares of Reliability Common Stock or other securities, in case or otherwise; or (iii) publicly disclose the intention to do (i) or (ii) constituting the Merger Consideration described in this Item 2.01 or held by the Holders as of the Closing for a period of one year following the Closing. Reliability entered into a Lock-Up Agreement with each of Dr. Doki, Dr. Valleru, Igly Trust and Judos Trust. The Company waived the requirement that each of Mrs. Janumpally, Federal Systems (a company owned and controlled by Mrs. Janumpally), Mrs. Pathuri and Mr. Eberwein enter into a Lock-Up Agreement. Accordingly, such persons did not enter into a Lock-Up Agreement with the Company. Although shares held by such persons are not subject to a Lock-Up Agreement, the shares are restricted and may not be sold without registration or an exemption from registration. Because the Company was a shell company prior to the Merger, Rule 144 will not be available for the resale of such shares until one year has elapsed since the filing of this Current Report on Form 8-K, in addition to certain other requirements. The foregoing description of the Lock-Up Agreements is qualified in its entirety by reference to the form of Lock-Up Agreement filed herewith as Exhibit 10.25 and incorporated by reference herein. 5 Lone Star Value Investors, LP, a Delaware limited partnership and Lone Star Value Co-Invest I, LP, a Delaware limited partnership (each, an “Investor”), also entered into a piggyback registration rights agreement at the Closing (the “Registration Rights Agreement”) with Reliability, pursuant to which Reliability agreed to provide the Investors with certain registration rights with respect to the shares of Reliability Common Stock held of record by the Investors as of the Closing. Pursuant to the terms of the Registration Rights Agreement, if, at any time after the effective date of the Registration Rights Agreement, Reliability determines to register for sale for cash on a Registration Statement under the Securities Act any of its Reliability Common Stock, for its own account or for the account of others (other than the Investors), subject to certain exceptions, then Reliability must, no less than 20 calendar days prior to such registration, give each Investor written notice thereof and, subject to certain exceptions, include as a piggyback registration all of the Investor’s registrable securities specified in a written request delivered by the Investor thereof within 10 calendar days after delivery to the Investor of such written notice from Reliability. If a piggyback registration is for a registered public offering that is to be made by an underwriting, Reliability must so advise any Investor as part of the written notice. In that event, the right of any Investor to piggyback registration is conditioned upon such Investor’s participation in such underwriting and the inclusion of such Investor’s registrable securities in the underwriting, subject to certain conditions. The foregoing description of the Registration Rights Agreement is qualified in its entirety by reference to the form of Registration Rights Agreement filed herewith as Exhibit 10.24 and incorporated by reference herein. The foregoing description of the terms of the Merger Agreement is qualified in its entirety by reference to the provisions of the Merger Agreement filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 23, 2019 and is incorporated by reference herein. Additionally, at the Closing, the Company entered into Joinder Agreements with certain holders of 10% or more of Maslow’s common stock. These Joinder Agreements are filed herewith as Exhibits 10.27, 10.28, and 10.29 FORM 10 DISCLOSURES As disclosed elsewhere in this Current Report on Form 8-K, effective October 29, 2019, we acquired Maslow upon consummation of the transactions in the Merger Agreement. Item 2.01(f) of Form 8-K provides that if a registrant was a “shell company,” as such term is defined in Rule 12b-2 under the Exchange Act, as we were immediately preceding the Closing, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10 under the Exchange Act (“Form 10”). Accordingly, set forth below is the information that would be included in Form 10. DESCRIPTION OF BUSINESS Organizational History of Reliability and Maslow Reliability Incorporated was incorporated under the laws of the State of Texas in 1953. From 1971 to 2007, Reliability was principally engaged in the design, manufacture, market, and support of high-performance equipment used to test and condition integrated circuits. This business was closed down in 2007. Since 2007, Reliability has had no operating activities and has been a “shell company” as defined by the Exchange Act. Founded in 1988, Maslow originally focused on providing qualified production crews to Washington, D.C.’s television, cable, and multimedia outlets. In 1992, Maslow reorganized its business and incorporated in the Commonwealth of Virginia. Over time, Maslow expanded its reach, adding managed services, employer of record services, and executive recruiting services to clients throughout the United States. In addition, Maslow provides video production crews to clients in numerous countries outside of the United States. Maslow’s headquarters are located in Rockville, Maryland. 6 Overview of Maslow Business Principal Services Managed Services As part of its managed services, Maslow offers clients the opportunity to outsource all or part of their human resources (“HR”) functions to the Maslow managed teams, including: ● Recruiting/Staffing ● On site management ● Background Checks/Drug Testing ● On-Boarding ● Benefits Administration (where applicable) ● Workers Compensation Claim Management ● Employee Relations ● Vendor Management ● Labor Law Requirements ● State Employment Registration. For Maslow’s managed services, Maslow provides an on-site manager who supervises Maslow’s staff and manages the specific function performed for the client. Maslow’s managed teams are comprised of employees of Maslow, and, therefore, do not require any human resource (“HR”) related duties on the part of the client. Employer of Record Services (“EOR”) Maslow can support its clients’ operations with employer of record (“EOR”) services. An EOR serves as an employer for tax purposes while an employee performs work for the client. The client company still instructs the work of the employees, but the employees are still considered workers of the EOR. As an EOR, Maslow is responsible for all personnel functions, including payroll, taxes deposits and filing benefits administration, as well as federal, state and local compliance. Maslow’s EOR services include: ● Classification of W-2s and 1099s; ● Payroll processing; ● State/city mandated sick leave tracking; ● Affordable Care Act compliance; ● Benefit Plan Administration (medical, dental, vision, short-term disability, supplemental life insurance, etc.); ● Fair Labor Standards Act compliance; ● Retirement plan management; ● Workers’ compensation claim management; ● Direct deposit processing; ● Expense, equipment, and per diem payments; ● End of year reporting; and ● Customized billing and accounting report preparation. Staffing and Executive Recruiting For clients that need to fill new or vacant positions with qualified, permanent staff, Maslow offers executive recruiting services, whereby Maslow identifies and recruits full-time personnel to meet the needs of the client. Maslow’s recruiting services include: ● Advertising and marketing cost management; and ● Life cycle involvement throughout the hiring process – including screening, salary negotiations, and contract or offer letter preparation. Maslow also provides staffing services to clients. Maslow maintains a global network of multimedia and video production professionals to provide clients with camera crews and other technical and creative talent. Maslow’s staffing services include: ● Interviewing and screening candidates thoroughly; ● Processing background and reference checks; ● Negotiating compensation packages; and ● Monitoring performance. Maslow presently has approximately 1,377 employees, consisting of 222 full-time and 1,155 part-time employees. These personnel have been deployed on customer projects throughout the U.S. and internationally, including in the following countries: China, Japan, Hong Kong, Australia, Peru, Chile, Brazil, St. Helena Island, Nigeria, Spain, the United Kingdom, France, Germany, Russia, Poland, Ukraine, Egypt, Turkey, Israel, Lebanon, Poland, Ireland, The Netherlands, Belgium, Austria, and Italy. 7 Video Production Services In connection with Maslow’s video production services, Maslow provides camera crews, equipment (as needed) and creative video production services to Maslow’s clients. Contract personnel with the following expertise are placed with clients for the term of a project: ● Directors of photography; ● Audio engineers; ● Make-up artists; ● Field producers; ● Gaffers and grips; ● Teleprompter operators; and ● Drone operators. Maslow’s production managers work side-by-side with clients to provide script-to-screen solutions for clients’ projects, including: ● Conceptualization and treatment; ● Project consultation and planning; ● Budget development and management; ● Booking and managing logistics and studio/field teams; ● Camera crews and support worldwide; ● Post-production facilities and freelancers; ● Graphic design development; ● Transmission services from satellite to streaming; and ● Fully-staffed studios. To support the needs of major broadcaster clients, Maslow has staff credentialed to work at high security U.S. government institutions, such as: ● The White House; ● The Pentagon; and ● Capitol Hill. All three of these offices require media personnel to obtain specific press passes through processes that include submission of an application, review by authorized personnel of the institution, and, if acceptable, issuance of a pass/badge. Once a client informs Maslow of its creative and video production needs, Maslow assembles a team of creative and technical talent with professional gear packages to support those requirements. Project types include: ● Documentaries; ● Live events; and ● Commercials. Agreements with Clients The specific terms governing an engagement are set forth in written agreements with Maslow’s clients. These service contracts generally fall into three categories and cover the following services: ● Staffing Agreements o Staffing o Employer of Record Services o Managed Services ● Search Agreements o Recruiting ● Service Agreements (general contract for all services of Maslow) o Staffing o Employer of Record Services o Managed Services o Recruiting 8 In certain instances, Maslow will enter into an agreement provided by a client on terms similar to one of Maslow’s form agreements. Historically, this has only been done at the request of the client, and such agreements are generally the same as our standard service agreements. In addition, video production services are generally provided on an ad-hoc basis, and not pursuant to a standard agreement. The pricing terms in the agreements are described in the sub-section “Pricing,” immediately following this sub-section. Search Agreements Search Agreements are generally executed with clients who seek recruiting services. Among other things, these contracts require Maslow to identify, evaluate, and screen prospective candidates for the open client positions, as well as to arrange initial interviews. Maslow also may agree to aid the client in the development and presentation of offers to prospective candidates. Staffing Agreements Staffing Agreements are generally used with clients who engage Maslow for its staffing, employer of record, and managed services. On the staffing side, pursuant to these agreements, Maslow provides the client with temporary or