{"url_path":"/sec/rlby/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A , Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business,","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-20","source_url":"https://www.sec.gov/Archives/edgar/data/34285/0001493152-26-024677-index.html","accession_number":"0001493152-26-024677","cik":"0000034285","ticker":"RLBY","issuer_name":"RELIABILITY INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/34285/0001493152-26-024677-index.html","primary_entity_key":"0000034285","primary_entity_name":"RELIABILITY INC"},"word_count":562,"has_tables":true,"body_markdown":"Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business,\nfinancial condition, or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing the Company.\nAdditional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely\naffect our business, financial condition and/or operating results.\n\n \n\n20\n\n \n\n \n\n**Our\ncapital structure, including the substantial increase in shares available for future issuance following the return of shares to the Company,\nand potential future issuances of shares could dilute existing shareholders and adversely affect the market price of our common stock.**\n\n \n\nWe may seek to raise capital, pursue acquisitions,\nrecapitalize the Company, or fund strategic initiatives through the issuance of equity securities, including shares available for future\nissuance following the return of shares to the Company, or through the issuance of convertible securities or warrants.\n\n \n\nThe sale or issuance of a substantial\nnumber of shares of common stock, or the perception that such sales may occur, could adversely affect the market price of our common\nstock and increase volatility. Any such issuance would dilute existing shareholders and could reduce earnings per share or voting power.\nIn addition, the substantial increase in shares available for future issuance following the share transfer may create an overhang that\ncould negatively impact investor perception or market pricing.\n\n \n\nChanges in federal government spending priorities\nand operational directives may adversely affect our business. A portion of our revenue is derived from contracts with U.S. federal government\nagencies. Periodic budget reviews, cost-reduction initiatives, spending reallocations, hiring freezes, or other efficiency directives\naffecting federal agencies may result in reductions or delays in client spending on outsourced services, including media-related staffing\nand production support. While the Company does not believe any specific reductions experienced to date have had a material impact on its\nconsolidated financial statements, broader federal spending constraints or operational restructuring initiatives could reduce demand for\nthe Company’s services within the public sector. In addition, uncertainty surrounding the timing and scope of such governmental\nactions may increase the difficulty of forecasting client demand and strategic planning.\n\n \n\n**Our\nbusiness may be indirectly affected by the imposition of tariffs or other trade restrictions that impact our clients’ operations\nand profitability.**\n\n \n\nWhile\nour core operations are not directly exposed to international trade or tariff risk, a significant portion of our revenue is derived from\nmedia services provided to clients across various industries, some of which rely on global supply chains or imported goods. The imposition\nor escalation of tariffs, trade barriers, or similar regulatory actions, particularly those affecting cost of revenue to our clients,\nmay reduce their gross margins and overall profitability. In response, clients may reduce discretionary expenditures, including advertising\nand media budgets, which could negatively impact our revenues and financial performance. Even perceived uncertainty around future trade\npolicy could lead to more conservative client behavior, affecting campaign timing, spend, or scope.\n\n \n\n**Our\nbusiness may be impacted by reductions in federal funding to client programs.**\n\n \n\nSeveral\nof our clients receive federal funding to support their operations. We have already experienced one instance in which a client significantly\nreduced media spend following the cessation of federal funds. Continued or expanded cuts in federal funding may similarly affect other\nclient budgets and, in turn, our revenue."}