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| RELATED PARTY TRANSACTIONS | NOTE 8. RELATED PARTY TRANSACTIONS
Stock Purchase Agreement
On November 9, 2016, Vivos Holdings, LLC, the former owner of MMG, acquired 100% of MMG through a stock acquisition exchange for a purchase price of $1,750, of which $1,400 was paid at settlement with proceeds from MMG. The Vivos Debtors subsequently entered into a promissory note receivable with MMG for the full stock purchase price. Between 2018 to present there was $2,217 in additional borrowings.
Related Party Notes Receivable
The Company has several notes receivable from related parties. Prior to the Merger, Vivos Holdings collaborated on a share swap of MMG for other Vivos companies with individuals who included, but were not limited to, Dr. Doki, Shirisha Janumpally (“Mrs. Janumpally”), wife of Dr. Doki, Kalyan Pathuri (“Mr. Pathuri”) husband of Silvija Valleru, Igly Trust, and Judos Trust. These parties also have common ownership combinations in a number of other entities [Vivos Holdings, LLC, Vivos Real Estate Holdings, LLC (“VREH”), Vivos Holdings, Inc., Vivos Group, Vivos Acquisitions, LLC, and Federal Systems, LLC], which are collectively referred to as the “Vivos Group.”
The table below is a summary of Vivos Group related party notes receivable which, as of September 30, 2025, total $6,228. Based on management’s current expected credit loss (“CECL”) assessment, which considered legal judgments in favor of Company and the ongoing receivership process supporting recovery and collectability, no allowance for credit losses has been recorded.
RELIABILITY INCORPORATED AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2025 (amounts in thousands, except per share data)
With awarded legal fees and the fraud award of $1,000, the total liability as of September 30, 2025 was $8,649.
Related Party Costs
Within Other Expense on the accompanying consolidated financial statements approximately $41 in the second quarter and $68 for the nine months ended September 30, 2025, were exclusively for receivership related costs for recovery of the arbitration award related to the Vivos Group.
Related Party Relationships
On October 29, 2019, prior to the Merger, Naveen Doki and Silvija Valleru became beneficial owners of Company Common Stock, equal to approximately % and 17%, respectively, of the total number of shares of the Company’s Common Stock outstanding after giving effect to the Merger.
At the present time, the Vivos Group shall not be entitled to vote on any of their shares in Reliability at any annual or special meetings of the shareholders. The Receiver is empowered to recover the awards by seizing shares of the Company held by Dr. Naveen Doki and his affiliates, the Vivos Group. Once the judgments in favor of Reliability are satisfied, the restrictions on the rights of the Vivos Group shareholders imposed by the Award shall be lifted.
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