RELIABILITY INC's Losses Widen 122% Amid Revenue Decline, Cash Dwindles

TL;DR

**RLBY is bleeding cash and revenue, and while management is optimistic, the Vivos Group debt is a massive red flag; steer clear until they prove they can collect.**

AI Summary

RELIABILITY INC (RLBY) reported a significant decline in financial performance for the nine months ended September 30, 2025, with service revenue decreasing by 15.3% to $14.882 million from $17.566 million in the prior year. The company's consolidated net loss widened substantially to $742,000, compared to a net loss of $334,000 for the same period in 2024, representing a 122.1% increase in losses. Operating loss also deteriorated, reaching $863,000 from $545,000 year-over-year. Cash and cash equivalents plummeted to $229,000 as of September 30, 2025, from $522,000 at December 31, 2024, a 56.1% decrease. Total current assets decreased by 20.7% to $9.118 million from $11.494 million. The company continues to grapple with a substantial related-party notes receivable balance of $6.228 million from the Vivos Group, stemming from arbitration awards totaling approximately $8.49 million plus accrued interest. Management, however, believes it can continue as a going concern through November 30, 2026, citing a 52-week cash flow forecast, expected reductions in legal fees, anticipated collection of notes receivable, a new client financing arrangement with JPMorgan, and $1.553 million in available factoring capacity.

Why It Matters

RELIABILITY INC's deepening losses and declining revenue signal significant operational challenges for investors, raising concerns about its long-term viability despite management's going concern assessment. The heavy reliance on a few key clients, with two clients accounting for 56.4% of revenue, exposes the company to substantial concentration risk, making it vulnerable to client churn or reduced demand. The ongoing legal battle and uncollected $6.228 million from the Vivos Group further strain liquidity and divert resources, impacting the company's ability to invest in growth or reward employees. In a competitive staffing and media production market, RLBY's financial instability could erode customer confidence and make it harder to attract and retain talent.

Risk Assessment

Risk Level: high — The company reported a consolidated net loss of $742,000 for the nine months ended September 30, 2025, a 122.1% increase from the prior year's loss of $334,000. Cash and cash equivalents decreased by 56.1% from $522,000 at December 31, 2024, to $229,000 at September 30, 2025, indicating significant cash burn. Furthermore, two clients represent 56.4% of total revenue, creating high customer concentration risk.

Analyst Insight

Investors should exercise extreme caution and consider avoiding RLBY stock given the significant and increasing net losses, declining revenue, and substantial cash burn. Monitor the collection efforts for the $6.228 million Vivos Debtor balance and any material improvements in operating cash flow before considering an investment.

Financial Highlights

debt To Equity

N/A

revenue

$14.882M

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

-$742K

eps

N/A

gross Margin

N/A

cash Position

$229K

revenue Growth

-15.3%

Revenue Breakdown

Key Numbers

• $14.882M — Service Revenue (Decreased by 15.3% from $17.566M in 2024 for the nine months ended September 30, 2025.)
• $(742)K — Consolidated Net Loss (Widened by 122.1% from $(334)K in 2024 for the nine months ended September 30, 2025.)
• $229K — Cash and Cash Equivalents (Decreased by 56.1% from $522K at December 31, 2024, as of September 30, 2025.)
• $6.228M — Notes Receivable from Related Parties (Outstanding balance from Vivos Debtor as of September 30, 2025.)
• 56.4% — Revenue Concentration (Percentage of total revenue from two clients for the nine months ended September 30, 2025.)
• $1.553M — Factoring Availability (Additional borrowing capacity under factoring facility as of November 11, 2025.)
• $8.49M — Arbitration Judgments (Total judgments against Vivos Group, plus accrued interest, enforceable for 12 years.)
• $(863)K — Operating Loss (Increased from $(545)K in 2024 for the nine months ended September 30, 2025.)
• $2.350M — Trade Receivables, net (Decreased from $4.785M at December 31, 2024, as of September 30, 2025.)
• $2.553M — Total Current Liabilities (Decreased from $4.198M at December 31, 2024, as of September 30, 2025.)