contingent workers and pay all compensation to those workers. Maslow maintains workers’ compensation and disability insurance on behalf of the workers and ensures that it meets all federal and state immigration requirements to service its clients. Maslow also can provide training for the workers supplied at customer requests, and screening to ensure a worker’s suitability for its client’s requirements. If the client desires to employ the worker directly during the term of the Staffing Agreement or within 12 months thereafter, the client agrees to pay a “release fee,” described in the sub-section “Pricing,” set forth below. If a worker supplied to a client resigns or is terminated for performance within the first 60-90 days of employment, Maslow will replace the individual at no additional cost to the customer. On the managed services and employer of record side, Maslow agrees to serves as the employer of record for all employees of the client that are identified in the contract, pays wages and all applicable federal, state, and local payroll taxes for these employees, and manages health plans and insurance. The agreement also requires the client to perform risk assessments for a particular assignment in advance of any of Maslow’s employees to begin working for the client. Service Agreements Service Agreements are generally used with clients who engage Maslow for recruiting, staffing, employer of record, and managed services, and therefore is combination of the Search and Staffing Agreements, containing similar terms to those outlined above. Pricing Managed Services For managed services, Maslow’s pricing model is based on a fixed cost that varies based on the number of the employees managed by Maslow for the client. In other words, the greater the number of employees managed, the greater the fee to the client. This fee is billed to the client on a monthly basis. Employer of Record Services Maslow is a national provider of EOR services. Because Maslow does business in every U.S. state, Maslow can quickly onboard and offboard employees to support customer requirements for temporary, seasonal or contract assignments. These employees are sourced and recruited by our customers and Maslow charges the client a fee that is a percentage of the gross wages paid to the Maslow employees that are working on behalf of the client. Since Maslow is the EOR for these individuals, Maslow pays the client’s employees directly. The client reimburses Maslow for the wages paid and Maslow charges a fee (or a “markup”) of those gross wages. The markup is intended to cover all statutory costs (such as taxes, workers’ compensation, any federal, state or local mandates, etc.) incurred by Maslow, Maslow’s overhead costs, and a service fee. Maslow’s service fee is generally the same for each client, but can vary based a number of factors, such as the classification of the employees, the location of services provided, and whether the employee is part of an organized labor union. For example, the service fee for managing 1099 contractors/corporations may be lower than the service fee for managing W-2 employees. Maslow also charges a higher service fee for clients that require expedited processing of their workers. In addition, Maslow offers discretionary volume discounts to clients that have a large number of workers managed by Maslow. 9 Staffing and Executive Recruiting For staffing services, Maslow typically charges the client by marking up the pay of employees or through other bill rates (i.e. Maslow charges the client an hourly rate that is a premium (mark-up) to the hourly wage that Maslow pays to the employee). The mark-up amount charged by Maslow on these staff varies based on the experience and qualifications of the candidate(s). In addition, if the client hires a worker supplied by Maslow directly during the term of the Staffing Agreement or within 12 months thereafter, Maslow charges up to 25% of the hired worker’s anticipated first year’s base salary as a “release fee.” This fee may be reduced based on the length of the Staffing Agreement prior to being hired by a client. For recruitment services, Maslow works on contingency basis - no fee is charged unless Maslow’s referred candidate is engaged to perform services directly or indirectly by the client. The fee for Maslow’s services is earned when a candidate is engaged to perform services. If Maslow permanently places any employee with the client, Maslow charges a flat placement fee that is a percentage of the new hire’s initial annualized base salary. Maslow offers a 60-90-day replacement search warranty, meaning if the candidate resigns or is terminated for performance within 60-90 days of the placement, Maslow will replace the candidate at no cost to the client, subject to certain limitations. Video Production Services Fees for crew members and equipment, as required, are typically charged as a single, lump sum, fixed fee. The fee varies depending the number of crew members supplied, the location of the project, the amount (and type) of equipment needed, the length of the project, and the length (and type) of deliverable expected at the end of the project. If the client requires equipment other than what Maslow typically supplies, that is offered at a fee based on “a la carte” pricing. The Industry Maslow operates within the workforce management industry. The services Maslow provides (managed services, employer of record, staffing, executive recruiting, and video production services) all fall within the broader category known as “workforce management” services. The workforce management industry is divided into three major segments: ● Employer of Record (EOR); ● Contingent staffing (freelance, contract, temporary-to-permanent, direct hire); and ● Managed services. Due to the variety of the services Maslow offers, Maslow does not consider itself as falling into any specific segment of the staffing industry. However, the largest component of its revenues are from EOR services. The EOR Market Segment An EOR provides workers to customers often for specific functions. The EOR holds the employee agreement for individuals that have been sourced and recruited by its customers. Individuals are hired and provide services to customer organizations only. Unlike the co-employer model of professional employer organizations (“PEOs”) where employee agreements remain at the customer level, an EOR holds all employee agreements and provides a complete suite of outsourced payroll, benefits, HR and compliance functions such as background checks, payroll management, benefits administration, and off-site quality management testing. ● EORs differ from PEOs in that the EOR is the employer of the customer’s worker, as opposed to the worker being employed by the customer, as in the case with a PEO. ● EORs assume all liabilities (i.e. U.S. Department of Labor classification, worker’s compensation, etc.) and responsibilities for workers. ● EORs are responsible for all compliance with federal and state regulations, including healthcare mandates. ● Customers maintain a single service agreement with the EOR as opposed to a bevy of and direct employee and contractor relationships. ● EORs handle all issues arising from employment contracts. Businesses of all sizes face increasing levels of complexity in managing HR processes, including regulatory pressures and escalating healthcare costs. These challenges are especially acute for small to medium-sized businesses (“SMBs”), which typically lack the scale and capability to solve many of these issues on their own. Services offered in the outsourced workforce management market segment, such as managed services and EOR services, can help SMBs with these challenges. The HR needs of clients are influenced by the industry in which they operate. For example, wage and hour compliance and workers’ compensation are important components of Maslow’s solution for clients in the entertainment industry, and retirement plans and specialized employee perquisites are significant components of the solution to clients in the financial services industry. As a result, some EORs specialize in servicing clients of a specific industry, while others offer more general services to clients of any industry. 10 Recruiting - The Placement Agency Market Segment Recruiting agencies (or placement agencies) find workers to fill temporary, seasonal, contract or permanent positions at customer companies. These agencies may specialize in placing senior managers, midlevel managers, technical workers, or clerical and other support workers. The recruiting services Maslow provides are typical of the kinds of services provided by a staffing agency. Demand for recruiting services is strongest in areas with strong employment growth, and geographic location can determine an agency’s success in attracting employees and employers. During economic slowdowns, many client companies stop hiring altogether. In years of good economic growth, the number of jobs in the U.S. economy typical grows 1% to 2% per year. To avoid large placement fees, big companies may use in-house personnel staff, current employee referrals, or human resources consulting companies to find and hire new personnel. Because staffing agencies typically charge a fee or markup on wages paid or a fixed fee based on a percentage of the first year’s salary of a new worker, companies with many jobs to fill have a large financial incentive to avoid agencies. Most staffing agencies are small and may depend heavily on a few big customers for a large portion of revenue. Large customers may lead to increased revenues, but also expose agencies to higher risks. When major accounts experience financial hardships, and have less need for temporary employment services, agencies stand to lose large portions of revenue. The loss of a staff member who handles a large volume of business can result in a large loss of revenue for an agency. Individual staff members, rather than the agency itself, usually develop strong relationships with customers. Staff members who move to another agency are often able to move customers with them. Temporary Help and Video Production Services – The Contingent Staffing Market Segment Temporary help services is the largest segment within the staffing industry, accounting for 55% of companies and 74% of offices in the industry according to data published by the American Staffing Association. These companies provide workers for customers for limited periods, often to substitute for absent permanent workers or to help during periods of peak demand. These workers, who are employees of the temporary help agency, will generally fill clerical, technical, or industrial positions. The crew workers that Maslow supply for its video production services are generally provided to clients on a temporary basis. Major end-use customers for temporary staffing include businesses from a wide range of industries. Marketing involves direct sales presentations, referrals from existing clients, and advertising. Companies in the staffing industry compete both for customers and workers. Depending on market supply and demand at any given time, companies may allocate more resources either to finding potential clients or potential workers. For many staffing companies, demand is lower late in the fourth quarter and early in the first quarter, partly because of holidays, and higher during the rest of the year. Some of the best opportunities for temporary employment are in industries traditionally active in seasonal cycles, such as construction, wholesale, and retail. The demand for video production services, however, is generally consistent year-round. The Market According to a 2018 report published by Statista, in the United States, the staffing industry generated $148.1 billion in 2018, and is predicted to increase to $157.8 billion in 2020. Major staffing services providers include Allegis Group and Randstad. The global staffing industry generated $490 billion in revenue worldwide in 2018, growth of 5% compared to the previous year, according to a May 2019 report published by Staffing Industry Analysts. Three countries — the US, Japan and the UK — comprised a majority of the revenue. The industry is growing fastest among nations in the Asia-Pacific region. In the U.S., there are about 20,000 staffing companies currently operating. Government policies often shape the staffing services industry and determine growth potential. In Europe and Asia, employment services providers must register and obtain licenses from government agencies. In the US and the UK, employment service firms are considered the legal employer of temporary and contract workers and must abide by additional regulations. Some countries, such as France, have restrictions on the use of temporary workers. 