RELIABILITY INC 10-Q

Item 1a. Risk Factors In addition to the other information set forth in this Quarterly Report, shareholders should carefully consider the factors discussed in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2024, which could materially affect our business, financial condition, or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. We are currently engaged in litigation and collecting an arbitration award with the Vivos Group, the outcome of which could materially harm our business and financial results. As more fully described in Note 6 (Commitments and Contingencies) of the Notes to Unaudited Condensed Consolidated Financial Statements, while we received a favorable arbitration outcome with the Vivos Group, but the ultimate collection of cash and shares is unknown. The collection process is complex and has caused and could continue to cause us to incur significant costs, as well as distract our management over an extended period. It is highly likely that the initial portion of the recovered arbitration award will be in shares of our common stock rather than cash, which could negatively impact the Company’s liquidity and working capital. As of March 31, 2025, the Vivos Group’s outstanding Notes Receivable obligation was $5,973. However, the composition of Vivos Group assets available to settle this obligation remains uncertain. Management anticipates that common stock will be used to satisfy the initial portion of the overall liability. With awarded legal fees and the fraud award of $1,000, the total liability as of March 31, 2025, was $8,333. Federal agency budget reviews and directives, including those issued by the Department of Government Efficiency (“DOGE”), may adversely impact our business. A portion of our revenue is derived from contracts with U.S. federal government agencies. Periodic budget reviews, cost-cutting mandates, or efficiency directives, such as those issued by the Department of Government Efficiency (DOGE), can lead to reductions or reallocations in client spending, even if such actions are not formally disclosed to us. Although unconfirmed, we believe a reduction in media-related staffing and spending by one federal agency client in 2025 may have been influenced by DOGE’s identification of those services as non-essential. While the potential revenue impact from this specific instance is not material, the broader implementation of similar directives across federal agencies could materially reduce demand for our services in the public sector. Moreover, the lack of transparency surrounding these decisions increases the difficulty of forecasting and strategic planning within this client segment. Our business may be indirectly affected by the imposition of tariffs or other trade restrictions that impact our clients’ operations and profitability. While our core operations are not directly exposed to international trade or tariff risk, a significant portion of our revenue is derived from media services provided to clients across various industries, some of which rely on global supply chains or imported goods. The imposition or escalation of tariffs, trade barriers, or similar regulatory actions, particularly those affecting cost of goods sold for our clients, may reduce their gross margins and overall profitability. In response, clients may reduce discretionary expenditures, including advertising and media budgets, which could negatively impact our revenues and financial performance. Even perceived uncertainty around future trade policy could lead to more conservative client behavior, affecting campaign timing, spend, or scope. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable.