Current Report Filing (8-k)
September 07 2022 - 05:30PM
Edgar (US Regulatory)
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2022-08-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of Report:
August 31, 2022
(Date
of earliest event reported)
RELIABILITY INCORPORATED
(Exact
name of registrant as specified in its charter)
Texas |
|
000-07092 |
|
75-0868913 |
(State
or other jurisdiction
of
incorporation)
|
|
(Commission
File
Number)
|
|
(IRS
Employer
Identification No.) |
22505 Gateway Center Drive
P.O. Box 71
Clarksburg,
MD
20871
(Address
of principal executive offices, including zip code)
(202)
965-1100
(Registrant’s
telephone number, including area code)
Not Applicable
(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:
☐ |
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 CFR
240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
Common Stock, no par value |
|
RLBY |
|
OTC Pink Sheets |
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. ☐
Item
8.01. Other Events.
As
previously disclosed, Reliability Incorporated (the “Company”) and
Maslow Media Group, Inc. (“MMG”) were in arbitration with Vivos
Holdings, LLC (“Vivos”), Vivos Real Estate Holdings, LLC (“VREH”),
Naveen Doki (“Naveen”) Silvija Valleru (“Valleru”), Suresh Doki
(“Suresh”), Shirisha Janumpally (“Janumpally”), individually and as
Trustee of Judos Trust, Kalyan Pathuri (“Pathuri”), individually
and as Trustee of Igly Trust, and Federal Systems, LLC (“Federal
Systems” and, together with Vivos, VREH, Naveen, Valleru, Suresh,
Janumpally and Pathuri, collectively the “Vivos Group”) before a
retired judge (the “Arbitrator”) relating to amounts due and owing
under various promissory notes and to a claim for fraud regarding
that certain Merger Agreement between the Company, MMG and certain
other persons and entities, dated September 18, 2019 (the “Merger
Agreement”). The arbitration hearings were held over the course of
six days in March 2022 with closing arguments in June
2022.
On
August 31, 2022, the Arbitrator issued an award (the “Award”) with
the Company and MMG prevailing on their claims. The Company and MMG
were awarded the following:
|
● |
an
award in favor of MMG against Vivos under Note I (as defined in the
Award) in the amount of $3,458,377, with interest thereon from June
30, 2022, at the rate of 4.5% per year; |
|
● |
no
award as to Note II (as defined in the Award) until and at such
time as the automatic stay imposed by the United States Bankruptcy
Court as a result of the filing of a petition in bankruptcy by VREH
is lifted or the bankruptcy proceeding is terminated; |
|
● |
an
award in favor of MMG against Vivos under Note III (as defined in
the Award) in the amount of $800,448, with interest thereon from
June 30, 2022, at the rate of 2.5% per year, plus collection costs,
including reasonable attorneys’ fees, incurred in the effort to
collect Note III; |
|
● |
an
award in favor of MMG against Naveen under the Personal Guaranty
(as defined in the Award) in the amount of $2,309,449, plus
interest thereon at the rate of 6% per year from the date of the
Award; |
|
● |
an
award in favor of the Company against Naveen, Valleru, Janumpally,
individually and as Trustee of Judos Trust, and Pathuri, as Trustee
of Igly Trust, jointly and severally, for contract damages of
$1,000,000, to be satisfied by the transfer of their shares of the
Company common stock to the Company equal in value to $1,000,000,
valued as of the date of the Award, in accordance with the
provisions of Section 9.06(d) of the Merger Agreement; |
|
● |
an
award in favor of the Company against Naveen, Valleru, Janumpally,
individually and as Trustee of Judos Trust, and Pathuri, as Trustee
of Igly Trust, jointly and severally, for fraud damages in the
amount of $4,327,127, plus interest thereon at the rate of 6% per
year from the date of the Award, together with any out-of-pocket
fees and expenses, including attorneys’ and accountants’
fees; |
|
● |
an
award appointing a rehabilitative receiver for the Company under
the deadlock situation provisions of Section 11.404(a)(1)(B) of the
Texas Business Organizations Code, the primary function of which is
to collect the contract and fraud damages, including costs,
expenses and fees provided in the Award, due to the Company, with
matters regarding such receivership to be set forth in a
supplemental award; and |
|
● |
declaratory
relief in favor of the Company and its officers and
directors. |
Section
11.404(a)(1)(B) of the Texas Business Organizations Code provides
for the appointment of a rehabilitative receiver when “the
governing persons of the entity are deadlocked in the management of
the entity’s affairs, the owners or members of the entity are
unable to break the deadlock, and irreparable injury to the entity
is being suffered or is threatened because of the deadlock.” With
respect to the receivership, the owners or holders of all of the
shares of common stock of the Company received as a result of the
conversion of 1,600 shares of common stock of MMG owed by Naveen
and Valleru under the Merger Agreement shall not be entitled to
vote any of those shares at any annual or special meeting of the
shareholders of the Company during the period of the receivership.
Upon the completion of the receiver’s primary function of
collecting damages due to the Company, the receivership shall
terminate and the restrictions on the rights of the shareholders of
the Company imposed by the Award shall be lifted. The parties have
until September 19, 2022 to submit to the Arbitrator written
proposals for the rehabilitative receivership.
The
foregoing summary of the Award is qualified in its entirety by
reference to the full text of the Award, which is filed as Exhibit
99.1 hereto and incorporated herein by reference.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
|
RELIABILITY
INCORPORATED |
|
|
|
|
By: |
/s/ Nick
Tsahalis |
|
|
Nick
Tsahalis |
|
|
President
and Chief Executive Officer |
Date:
September 7, 2022
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