11 The rapid growth in the IT industry is benefitting US staffing firms, especially those with an IT focus. Both permanent and contingent IT employees are in high demand. Recruiters are having a harder time finding high-skilled workers, such as enterprise architects, cloud architects, and security specialists. 65% of staffing agencies servicing the IT industry reported skill shortages, according to a 2018 North American Staffing & Recruiting Trends Report. As a result, companies are more likely to turn to staffing agencies to find employees. In addition, the healthcare staffing industry is growing at approximately 6% per year. In 2018, seven of the top ten fastest growing staffing firms cited healthcare staffing as a top segment, according to the Bullhorn report cited above. Employer of Record and Managed Services The outsourcing of HR functions (i.e. employer of record and managed services) as an industry is growing. According to a 2018 report published by PrismHR, HR service providers reported an average 22% growth in 2017 from 2016. This number is even higher for smaller providers – HROs less than 1,000 employees saw average growth of 35%. In addition, 70% of executives at HRO companies surveyed by this study expected an increase in profit margins in the next few years. Additionally, according to data published by Statista in August 2019. the managed services market is expected to reach over 190 billion U.S. dollars in size in 2019, with forecasts suggesting that this number could grow to nearly 300 billion as early as 2023. Recruiting Over the past five years, the Placement Agencies in the US industry has grown by 4.4% to reach revenue of $23 billion in 2018, according to an October 2018 report published by IBIS world . A 2018 article published by Forbes estimates the entire recruitment market is over $200 billion worldwide. Staffing U.S. staffing companies employed an average of 3 million temporary and contract workers per week in 2018, up 1.4% from 2017, according to data published by the American Staffing Association. This is a record high average weekly number of staffing employees for any year since the inception of the ASA Staffing Employment and Sales Survey in 1990. In the fourth quarter of 2018, average weekly staffing employment totaled 3.40 million, 2.0% higher than in the fourth quarter of 2017, and the most for any quarter since 2005. On a quarter-to-quarter basis, the average weekly number of temporary and contract staffing jobs increased 5.6% from the third quarter of 2018 to the fourth quarter, signaling growth in the industry as a whole going forward. Video Production Services In the media and entertainment sector, the skyrocketing growth of streaming and mobile video has created new opportunities for television production. 55 percent of US households now subscribe to paid streaming video services, and nearly half (48 percent) of all US consumers streamed TV content every day or weekly in 2017, according to a Digital media trends survey published by Deloitte in 2018. Not only are consumers across all age groups streaming more content than ever before - they are doing it on smartphones and tablets. US consumers now pay about $2 billion monthly for subscription-video services. Over the past two years, 467 live-action scripted series were produced by U.S. studios for the domestic market, making the 2017-2018 development cycle the most productive in recent history. The number of live-action scripted series in production increased nearly 10 percent from 2016-2017 to 2017-2018 according to FilmLA’s 2018 Television Report. These upward trends signal continued growth of the television production industry, and more opportunities for staffing in this industry. Maslow’s Presence in the Market Maslow strives to provide comprehensive services and expertise to its clients across all segments of the staffing industry. Maslow was named one of the country’s top five payroll companies by the Hollywood Reporter in 2012. Maslow’s production crews have been recognized with multiple media awards for their work, such as: ● “#3 Media Production Company” – DC Metro Area, The Washington Business Journal (2018) ● “#2 Media Production Company” – DC Metro Area, The Washington Business Journal (2016 & 2017) ● “Top Media Production Company” – DC Metro Area, The Washington Business Journal – (2014 & 2015) ● “#1 Video Production Company, Washington DC” - The Washington Business Journal – (2005, 2006, 2007, 2008, 2009, 2010, & 2011) Maslow was also ranked #3590 in 2010 and #4381 in 2012 in the Inc. 5000 “Fastest Growing Private Companies in the US” list. 12 Currently, Maslow operates out of Rockville, Maryland, but provides services worldwide. Maslow is currently an Employer of Record in all 50 U.S. States. Outside the U.S., Maslow supplies crews to China, Japan, Hong Kong, Australia, Peru, Chile, Brazil, St. Helena Island, Nigeria, Spain, The U.K., France, Germany, Russia, Poland, Ukraine, Egypt, Turkey, Israel, Lebanon, Poland, Ireland, The Netherlands, Belgium, Austria, and Italy. In the past 12 months, Maslow has seen the market for its services trending upward with respect to its current client base, as evidenced in clients’ billing amounts increasing, new client relationships increasing, and their overall need for labor assistance increasing. Maslow believes this is due to increased marketing and sales efforts. Maslow has increased its marketing, association and travel budgets to increase its visibility to its current and prospective clients, which it believes has contributed to its recent growth. Maslow sees a majority of its business in the form of employer of record services, which accounts for approximately 92% of Maslow’s annual revenues. Maslow’s managed services represent approximately 3%, and video production, staffing and executive recruiting services combined represent approximately 5% of its annual revenues. Competition Managed Services Managed Services providers that Maslow competes with include, but are not limited to: ● TeamPeople, a division of System One Inc. ● Randstad ● Insperity ● Group Management Services ● Namely.com Staffing and Executive Recruiting Direct competitors of Maslow in the staffing space include, but are not limited to: ● TeamPeople, a division of System One Inc. ● Randstad For executive recruiting, direct competitors include, but are not limited to: ● TeamPeople, a division of System One Inc. ● Creative Circle ● The Lucas Group ● Onward Search ● DHR International Employer of Record In the Employer of Record space, the direct competitors of Maslow in the television and video production industry include, but are not limited to: ● Entertainment Partners ● Cast & Crew ● PayReel, Inc. Competitors in this space more generally include: ● Velocity Global ● Easy Payroll Global ● Elements Global Services 13 Video Production Services In the video production services space, Maslow’s competitors include, but are not limited to: ● PayReel, Inc. ● Crew Connection Inc. ● TeamPeople, a division of System One Inc. In addition to the above companies, there are additional competitors that include any company that provides a similar range of services as us, as well as companies that just provide some or one of the services Maslow provides. The direct competitors listed above service the same industry that Maslow services and relies upon. The criteria for which these companies compete are based on price and service levels. Customers Maslow’s target customers are corporate media departments of Fortune 100 and Fortune 500 enterprises in all industries, broadcast networks, and government agencies. Currently, Maslow’s clients include global production companies, television networks, financial institutions, corporate multimedia departments, and government agencies. A large portion of Maslow’s business comes from a single client - AT&T Services, Inc. (inclusive of its DirecTV division) (“AT&T”) - which accounted for 27% of Maslow’s total revenues in 2017 and 37% of Maslow’s total revenues in 2018. A copy of the Professional Services Agreement between AT&T and Maslow is attached to this Form 8-K as Exhibit 10.19. No other customer accounted for more than 10% of Maslow’s revenues. Other key customers include Morgan Stanley, Goldman Sachs, Johnson & Johnson, Kaiser Permanente, Discovery, and Strayer University. Marketing and Sales Maslow extensively networks, markets, and advertises to build a large, qualified staff with all areas of expertise that its clients may need. Maslow has used multiple resources to drive in potential new temporary employees. These tactics range from advertisements at job boards, unemployment assist centers, as well as online advertisements. Maslow also utilizes Indeed and LinkedIn to recruit for direct placements. Maslow markets itself primarily through business-to-business relationships. Salespeople are utilized to create relationships with the key decision makers at each potential client site. Each client is scrutinized for credit worthiness, reputation, and exposure to potential injuries. Maslow provides ongoing internal training to its managed teams, keeping them abreast of industry trends and the latest digital technology. Maslow also provides annual performance reviews to develop, mentor, and encourage its employees to maintain a high standard of work quality. Targeting commercial customer opportunities is done through a combination of aggressive marketing campaigns, leveraging internal and external sales teams, and networking. Maslow has engaged a marketing firm to handle its social media presence, newsletter outreach and leveraged campaigns on LinkedIn, all aimed at customer acquisition for Maslow. Maslow also partners with and is a member of a number of organizations, such as Communications Media Managers Association (CMMA), the American Staffing Association, and TIVA that connect Maslow with key players in its industry. Maslow plans to expand its operations to provide Employer of Record, Staffing, and Managed Services in the IT, Healthcare, Accounting and Finance industries and other specialty spaces. In addition, improved relations with Maslow’s clients through consistent high-quality service may convince clients that Maslow can handle more of their needs than it currently provides, which could stimulate further growth. Prospective Federal Government clients are targeted through Maslow’s active U.S. General Services Administration (GSA) schedule and by leveraging GovSpend, FedConnect, and FedBizOps tools to identify new opportunities. The Maslow Media Group, Inc. holds a GSA Schedule, Professional Services Schedule, Contract Number: GS-23F-0094M in order to qualify for U.S. Government contracts. Maslow’s membership in industry organizations such as the CMMA (Communications Media Managers Association) and WIFV (Women in Film & Video) provide leads to additional opportunities. In addition, relationships with former freelancers and contract personnel of Maslow who have since become clients of The Maslow Media Group provides another channel of clients. 14 Strategic Plans Our objective is to increase Maslow’s market position as a leading comprehensive staffing and workforce management solutions provider on a national scale. Future plans include further expanding our global capabilities. To achieve this objective, we plan to utilize the following strategies: Expand Employer of Record Market Position Currently, Maslow’s EOR service is focused on serving the public or private sector in the media space or those organizations with media staffing requirements or desires. We believe there is an opportunity to expand our EOR sales and operational model by introducing our EOR services to industries outside of media, given that the organizational value our services can provide are not limited to any one industry. There is an opportunity to approach large corporates and other targets that: ● have distinct profiles mirroring Maslow clients that are more apt to adopt an EOR solution. ● are currently using PEO models and would be open to switching to EOR ● have other matching target attributes that make them good candidates for EOR services Maslow will utilize marketing and awareness campaigns to apprise the public and private sectors on the merits of EOR and how this form of outsourcing can have a profound cost savings. Maslow will also look to acquire companies in EOR space, given knowledge of the industry. Pursue Strategic Acquisitions The staffing industry is a fragmented industry and we believe there may be a substantial number of staffing and employer of record firms that could be acquired and would be accretive to our financial results. We intend to expand Maslow’s domestic coverage by acquiring specialized staffing and workforce management organizations that allow us to strengthen Maslow’s geographic reach, prime customer relationships, customer count, and core capabilities. Further, we plan to continue to enhance Maslow’s core competencies through potential acquisitions of businesses with strong staffing and solution specialties, including those employing new and emerging technologies. We will also look at tech-based solutions that are synergistic with our staffing business. However, there can be no assurance that a strategic acquisition can occur, or even if it does occur, there can be no assurance that it would be on terms acceptable to the Company or its shareholders. Grow Revenues from Existing Clients We plan to expand Maslow’s business by continuing to sell additional staffing and workforce management solutions to its existing client base. We believe Maslow’s client base is currently underpenetrated, and there are opportunities to sell additional services to these clients. We intend to leverage Maslow’s relationships and certifications, actively market its broad portfolio of services, and deliver a more comprehensive solution suite to Maslow’s clients, many of whom received only a subset of its services in the past. We plan to leverage Maslow’s extensive understanding of its client needs and infrastructures and implement best practices developed over years of successful implementations across the organization seeking to strengthen client relationships and expand the scope of the services Maslow provides to its existing clients. However, there can be no assurance that any of the foregoing will occur. Attract New Clients We intend to capitalize on Maslow’s scale, the scope of its domain expertise and its core capabilities, as well as its reputation as a trusted service provider to grow its client base in the United States and internationally. We believe we can capitalize on the growing demand for the types of solutions Maslow provides to cultivate new relationships across commercial enterprises and the public sector. We also intend to leverage Maslow’s expertise and industry knowledge to: ● extend the reach of its EOR services to other industries. Given EOR acts as a workforce solution to almost any industry, there is a considerable opportunity to expand our customer base to Fortune 100 and Fortune 500 enterprises in all industries and dramatically increase revenues and profits. ● broaden its focus and expand its operations to include professional services in IT, healthcare, aviation, oil and gas, finance, and accounting. ● pursue new contracts with corporate media departments of in all industries, broadcast networks, and government agencies, as well as expand our involvement with Maslow’s current customer base. However, there can be no assurance that any of the foregoing can occur as planned. 15 Expand Services Offerings Maslow plans to strengthen its video production services capabilities by continuing to hire recognized experts in the field. Maslow plans to continue to recruit professionals with the expertise needed to provide outstanding service and value to its clients’ staffing needs. Maslow also intends to continue to develop the skills and certifications of its video production crews, temporary employees, and full-time employees. Maslow also plans to enhance its employer of record and managed services capabilities and seeks to cross-sell these services to its existing broad client base, as well as to new clients. Maslow intends to increase its solutions capabilities through acquisitions of companies with IT consulting and professional service expertise. However, there can be no assurance that any of the foregoing can occur as planned. Continue to Innovate and Deliver New Solutions We intend to broaden Maslow’s capabilities and solutions to help clients keep pace with emerging services, industry practices, and technologies. Maslow expects to continue to invest in its infrastructure and technology to keep current with new technology initiatives, such as Enterprise Resource Planning and Customer Resource Management software, full migration of company data to the cloud, and upgraded Human Capital Management systems and software. We believe Maslow clients will continue to look to Maslow to solve their human resources challenges, and we plan to leverage Maslow’s industry expertise, experience and innovative culture to offer solutions that improve cost efficiency and business processes of our clients. We also believe the outsourcing certain of Maslow’s business functions will allow Maslow to realize additional cost optimization for its operations, which it can pass on to its clients. Maslow intends to outsource a number of its back-office functions to India, such as staff accountants, marketing analysts, and IT administrators. Maslow is also currently developing expertise to enable it to offer accounting, finance, and IT-related professional and consulting services, in addition to the services it already offers. Capitalize on Opportunities Across Service Categories We intend to leverage Maslow’s customer relationships and the capabilities of each of its service types to penetrate its broad solutions offerings into its combined client base. We believe that the complementary resources and capabilities of Maslow’s broad range of services will allow it to sell additional solutions offerings to its clients, many of whom currently purchase only a subset of its capabilities. We intend to utilize Maslow’s infrastructure to better serve its clients. However, there can be no assurance that any of the foregoing can occur as planned. Additional Funding We intend to secure credit facilities, term loans, guarantees, letters of credit, or other similar debt instruments on acceptable terms from traditional lenders to help finance our planned strategies and objectives for the Maslow business as outlined in this subsection. We will also look to see if actions we take may qualify for any local and state economic development incentive programs In addition, we will look to capital markets and accredited individual investors to raise capital via convertible notes, Private Investments into Public Companies (PIPE), preferred stock issuances, bond issuances, and debentures. Funding will be used to bolster corporate infrastructure and fund mergers and acquisitions activities. Governmental Regulations Maslow does not need or require any approval from government authorities or agencies in order to operate its regular business and operations. While Maslow believes that its operations are currently in compliance in all material respects with applicable federal and state statutes and regulations, the topics discussed below summarize what Maslow believes are the most important regulatory aspects of its business. Maslow’s business is impacted by governmental regulations in the ordinary course of business. These regulations concern employment laws and rules, data privacy, and credentialing required for services we provide involving government agencies. Maslow must comply with all applicable federal and state wage and employment laws and rules. These regulations include, but are not limited to, the following: The Fair Labor Standards Act (FLSA), Occupational Safety and Health Act (OSHA), The Consumer Credit Protection Act (CPCA as it pertains to wage garnishment), and The Family and Medical Leave Act (FMLA), and the Affordable Care Act (ACA). In addition, as employment laws and regulations are constantly changing, Maslow must regularly evaluate if any new legislation requires it to comply with other or different laws. Maslow strictly adheres to all IRS guidelines regarding its employees and independent contractors labor, as well as ACA compliance, mandated sick leave, and sexual harassment training. 16 Operations Managed Services For Maslow’s outsourced contingent workforce program, a client is provided a team of workers to provide the services that would normally be handled by a department of the client company. The team is supported by a dedicated Maslow Media Client Services Representative who interfaces with the client to make sure its needs are being met. Maslow provides ongoing internal training to its managed teams, keeping them abreast of industry trends and the latest digital technology. They are treated as part of Maslow’s corporate staff and receive similar benefits. Maslow also provides annual performance reviews to develop, mentor, and incentivize its staff to maintain high standards of work. Staffing and Executive Recruiting A key component of Maslow’s ability to provide staffing and recruiting solutions for its clients is the maintenance of its global network of industry professionals and its experienced recruiting team. To find and recruit such candidates, Maslow uses its internal recruiting team, its own job board posted on Maslow’s website, as well as other online recruiting sources, such as Indeed and LinkedIn. All potential candidates are required to complete an application process, which screens for experience and work history. Upon completion, each candidate is interviewed by Maslow’s staffing coordinators and is asked a series of questions based on the client’s needs. If requested by Maslow’s clients, a candidate may be given a sequence of competency tests and/or a background check. Candidates may also be asked to provide samples of their prior work for client review (i.e. demo reels, etc.). Final candidate selections are sent to client for review. In addition, Maslow continues to monitor the performance of new hires and/or temporary workers supplied to the client. Employer of Record Services For Employer of Record (EOR) services, Maslow relies heavily on its expert team process and software providers to manage payroll, onboarding, benefits administration, year-end reporting, and other related human resources issues. Currently, Maslow relies on software provided by PayCom and Sage50, but in the future, Maslow may also consider other suitable software and integrated service options. Maslow handles all visa and work permit issues on behalf of its workers overseas. Video Production Services Maslow utilizes its network of freelancers with creative and technical production skills to support its clients’ creative video production needs, from documentaries to live events. Maslow also has full-time in-house production managers that can be retained to work side by side with clients for all logistical and creative endeavors related to the project at hand. Maslow also offers customers the option of sourcing gear and equipment from Maslow as part of its services package. Insurance is an important part of Maslow’s overall operations, and Maslow maintains a full complement of insurance coverage, including General Liability, Workers Compensation, Inland Marine, Cyber Liability, Umbrella, Auto, Employment Practices Liability, Crime, and Professional Liability. Employees Maslow presently has approximately 1,377 employees, consisting of 222 full-time and 1,155 part-time employees. This number consists of employees that Maslow employs on behalf of its clients (1,760), as well as our “internal” employees (19) consisting of staffing coordinators, operation managers, sales managers, and senior management, all of which are integral to the success of the Company’s organization and operations. Subsidiaries Maslow is a wholly owned operating subsidiary of Reliability. Reliability has no other subsidiaries and Maslow has no subsidiaries. RISK FACTORS In this “Risk Factors” section of this Form 8-K, any references to “the Company,” “we,” “us,” “our” or words of similar import, refer to the Company and Maslow on a combined basis. YOU SHOULD CAREFULLY CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS CURRENT REPORT ON FORM 8-K BEFORE DECIDING WHETHER TO INVEST IN THE REGISTRANT’S COMMON STOCK. ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO THE REGISTRANT OR THAT THE REGISTRANT CURRENTLY DEEMS IMMATERIAL MAY ALSO IMPAIR THE REGISTRANT’S BUSINESS OPERATIONS. 17 IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, THE REGISTRANT’S BUSINESS, FINANCIAL CONDITION OR OPERATING RESULTS COULD BE MATERIALLY ADVERSELY AFFECTED. IN SUCH CASE, THE TRADING PRICE OF THE REGISTRANT’S COMMON STOCK COULD DECLINE AND YOU MAY LOSE PART OR ALL OF YOUR INVESTMENT. THIS CURRENT REPORT ON FORM 8-K ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. PLEASE SEE “CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS” ABOVE. Risks Related to Our Business and Industry The success of our business depends on our ability to attract and retain qualified employees that possess the skills demanded by clients and intense competition may limit the ability to attract and retain such qualified employees. For the staffing, executive recruiting, and video production services the client offers, the success of the Company depends on the ability to attract and retain qualified employees who possess the skills and experience necessary to meet the requirements of clients or to successfully bid for new client projects. The ability to attract and retain qualified employees could be impaired by improvement in economic conditions resulting in lower unemployment, increases in compensation, or increased competition. During periods of economic growth, the Company faces increasing competition from other staffing companies for retaining and recruiting qualified temporary and permanent employees, which in turn leads to greater advertising and recruiting costs and increased salary expenses. These problems can be exacerbated by the fact that the Company often must attract and retain employees with skills specific to the video production industry, which narrows the pool of available, qualified employees that the Company may draw upon. If the Company cannot attract and retain qualified temporary and permanent employees, the quality of its services may deteriorate and the financial condition, business, and results of operations may be materially adversely affected. Our success depends to a large degree on growth in market acceptance of the human resources outsourcing and related services we provide. Since the majority of our revenues currently comes from employer of record services, a large portion of our success depends on the willingness of clients to outsource their HR function to a third-party service provider. Many companies have invested substantial personnel, infrastructure and financial resources in their own internal HR organizations and therefore may be reluctant to switch to our solution. Companies may not engage us for other reasons, including a desire to maintain control over all aspects of their HR activities, a belief that they manage their HR activities more effectively using their internal administrative organizations, perceptions about the expenses associated with our services, perceptions about whether our services comply with laws and regulations applicable to them or their businesses, or other considerations that may not always be evident. Additional concerns or considerations may also emerge in the future. We must address our potential clients’ concerns and explain the benefits of our approach in order to convince them to change the way that they manage their HR activities, particularly in parts of the United States where our company and solution are less well-known. If we are not successful in addressing potential clients’ concerns and convincing companies that our solution can fulfill their HR needs, then the market for our solution may not develop as we anticipate and our business may not grow. Any significant or prolonged economic downturn could result in clients using fewer staffing and executive recruiting services offered by the Company, terminating their relationship with the Company, or becoming unable to pay for services on a timely basis, or at all. Because demand for the types of services our Company offers is sensitive to changes in the level of economic activity, the Company’s business has in the past and may in the future suffer during economic downturns. Demand for the services we provide are highly correlated to changes in the level of economic activity and employment. Consequently, as economic activity begins to slow down, it has been the Company’s experience that companies tend to reduce their use of our services, resulting in decreased revenues and profit levels. In addition, the Company may experience pricing pressure during economic downturns which could have a negative impact on the results of operations. Further, many of our clients are corporate media departments and broadcast networks. As a result, any industry downturn that affects these kinds of companies could have a major effect on our business. The deterioration of the financial condition and business prospects of clients could reduce their need for the staffing and executive recruiting services we provide, and could result in a significant decrease in the Company’s revenues and earnings derived from these clients. In addition, during economic downturns, companies may slow the rate at which they pay their vendors, seek more flexible payment terms or become unable to pay their debts as they become due. 18 State unemployment insurance expense is a direct cost of doing business in the staffing industry. State unemployment tax rates are established based on a company’s specific experience rate of unemployment claims and a state’s required funding formula on covered payroll. Economic downturns have in the past, and may in the future, result in a higher occurrence of unemployment claims resulting in higher state unemployment tax rates. This would result in higher direct costs to us. In addition, many state unemployment funds have been depleted during the recent economic downturn and many states have borrowed from the federal government under the Title XII loan program. Employers in all states receive a credit against their federal unemployment tax liability if the employer’s federal unemployment tax payments are current and the applicable participating state is also current with its Title XII loan program. If a state fails to repay such loans within a specific time period, employers in such states may lose a portion of their tax credit. The Company is exposed to employment-related claims and costs as well as periodic litigation that could materially adversely affect the Company’s financial condition, business, and results of operations. Our business often entails employing individuals and placing such individuals in clients’ workplaces. The ability to control the workplace environment of clients is limited. As the employer of record of these employees, the Company incurs a risk of liability to its employees and clients for various workplace events, including: ● claims of misconduct or negligence on the part of employees; ● discrimination or harassment claims against employees, or claims by employees of discrimination or harassment by clients or the Company; ● immigration-related claims; ● claims relating to violations of wage, hour, and other workplace regulations; ● claims related to wrongful termination or denial of employment; ● violation of employment rights related to employment screening or privacy issues; ● claims relating to employee benefits, entitlements to employee benefits, or errors in the calculation or administration of such benefits; and; ● possible claims relating to misuse of clients’ confidential information, misappropriation of assets, or other similar claims. The Company may incur fines and other losses and negative publicity with respect to any of these situations. Some of the claims may result in litigation, which is expensive and distracts attention from the operations of ongoing business. The Company assumes the obligation to make wage, tax, and regulatory payments for our employees, and, as a result, is exposed to client credit risks. The Company generally assumes responsibility for and manages the risks associated with employees’ payroll obligations, including liability for payment of salaries, wages, and certain taxes. These obligations are fixed, whether or not clients make payments as required by services contracts, which exposes the Company to credit risks of clients. Workers’ compensation costs for employees may rise and reduce our margins and require more liquidity. The Company is responsible for and pays workers’ compensation costs for individuals employed by the company – both regular staff and client employees for which the company is the “employer of record.” At times, these costs have risen substantially as a result of increased claims and claim trends, general economic conditions, changes in business mix, increases in healthcare costs, and government regulations. Although the Company carries insurance, unexpected changes in claim trends, including the severity and frequency of claims, actuarial estimates, and medical cost inflation could result in costs that are significantly different than initially reported. If future claims-related liabilities increase due to unforeseen circumstances, or if new laws, rules, or regulations are passed, costs could increase significantly. There can be no assurance that the Company will be able to increase the fees charged to clients in a timely manner and in a sufficient amount to cover increased costs as a result of any changes in claims-related liabilities. We currently depend on a single customer for a material portion of our net revenue. The loss of or a substantial reduction in business of this customer would significantly reduce our net revenue adversely impact our operating results. AT&T accounted for 37% of our total revenues for the year ended December 31, 2018. The loss of, or a substantial reduction in business from, this customer would have a significant negative impact on our business and our operating results. We may not be successful in finding a client or clients that could replace the loss of this single customer, and as such, it could have a negative impact on our revenue and results of operations for a prolonged period. Reference is made to the information provide in the “Description of Business – Customers” section of this Report above. 