Reliability (RLBY) 10-Q 14 Nov 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 13, 2018
Document And Entity Information
Entity Registrant Name	RELIABILITY INCORPORATED
Entity Central Index Key	34,285
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity an Emerging Growth Company?	false
Is Entity a Small Business?	true
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		16,914,693
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,018

Unaudited Balance Sheets

Unaudited Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 8,148	$ 8,043
Total current assets	8,148	8,043
Total Assets	8,148	8,043
Current liabilities:
Accounts payable and accrued liabilities	3,395	7,670
Total current liabilities	3,395	7,670
Long term liabilities:
Accrued interest on loans	30,436	23,524
Loans from shareholder and affiliate	105,000	90,000
Total Long term Liabilities	135,436	113,524
Total Liabilities	138,831	121,194
Stockholders' equity (deficit):
Preferred stock, without par value; 1,000,000 shares authorized, none issued and outstanding
Common stock, without par value; 300,000,000 shares authorized; 17,268,993 shares issued	9,912,150	9,912,150
Accumulated deficit	(8,948,316)	(8,930,784)
Less treasury stock at cost, 354,300 shares	(1,094,517)	(1,094,517)
Total stockholders' deficit	(130,683)	(113,151)
Total liabilities and stockholders' deficit	$ 8,148	$ 8,043

Unaudited Balance Sheets (Paren

Unaudited Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Stockholders' equity (deficit):
Preferred stock, par value	$ 0	$ 0
Preferred stock shares, authorized	1,000,000	1,000,000
Preferred stock shares, issued	0	0
Preferred stock shares, outstanding	0	0
Common stock, par value	$ 0	$ 0
Common stock shares, authorized	300,000,000	300,000,000
Common stock shares, issued	17,268,993	17,268,993
Treasury stock shares	354,300	354,300

Unaudited Statements of Operati

Unaudited Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Operating expenses:
General and administrative	$ 3,734	$ 3,623	$ 10,570	$ 9,693
Interest expense	2,449	2,281	6,912	6,732
Total expenses	6,183	5,904	17,482	16,425
Operating loss	(6,183)	(5,904)	(17,482)	(16,425)
Loss before taxes	(6,183)	(5,904)	(17,482)	(16,425)
Income taxes	50		50	250
Net Loss	$ (6,232)	$ (5,904)	$ (17,532)	$ (16,675)
Basic and diluted loss per share	$ 0	$ 0	$ 0	$ 0
Weighted average shares:
Basic	16,914,693	16,914,693		16,914,693
Diluted	16,914,693	16,914,693	16,914,693	16,914,693

Unaudited Statements of Cash Fl

Unaudited Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net loss	$ (17,532)	$ (16,675)
Adjustments to reconcile net loss to net cash used in operating activities:
Accrued interest on loans from stockholders and affiliate	6,912	6,732
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities	(4,275)	(3,945)
Net cash used in operating activities	(14,895)	(13,888)
Cash flows from financing activities:
Loan from shareholder and affiliate	15,000
Net cash provided by financing activities	15,000
Net (decrease) increase in cash and cash equivalents	105	(13,888)
Cash and cash equivalents:
Beginning of period	8,043	30,479
End of period	8,148	16,591
Cash paid during the period for:
Interest
Income taxes	$ 50	$ 250

OPERATIONS AND SUMMARY OF SIGNI

OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Reliability Incorporated (the “Company”) was incorporated under the laws of the State of Texas in 1953, but the principal business of the Company started in 1971, and was closed down in 2007. The Company has no further operating activities and is now a shell company. Going Concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has concluded that it should look for acquisitions or identify a merger partner and is actively in discussions with interested parties. There can be no assurances that the Company will be successful in completing such a transaction or be able to maintain sufficient liquidity over a period of time that will allow it to carry out these actions, in which case the Company might be forced to liquidate or seek protection under the Federal bankruptcy statutes, or both. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern. The Company is quoted on the OTC Marketplace under the symbol “RLBY”. Basis of presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. Accordingly they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim periods ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. For further information, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2017. Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Cash Equivalents For the purposes of the statements of cash flows, the Company considers all highly liquid cash investments that mature in three months or less when purchased, to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value. Stock Options Compensation cost relating to stock-based payments, including grants of employee stock options, is recognized in financial statements based on the fair value of the equity instruments issued on the grant date. The Company recognized the fair value of stock-based compensation awards as compensation expense in its statement of operations on a straight line basis, over the vesting period. Income Taxes Income taxes are provided under the asset and liability method and reflect the net tax effects of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements The Company establishes valuation allowances when the realization of specific deferred tax assets is subject to significant uncertainty. The Company records no tax benefits on its operating losses, as the losses will have to be carried forward and realization of any benefit is uncertain. Earnings Per Share Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since the exercise price of the Company’s outstanding stock options exceeded the average market price of its common shares during the periods presented and the Company reported losses, the options would have been anti-dilutive and were not considered in these calculations. Fair Value of Financial Instruments The carrying values of the Company’s current assets and current liabilities approximated fair value due to their short maturity or nature. It is not practicable to estimate the fair value of the loans from shareholder and affiliates due to the related party nature of the amount. Reclassifications Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. Recently Issued Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
INCOME TAXES	2. INCOME TAXES The Company has substantial U.S. net operating loss carryforwards that will expire in 2023 through 2037. These carryforwards are subject to certain limitations on annual utilization and in the event of a change in ownership, as defined by tax law. See Note 2 to the Company’s financial statements in its Form 10-K for the year ended December 31, 2017. The Company’s income tax returns remain subject to examination for the years 2014 through 2017 for federal and state purposes.

STOCKHOLDERS' EQUITY (DEFICIT)

STOCKHOLDERS' EQUITY (DEFICIT)	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
STOCKHOLDERS' EQUITY	3. STOCKHOLDERS' EQUITY On January 15, 2014, the Company issued 3,401,360 shares of unregistered common stock in a private placement to Lone Star Value Investors, LP, an entity controlled by a former director and officer of the Company, for cash proceeds of $50,000. The proceeds of this issuance were used to assist in funding the Company's operating expenses.

LOANS FROM STOCKHOLDER AND AFFI

LOANS FROM STOCKHOLDER AND AFFILIATE	9 Months Ended
	Sep. 30, 2018
Receivables [Abstract]
LOANS FROM STOCKHOLDER AND AFFILIATE	4. LOANS FROM SHAREHOLDER AND RELATED PARTY TRANSACTIONS On June 6, 2014, a shareholder, Lone Star Value Investors, LP was issued a promissory note by the Company in the amount of $50,000 (2014 Note). The proceeds of the note are being used for ongoing operating expenses. The loan bears interest at 10% per annum. Interest on the loan and the full amount of the principal is to be repaid on June 30, 2019. On August 2, 2016, the Company issued a promissory note to an affiliate of Lone Star Value Investors, LP in the amount of $40,000 (2016 Note). The proceeds of the 2016 Note will be used for ongoing operating expenses. The 2016 Note bears interest at 10% per annum. Interest and principal on the 2016 Note is to be repaid on August 31, 2021, and all payments are subordinate to the payment of all outstanding amounts due under the 2014 Note. On August 10, 2018, the Company issued a promissory note to an affiliate of a shareholder in the amount of $15,000 (“2018 Note”). The proceeds of the 2018 Note will be used for ongoing operating expenses. The loan bears interest at 10% per annum. Interest and principal on the loan is to be repaid on August 31, 2021, and all payments are subordinate to the payment of all outstanding amounts due under the 2014 Note. During the nine months ended September 30, 2018 and September 30, 2017, the Company recognized aggregate interest expense in the amounts of $6,912 and $6,732, respectively. During the three months ended September 30, 2018 and September 30, 2017, the Company recognized aggregate interest expense in the amounts of $2,449 and $2,281, respectively. Total accrued interest on the 2014 Note, 2016 Note, and 2018 Note is $30,436 and $23,524 as of the September 30, 2018 and December 31, 2017, respectively. As of September 30, 2018, the Company had $821 payable to Lone Star Value Management as reimbursement for a payment made to the Company’s transfer agent on the Company’s behalf. This amount is included in accounts payable and accrued liabilities on the accompanying September 30, 2018 balance sheet.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
SUBSEQUENT EVENTS	5. SUBSEQUENT EVENTS No material subsequent events have occurred since September 30, 2018 that require recognition or disclosure in the financial statements.

Operations and Summary of Sig_2

Operations and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2018
Operations And Summary Of Significant Accounting Policies Policies
Nature of Operations	Nature of Operations Reliability Incorporated (the "Company") was incorporated under the laws of the State of Texas in 1953, but the principal business of the Company started in 1971, and was closed down in 2007. The Company has no further operating activities and is now a shell company.
Going Concern	Going Concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has concluded that it should look for acquisitions or identify a merger partner and is actively in discussions with interested parties. There can be no assurances that the Company will be successful in completing such a transaction or be able to maintain sufficient liquidity over a period of time that will allow it to carry out these actions, in which case the Company might be forced to liquidate or seek protection under the Federal bankruptcy statutes, or both. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern. The Company is quoted on the OTC Marketplace under the symbol "RLBY".
Basis of presentation	Basis of presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q. Accordingly they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim periods ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.
Accounting Estimates	Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.
Cash Equivalents	Cash Equivalents For the purposes of the statements of cash flows, the Company considers all highly liquid cash investments that mature in three months or less when purchased, to be cash equivalents. Cash equivalents are stated at cost, which approximates fair value.
Stock Options	Stock Options Compensation cost relating to stock-based payments, including grants of employee stock options, is recognized in financial statements based on the fair value of the equity instruments issued on the grant date. The Company recognized the fair value of stock-based compensation awards as compensation expense in its statement of operations on a straight line basis, over the vesting
Income Taxes	Income Taxes Income taxes are provided under the asset and liability method and reflect the net tax effects of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The Company establishes valuation allowances when the realization of specific deferred tax assets is subject to significant uncertainty. The Company records no tax benefits on its operating losses, as the losses will have to be carried forward and realization of any benefit is uncertain.
Earnings Per Share	Earnings Per Share Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since the exercise price of the Company's outstanding stock options exceeded the average market price of its common shares during the periods presented, the options would have been anti-dilutive and were not considered in these calculations.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The carrying values of the Company's current assets and current liabilities approximated fair value due to their short maturity or nature. It is not practicable to estimate the fair value of the loans from stockholder and affiliate due to the related party nature of the amounts
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern

Income Taxes (Details Narrative

Income Taxes (Details Narrative)	9 Months Ended
	Sep. 30, 2018
Income Taxes
Net operating loss carryforwards expiration dates	2023 through 2037

STOCKHOLDERS' EQUITY (DEFICIT)

STOCKHOLDERS' EQUITY (DEFICIT) (Details Narrative)	Jan. 15, 2014USD ($)shares
Equity [Abstract]
Shares issued for cash | shares	3,401,360
Cash proceeds from issuance of stock | $	$ 50,000

Loan From Shareholder (Details

Loan From Shareholder (Details Narrative) - USD ($)	Jan. 15, 2014	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Receivables [Abstract]
Promissory note amount	$ 50,000
Interest rate of promissory note	10.00%
Date the loan is to be repaid in full (interest and principle)	Jun. 30, 2019
Interest expense		$ 2,449	$ 2,281	$ 6,912	$ 6,732
Accrued interest				$ 30,436	$ 23,524