Key Players & Entities

• RELIABILITY INC (company) — registrant
• The Maslow Media Group, Inc (company) — wholly owned subsidiary of Reliability Inc
• Vivos Holdings, LLC (company) — former owner of MMG and related party debtor
• Dr. Naveen Doki (person) — owner of Vivos Holdings, LLC and related party debtor
• Silvija Valleru (person) — owner of Vivos Holdings, LLC and related party
• JPMorgan (company) — provider of client financing arrangement
• Gulf Coast Bank and Trust (company) — provider of factoring facility
• $742,000 (dollar_amount) — consolidated net loss for nine months ended September 30, 2025
• $14.882 million (dollar_amount) — service revenue for nine months ended September 30, 2025
• $6.228 million (dollar_amount) — notes receivable from related parties (Vivos Debtor balance) as of September 30, 2025

FAQ

Risk Factors

• Deteriorating Financial Performance and Liquidity Concerns [high — financial]: The company experienced a 15.3% decline in service revenue to $14.882M and a 122.1% increase in net loss to $742,000 for the nine months ended September 30, 2025. Cash and cash equivalents fell by 56.1% to $229,000, raising concerns about short-term liquidity.
• Significant Related-Party Notes Receivable and Collection Uncertainty [high — legal]: A substantial $6.228M in notes receivable from the Vivos Group, stemming from arbitration awards, remains outstanding. The company's ability to collect these funds is critical for its financial health, but the collection process and timeline are uncertain.
• High Revenue Concentration Risk [high — financial]: Revenue is highly concentrated, with 56.4% of total revenue for the nine months ended September 30, 2025, coming from just two clients. This makes the company vulnerable to the loss of either client.
• Dependence on Future Financing and Collections [high — financial]: Management's going concern assessment relies heavily on a new client financing arrangement with JPMorgan, anticipated collection of notes receivable, and available factoring capacity of $1.553M. Any failure in these areas could severely impact operations.
• Increasing Operating Losses [medium — operational]: The operating loss widened to $863,000 for the nine months ended September 30, 2025, from $545,000 in the prior year, indicating a worsening operational efficiency and cost structure.

Industry Context

Reliability Inc. operates in a sector that likely demands consistent service delivery and strong client relationships. The current financial distress suggests challenges in maintaining service levels, acquiring new business, or managing costs effectively within this competitive landscape. Industry trends may include increasing demand for specialized services, but also pressure on pricing and operational efficiency.

Regulatory Implications

The company's financial instability and reliance on specific collection and financing events could attract scrutiny from regulatory bodies if these events do not materialize as planned. Disclosure requirements regarding going concern assessments and material uncertainties are critical for investor protection.

What Investors Should Do

1. Monitor the collection progress of the Vivos Group notes receivable closely, as this is a key factor in the company's liquidity and financial recovery.
2. Evaluate the terms and likelihood of success for the new client financing arrangement with JPMorgan, as it is crucial for near-term cash flow.
3. Assess the sustainability of the business model given the significant decline in service revenue and widening operating losses.
4. Understand the concentration risk associated with the top two clients and any efforts to diversify the client base.

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 — Period reflects significant revenue decline, widening net loss, and reduced cash position.
• 2025-12-31: Balance Sheet Date — Indicates a substantial decrease in cash and cash equivalents from this prior year-end.
• 2025-11-30: Going Concern Assessment Period End — Management projects the company can operate for at least 12 months beyond this date, contingent on several factors.

Glossary

Consolidated Net Loss

The total loss incurred by the company and its subsidiaries after all expenses, interest, and taxes have been deducted from revenue. (Indicates the overall profitability of the company, which has significantly worsened.)

Cash and Cash Equivalents

Highly liquid short-term investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. (Represents the company's immediate liquidity, which has sharply declined.)

Notes Receivable from Related Parties

Money owed to the company by entities or individuals that have a close relationship with the company, often arising from transactions outside of normal business operations. (A significant asset balance that carries collection risk and is tied to arbitration outcomes.)

Factoring Availability

The amount of funds a company can borrow against its accounts receivable through a factoring agreement. (Represents a potential source of short-term liquidity for the company.)