19 Improper disclosure of employee and client data could result in liability and harm to the reputation of the Company. The business of the Company involves the use, storage, and transmission of information about employees and clients. It is possible that security controls over personal and other data and practices that the Company follows may not prevent the improper access to, or disclosure of, personally identifiable or otherwise confidential information. Our security controls may be inadequate, or hackers or other malicious groups or organizations may attempt to interfere with our data through different means, including but not limited to malware attacks, denial of service attacks, consensus based attacks. Any event that results in a disclosure of our clients’ and employees’ data could harm the reputation of the Company and subject the Company to liability under contracts and the laws that protect personal data and confidential information, resulting in increased costs or loss of revenue. Further, data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the various jurisdictions in which the Company provides services. The failure to adhere to or successfully implement processes in response to changing regulatory requirements in this area could result in legal liability or impairment to the reputation of the Company in the marketplace. The Company could face disruption and increased costs from outsourcing and offshoring various aspects of its business. The Company is currently intending to outsource aspects of its business to lower cost of employment areas such as India. This outsourcing solution would focus predominantly on shared service activities which traditionally consist of back office functions such as “hire to retire”, “procure to pay” and “order to cash” processes. Although a goal of outsourcing our operations is to reduce the operational costs of our business, it is possible that we will not realize any benefit from outsourcing such aspects of our business, or even increase our overhead expenses. A transition may create risk of errors and omissions or technical disruptions that could negatively impact our clients, and in turn damage our reputation resulting in a loss of customers of our business. The Company is obligated to pay certain fees and expenses. The Company will pay various fees and expenses related to its ongoing operations regardless of whether or not the Company’s activities are profitable. These fees and expenses will require dependence on third-party relationships. The Company is generally dependent on relationships with its strategic partners and vendors, and the Company may enter into similar agreements with future potential strategic partners and alliances. The Company must be successful in securing and maintaining its third-party relationships to be successful. There can be no assurance that such third parties may regard their relationship with the Company as important to their own business and operations, that they will not reassess their commitment to the business at any time in the future, or that they will not develop their own competitive services, either during their relationship with the Company or after their relations with the Company expire. Accordingly, there can be no assurance that the Company’s existing relationships or future relationships will result in sustained business partnerships, successful service offerings, or significant revenues for the Company. The Company depends on its management team to manage its business effectively. The Company’s future success is dependent in large part upon its ability to understand, develop, and execute the business plan and to attract and retain highly skilled management, operational and executive personnel. Thus, the Company’s is highly dependent on its officers, to provide the necessary skills, experience and background to execute the Company’s business plan. Additionally, the Employer of Record business while not overly complicated is a specialty service which requires a full understanding of the service and its merits to be able to educate the clients to win business and operate optimally. The loss of any officer’s services with this knowledge could stifle the Company’s growth for 4-9 months, and could impede, particularly initially as the Company builds a record and reputation, its ability to develop and execute on its objectives, and as such would negatively impact the Company’s possible overall development. Government regulation could negatively impact the business. The Company’s business is subject to various government regulations in the jurisdictions in which it operates. Currently, the Company operates in all 50 U.S. states and in numerous foreign countries. Due to the wide scope of the Company’s operations, the Company could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. The Company may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. The Company’s operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry, such as the imposition of additional licensing or tax requirements. Failure to comply with the legal regulations in places we do business or the regulatory prohibition or restriction of employment services could lead to financial liability and regulatory action against the Company, which could significantly harm our development as a business. The Company may face significant competition from companies that serve its industries. The Company may face competition from other companies that offer similar solutions. Some of these potential competitors may have longer operating histories, greater brand recognition, larger client bases and significantly greater financial, technical and marketing resources than the Company possesses. These advantages may enable such competitors to respond more quickly to new or emerging trends and changes in customer preferences. These advantages may also allow them to engage in more extensive market research and development, undertake extensive far-reaching marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to potential customers, employees and strategic partners. Increased competition may result in price reductions, reduced gross margin and loss of market share. The Company may not be able to compete successfully, and competitive pressures may adversely affect its business, results of operations and financial condition. 20 The staffing industry is highly competitive with limited barriers to entry, which could limit the Company’s ability to maintain or increase our market share or profitability. The staffing industry is highly competitive with limited barriers to entry. Although we specialize in Employer of Record and providing staffing services specifically for video production, where the market is not yet saturated by competitors, we still face significant competition in the national, regional, and local markets we operate in for staffing. Price competition in the staffing industry is intense and pricing pressures from competitors and clients are increasing. Pricing pressure in the past has negatively impacted the Company’s results of operations. There are new competitors entering various markets which may further increase pricing pressures. Clients have continued to competitively bid new contracts, and this trend is expected to continue for the foreseeable future. The Company also faces significant competition in attracting and retaining qualified personnel. The Company is subject to the potential factors of market and customer changes, which could result in our inability to timely respond to the needs of our clients. The business of the Company is susceptible to rapidly changing preferences of the marketplace and its customers. The needs of customers are subject to constant change. Although the Company intends to continue to develop and improve its services to meet changing customer needs of the marketplace, there can be no assurance that funds for such expenditures will be available or that the Company’s competition will not develop similar or superior capabilities or that the Company will be successful in its internal efforts. The future success of the Company will depend in part on its ability to respond effectively to rapidly changing trends, industry standards and customer requirements by adapting and improving the features and functions of its services. In the Company’s industry, failure by a business to adapt to the changing needs and demands of customers is likely to render the business obsolete. Negative publicity could adversely affect our business and operating results. Negative publicity about our industry or our Company, including the utility of our services, even if inaccurate, could adversely affect our reputation and the confidence in, and the use of, our services, which could harm our business and operating results. Harm to our reputation can arise from many sources, including poor performance or misconduct by the workers we supply and recruit for our clients, misconduct by our partners, outsourced service providers or other counter-parties, and failure by us to meet minimum standards of service expected by clients in our industry. The Company has generated revenues, but limited profits, to date . The business model of the Company involves significant costs of services, resulting in a low gross and net margins on revenues. Coupling this fact with the required operating expenses incurred by the Company, the Company has only generated approximately $1.5 million in total profits in any one year. The Company now has the added expense of being a public company, which will consist of additional expense for management compensation, administrative costs and legal fees for reporting and regulatory compliance. The Company hopes and expects that as its business expands it will enjoy economies of scale resulting in higher operating and net margins and improved cash flows, but there is no guarantee this will occur. The Company has made significant loans to related parties that are currently outstanding. The Company currently has three outstanding promissory notes with related parties – one with Vivos Real Estate, LLC, and two with Vivos Holdings, LLC (“Vivos”). Vivos was previously the sole shareholder of Maslow, and is owned and operated in part by Dr. Doki, a significant shareholder of the Company. As of September 30, 2019, the total outstanding balance on these notes was $3,918,068. Although both of these promissory notes do not mature until 2023, Dr. Doki, an owner of a of Vivos Real Estate, LLC and Vivos Holdings, LLC, has personally guaranteed to the Company that he will repay $3,000,000 of the balance of these notes within the 2019 calendar year via cash, stock, or other business assets acceptable to the Company pursuant to a personal guarantee agreement dated June 12, 2019. Nonetheless, it is possible that Dr. Doki will not make such a contribution to the Company prior to the maturity dates of these notes. While the Company does not require repayment of these notes in 2019 to be able to conduct its current plan of operations, the Company’s intended strategy of pursuing acquisitions of other companies and building a corporate infrastructure will require a level of cash resources beyond what the Company has currently. Therefore, without such an “early” repayment by Dr. Doki, we could require capital from lenders or the capital markets, which would increase the Company’s indebtedness and impact its liquidity. Further, in addition to Dr. Doki not adhering to his personal guaranty agreement, there is the possibility that Vivos Real Estate, LLC and/or Vivos will default on one or all of these promissory notes, which would be a significant loss of expected cash or relative value to the Company and could have a material negative impact on our operations. The Company could be subject to unknown liabilities as a result of its previous status as a wholly-owned subsidiary. The Company was previously (as Maslow) a wholly-owned subsidiary of Vivos. As such, Vivos had the authority to subject and join the Company as a guarantor or direct debtor for a loan, advance, or other liability without the knowledge or consent of the Company. Although Vivos has represented to us that there are no undisclosed debt or liabilities naming the Company as a debtor or guarantor, it is possible that there are liabilities that the Company is subject to of which the Company has no knowledge. Such unknown liabilities, to the extent they exist, could negatively affect our plan of operations. 21 The Company may suffer from lack of availability of additional funds. We expect to have ongoing needs for working capital in order to fund operations and to continue to expand our operations. To that end, we may be required to raise additional funds through equity or debt financing. However, there can be no assurance that we will be successful in securing additional capital on favorable terms, if at all. If we are successful, whether the terms are favorable or unfavorable, there is a potential that we will fail to comply with the terms of such financing, which could result in severe liability for our Company. If we are unsuccessful, we may need to (a) initiate cost reductions; (b) forego business development opportunities; (c) seek extensions of time to fund liabilities, or (d) seek protection from creditors. In addition, any future sale of our equity securities would dilute the ownership and control of your shares and could be at prices substantially below prices at which our shares currently trade. Our inability to raise capital could require us to significantly curtail or terminate our operations. We may seek to increase our cash reserves through the sale of additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional and potentially substantial dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties. In addition, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary for us to sell all or a portion of our assets, enter into a business combination, or reduce or eliminate operations. These possibilities, to the extent available, may be on terms that result in significant dilution to our shareholders or that result in our shareholders losing all of their investment in our Company. Our acquisition strategy creates risks for our business. We expect that we will pursue acquisitions of other businesses, assets or technologies to grow our business. We may fail to identify attractive acquisition candidates or we may be unable to reach acceptable terms for future acquisitions. We might not be able to raise enough cash to compete for attractive acquisition targets. If we are unable to complete acquisitions in the future, our ability to grow our business at our anticipated rate will be impaired. We may pay for acquisitions by issuing additional shares of Reliability Common Stock, which would dilute our stockholders, or by issuing debt, which could include terms that restrict our ability to operate our business or pursue other opportunities and subject us to meaningful debt service obligations. We may also use significant amounts of cash to complete acquisitions. Most acquisitions will include “Earn Out” provisions which ensure adequate generation of revenue and profits, but cash required to pay Earn Outs likely will exceed that total or incremental cash flow generated by the acquired business. To the extent that we complete acquisitions in the future, we likely will incur future depreciation and amortization expenses associated with the acquired assets. We may also record significant amounts of intangible assets, including goodwill, which could become impaired in the future. Acquisitions involve numerous other risks, including: ● difficulties integrating the operations, technologies, services and personnel of the acquired companies; ● challenges maintaining our internal standards, controls, procedures and policies; ● diversion of management’s attention from other business concerns; ● over-valuation by us of acquired companies; ● litigation resulting from activities of the acquired company, including claims from terminated employees, customers, former stockholders and other third parties; ● insufficient revenues to offset increased expenses associated with the acquisitions and unanticipated liabilities of the acquired companies; ● insufficient indemnification or security from the selling parties for legal liabilities that we may assume in connection with our acquisitions; ● entering markets in which we have no prior experience and may not succeed; ● risks associated with foreign acquisitions, such as communication and integration problems resulting from geographic dispersion and language and cultural differences, compliance with foreign laws and regulations and general economic or political conditions in other countries or regions; ● potential loss of key employees of the acquired companies; and ● impairment of relationships with clients and employees of the acquired companies or our clients and employees as a result of the integration of acquired operations and new management personnel. 22 If we fail to integrate newly acquired businesses effectively, we might not achieve the growth, service enhancement or operational efficiency objectives of the acquisitions, and our business, results of operations and financial condition could be harmed. The Company may be subject to financial liability under the terms of settlement agreements entered into with previous lenders. The Company was previously a co-borrower with Vivos on a number of Merchant Cash Advance (MCA) loans, as well as a guarantor on certain MCA loans of which Vivos was the borrower (collectively, the “MCA Loans”). Vivos, our former parent company, defaulted on all of these MCA loans, which resulted in the Company entering into settlement agreements with the lenders on the defaulted loans (the “Settlement Agreements”). As of September 30, 2019, the Company owes $38,695 in connection with the MCA Loans in its individual capacity, and Vivos owes a total of $1,230,811. However, under the terms of these Settlement Agreements, the Company is jointly and severally liable with Vivos for repayment of the total amounts due under the Settlement Agreements. As such, a default by Vivos could result in a default under the terms of the Settlement Agreements, and could cause any outstanding indebtedness under the Settlement Agreements to become immediately due and payable by all parties to the Settlement Agreements, including the Company, which could significantly affect our liquidity, as well as our ability to obtain further credits or loans in the future. Maslow has a binding and enforceable agreement with certain shareholders permitting Maslow to liquidate up to the full amount of Maslow equity held by such shareholders in order to satisfy the shareholders’ obligations under the Settlement Agreements. For more information on these Settlement Agreements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”. The Company may suffer from a lack of liquidity. By incurring indebtedness, the Company subjects itself to increased debt service obligations which could result in operating and financing covenants that would restrict our operations and liquidity. This would impair our ability to hire the necessary senior and support personnel required for our business, as well carry out its acquisition strategy and other business objectives. The Company currently lacks the technology necessary to manage its’ planned accounting, staffing operations, payroll, and sales activities. The Company relies heavily on its software providers to manage payroll, recruitment, onboarding, benefits administration, scheduling, year-end reporting, and other related human resources issues. Currently, we rely on software provided by PayCom and Sage50 to help manage these operations. Such software is sufficient for our current operations, but will not handle the growing complexity of our needs as we evolve our operations through mergers and acquisitions of other businesses. If we cannot successfully implement a technology solution for managing accounting finance, payroll, benefits, purchase orders, vendor payments, and management of human resources data, we may not be able to successfully reduce the general and administrative costs of businesses that we acquire – a major component of our acquisition strategy - which would ultimately impair our ability to generate a healthy profit. 23 The Company is currently party to a factoring facility that is eroding its profit margins and may impair our ability to secure quality financing. The Company is currently party to a factoring and security agreement (a “factoring facility”) that it entered into on November 4, 2016 with Triumph Business Capital. Pursuant to this factoring facility, the Company sells its accounts receivable (i.e. invoices) to Triumph at a discount so that the Company can meet its immediate cash needs, at which point the value of those invoices become a debt of the Company that must be paid to the Triumph. This type of facility is common for companies in the staffing and EOR industries as a great deal of cash is advanced to make payroll and pay contractors. We must use a substantial portion of our cash flow from operations to make debt service payments on this factoring facility, which reduces the funds available to us for other purposes such as working capital, capital expenditures and acquisitions. In addition, because our largest asset (our revenues) is encumbered pursuant to this factoring facility, our ability to obtain lines of credit or other financings for other purposes such as growth initiatives and acquisitions is limited. Additionally, we are exposed to fluctuations in interest rates because our factoring facility has variable rates of interest. The reduction of cash flow as a result of these factoring facilities may put us at a competitive disadvantage and reduce our flexibility in planning for, or responding to, changing conditions in our industry, including increased competition, and makes us more vulnerable to general economic downturns and adverse developments in our business. While we currently plan to renegotiate a more cost effective relationship or move to a significantly more cost effective factoring facility in early 2020, we may be unsuccessful in acquiring such an agreement on better terms than the factoring facility to which we are currently a party, in which case we would continue to experience the disadvantages and potential risks to our business caused by this agreement described herein. For more information about this factoring facility, see “Management’s discussion and analysis of financial condition and results of operations – Liquidity and Capital Resources.” No formal market survey has been conducted . No independent marketing survey has been undertaken to determine the potential demand for the Company’s services over the longer term. The Company has conducted no marketing studies regarding whether its business would continue to be marketable. No assurances can be given that upon marketing, sufficient customer markets and business can be developed to sustain the Company’s operations on a continued basis. The Company services numerous geographic areas, and therefore may be subject to risks such as natural disasters and travel-related disruptions, which may materially adversely affect our business, financial condition and results of operations. We operate in all U.S. states and in