Going Concern

An accounting assumption that a business will continue to operate for the foreseeable future, typically at least 12 months. (Management's assessment of the company's ability to meet its obligations and continue operations.)

Year-Over-Year Comparison

Compared to the prior year, Reliability Inc. has seen a significant deterioration in its financial performance. Service revenue has declined by 15.3%, and the consolidated net loss has more than doubled, increasing by 122.1%. Cash reserves have been depleted by 56.1%, and operating losses have also widened. New risks related to the uncertainty of collecting substantial related-party notes receivable have emerged as a critical concern.

Filing Documents

• form10-q.htm (10-Q) — 592KB
• ex31-1.htm (EX-31.1) — 8KB
• ex31-2.htm (EX-31.2) — 8KB
• ex32-1.htm (EX-32.1) — 4KB
• form10-q_001.jpg (GRAPHIC) — 2KB
• 0001493152-25-023621.txt ( ) — 3153KB
• rlby-20250930.xsd (EX-101.SCH) — 24KB
• rlby-20250930_cal.xml (EX-101.CAL) — 37KB
• rlby-20250930_def.xml (EX-101.DEF) — 91KB
• rlby-20250930_lab.xml (EX-101.LAB) — 206KB
• rlby-20250930_pre.xml (EX-101.PRE) — 160KB
• form10-q_htm.xml (XML) — 386KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 3 Item 1.

Financial Statements

Financial Statements 3 Unaudited Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 3 Unaudited Consolidated Statements of Operations for the Three Months Ended September 30, 2025 and 2024 4 Unaudited Consolidated Statements of Operations for the Nine Months Ended September 30, 2025 and 2024 5 Unaudited Consolidated Statements of Changes in Shareholders' Equity for the Nine Months Ended September 30, 2025 and 2024 6 Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 7 Notes to Unaudited Consolidated Financial Statements 9-15 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 16-20 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 20 Item 4.

Controls and Procedures

Controls and Procedures 20

OTHER INFORMATION

PART II. OTHER INFORMATION 21 Item 1.

Legal Proceedings

Legal Proceedings 21 Item 1a.

Risk Factors

Risk Factors 21 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22 Item 3. Defaults Upon Senior Securities 22 Item 4. Mine Safety Disclosures 22 Item 5. Other Information 22 Item 6. Exhibits 22

Signatures

Signatures 23 Exhibits 24 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements RELIABILITY INCORPORATED AND SUBSIDIARY UNAUDITED CONSOLIDATED BALANCE SHEETS (amounts in thousands, except per share data) September 30, December 31, 2025 2024 ASSETS CURRENT ASSETS Cash and cash equivalents $ 229 $ 522 Trade receivables, net of allowance for credit losses 2,350 4,785 Other receivables 25 4 Notes receivable from related parties 6,228 5,847 Prepaid expenses and other current assets 286 336 Total current assets 9,118 11,494 Other intangible assets, net 2 2 Property, plant and equipment, net 49 60 Total assets $ 9,169 $ 11,556 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Factoring liability $ 157 $ 2,375 Accounts payable 392 734 Accrued expenses 932 288 Accrued payroll 714 568 Deferred revenue 318 207 Notes payable, current 40 26 Total current liabilities 2,553 4,198 LONG-TERM LIABILITIES Notes payable, net of current 21 21 Total long-term liabilities 21 21 Total liabilities 2,574 4,219 Commitment and contingencies (Note 6) - STOCKHOLDERS' EQUITY Common stock, without par value, 300,000,000 shares authorized, 300,000,000 issued and outstanding as of September 30, 2025 and December 31, 2024 Additional paid-in capital 750 750 Retained earnings 5,845 6,587 Total stockholders' equity 6,595 7,337 Total liabilities and stockholders' equity $ 9,169 $ 11,556 The accompanying notes are an integral part of these statements. 3 RELIABILITY INCORPORATED AND SUBSIDIARY UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands, except per share data) 2025 2024 For the Three Months Ended September 30, 2025 2024 Revenue earned Service revenue $ 5,417 $ 6,230 Cost of revenue Cost of revenue 4,668 5,396 Gross profit 749 834 Selling, general, and administrative expenses 977 958 Operating loss

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