numerous countries around the world. To do so, we often send workers to locations that could be affected by various factors beyond our control that could adversely affect our ability to service our clients. These factors could also affect our employees, vendors, insurance carriers and other contractual counterparties. Such factors include: ● war, terrorist activities or threats and heightened travel security measures instituted in response to these events; ● outbreaks of pandemic or contagious diseases or consumers’ concerns relating to potential exposure to contagious diseases; ● natural disasters, such as hurricanes, fires, earthquakes, tsunamis, tornados, floods and volcanic eruptions and man-made disasters; ● bad weather and even forecasts of bad weather, including abnormally hot, cold and/or wet weather; ● oil prices and travel costs and the financial condition of the airline, automotive and other transportation-related industries, any travel-related disruptions or incidents and their impact on travel; and ● actions or statements by U.S. and foreign governmental officials related to travel and corporate travel-related activities (including changes to the U.S. visa rules) and the resulting public perception of such travel and activities. Any one or more of these factors could adversely affect our ability to offer services to clients, which could materially adversely affect our business, financial condition and results of operations. The Company’s lease for its headquarters may be terminated at the option of the landlord without cause. The Company currently leases its headquarters pursuant to a lease that is month-to-month. This lease is terminable upon either the Company or the Company’s landlord giving one month’s notice to the other party. As such, the Company could be forced to relocate upon a month’s notice, which could result in operational difficulties for the Company during the transitional period to a new office space. The information contained in the section entitled “Properties” is incorporated by reference. 24 Risks Related to Ownership of Reliability Common Stock Our stock price may be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors purchasing shares in this offering. The market price of Reliability Common Stock has been, and is likely to continue to be, volatile for the foreseeable future. The market price of Reliability Common Stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including the factors listed below: ● actual or anticipated fluctuations in our results of operations; ● any financial projections we provide to the public, any changes in these projections or our failure to meet these projections; ● failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● ratings changes by any securities analysts who follow our company; ● announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; ● changes in operating performance and stock market valuations of other business services companies generally, or those in our industry in particular; ● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; ● changes in our board of directors or management; ● sales of large blocks of Reliability Common Stock, including sales by our executive officers, directors and significant stockholders; ● lawsuits threatened or filed against us; ● short sales, hedging and other derivative transactions involving our capital stock; ● general economic conditions in the United States and abroad; and ● other events or factors, including those resulting from war, incidents of terrorism or responses to these events. In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many business services companies. Stock prices of many business services companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business, results of operations and financial condition. Reliability Common Stock is subject to risks arising from restrictions on reliance on Rule 144 by shell companies or former shell companies. Under a regulation of the SEC known as “Rule 144,” a person who beneficially owns restricted securities of an issuer and who is not an affiliate of that issuer may sell them without registration under the Securities Act provided that certain conditions have been met. One of these conditions is that such person has held the restricted securities for a prescribed period, which will be 6 months for Reliability Common Stock. However, Rule 144 is unavailable for the resale of securities issued by an issuer that is a shell company (other than a business combination related shell company) or, unless certain conditions are met, that has been at any time previously a shell company. The SEC defines a shell company as a company that has (a) no or nominal operations and (b) either (i) no or nominal assets, (ii) assets consisting solely of cash and cash equivalents; or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets. As a result of the Merger as described in Items 1.01 and 2.01, the Company ceased being a shell company as such term is defined in Rule 12b-2 under the Exchange Act. While we believe that as a result of the Merger, the Company ceased to be a shell company, the SEC and others whose approval is required in order for shares to be sold under Rule 144 might take a different view. Rule 144 is available for the resale of securities of former shell companies if and for as long as the following conditions are met: (i) the issuer of the securities that was formerly a shell company has ceased to be a shell company, (ii) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, (iii) the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and (iv) at least one year has elapsed from the time that the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that is not a shell company known as “Form 10 Information.” Although the Company is filing Form 10 Information with the SEC on this Form 8-K, shareholders who receive the Company’s restricted securities will not be able to sell them pursuant to Rule 144 without registration until the Company has met the other conditions to this exception and then for only as long as the Company continues to meet the condition described in subparagraph (iii), above, and is not a shell company. No assurance can be given that the Company will meet these conditions or that, if it has met them, it will continue to do so, or that it will not again be a shell company. 25 The sale of the additional shares of Reliability Common Stock could cause the value of Reliability Common Stock to decline. The sale of a substantial number of shares of Reliability Common Stock, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish. Further, if we do sell or issue more Reliability Common Stock, any investors’ investment in the Company will be diluted. Dilution is the difference between what you pay for your stock and the net tangible book value per share immediately after the additional shares are sold by us. If dilution occurs, any investment in Reliability Common Stock could seriously decline in value. The application of the “penny stock” rules could adversely affect the market price of Reliability Common Stock and increase transaction costs to sell those shares. The SEC has adopted rule 3a51-1 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires: ● that a broker or dealer approve a person’s account for transactions in penny stocks, and ● the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: ● obtain financial information and investment experience objectives of the person, and ● make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: ● sets forth the basis on which the broker or dealer made the suitability determination, and ● that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of Reliability Common Stock and cause a decline in the market value of Reliability Common Stock. FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock. In addition to the “penny stock” rules described above, FINRA has adopted Rule 2111 that requires a broker-dealer to have reasonable grounds for believing that an investment is suitable for a customer before recommending the investment. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy Reliability Common Stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares. We do not intend to pay dividends for the foreseeable future. We have never declared or paid any cash dividends on our stock and do not intend to pay any cash dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our Board. Risks Related to our Previous Status as a Shell Company We may have contingent liabilities related to our operations prior to the Merger of which we are not aware and for which we have not adequately provisioned. We identified as a shell company with no operating activities prior to the Merger. Upon completion of the Merger, we acquired all of the operations of The Maslow Media Group, Inc. Prior to the consummation of the Merger, Reliability Incorporated was engaged from 1971 to 2007 in the design, manufacture, market, and support of high performance equipment used to test and condition integrated circuits. This business was closed down in 2007. 26 We cannot assure you that there are no material claims outstanding, or other circumstances of which we are not aware, that would give rise to a material liability relating to those prior operations, even though we do not record any provisions in our financial statements related to any such potential liability. If we are subject to past claims or material obligations relating to our operations prior to the consummation of the Merger, such claims could materially adversely affect our business, financial condition and results of operations. Risks Related to the Merger and the Ownership of Reliability Common Stock We will incur increased costs and demands upon management and accounting and finance resources as a result of complying with the laws and regulations affecting public companies; any failure to establish and maintain adequate internal control over financial reporting or to recruit, train and retain necessary accounting and finance personnel could have an adverse effect on our ability to accurately and timely prepare our consolidated financial statements. We identified as a shell company with no operating activities prior to the Merger. Upon completion of the Merger, we acquired all of the operations of The Maslow Media Group. Inc. As a public operating company, we will incur significant administrative, legal, accounting and other burdens and expenses beyond those of a private company, including those associated with corporate governance requirements and public company reporting obligations. In particular, we will need to enhance and supplement our internal accounting resources with additional accounting and finance personnel with the requisite technical and public company experience and expertise, as well as refine our quarterly and annual financial statement closing process, to enable us to satisfy such reporting obligations. However, even if we are successful in doing so, there can be no assurance that our finance and accounting organization will be able to adequately meet the increased demands that result from being a public company. Furthermore, we will be required to comply with Section 404 of the Sarbanes-Oxley Act of 2002. In order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we will be required to document and test our internal control procedures and prepare annual management assessments of the effectiveness of our internal control over financial reporting. These assessments will need to include disclosure of identified material weaknesses in our internal control over financial reporting. Testing and maintaining internal control over financial reporting will involve significant costs and could divert management’s attention from other matters that are important to our business. Additionally, we cannot pro