UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x
QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2016
   
o
TRANSITION REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from  _______      to ________.
 
Commission File Number 0-7092  
 
RELIABILITY INCORPORATED
(Name of registrant in its charter)
     
TEXAS
 
75-0868913
(State or other jurisdiction of  incorporation or organization)
 
(I.R.S. Employer Identification Number)
     
53 Forest Avenue, First Floor, Old Greenwich, Connecticut 
 
06870
(Address of principal executive offices)
 
(Zip Code)
     
(203) 489-9500
(Issuer’s telephone number, including area code)  
 
 
(Former name, former address and former fiscal year, if changed since last report.)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days.     x   YES o NO
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒   YES ☐ NO
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
 
Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):     x   YES o NO
 


State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 16,914,693 shares of Common Stock, no par value, as of November 9, 2016.
 
 
 
 
 
 
RELIABILITY INCORPORATED
Quarterly Report on Form 10-Q
For the Nine Months Ended September 30, 2016
 
INDEX
 
 
 
 
PART I. FINANCIAL INFORMATION
2
     
Item 1.
Unaudited Financial Statements  
2
     
 
Balance Sheets as of September 30, 2016 and December 31, 2015  
 2
     
 
Statements of Operations for the Three Months Ended September 30, 2016 and 2015  
3
     
 
Statements of Operations for the Nine Months Ended September 30, 2016 and 2015  
4
     
 
Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015  
5
     
 
Notes to Unaudited Financial Statements  
6-8
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
9-10
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk  
10
     
Item 4.
Risk Controls and Procedures  
10
     
PART II. OTHER INFORMATION
 
Item 1.
Legal Proceedings  
11
Item 1a.
Risk Factors  
11
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds  
11
Item 3.
Defaults Upon Senior Securities  
11
Item 4.
Mine Safety Disclosures  
11
Item 5.
Other Information  
11
Item 6.
Exhibits  
11
     
Signatures  
12
   
Exhibits  
13
 
 
 
 
 
- 2 -
 
 


PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements

 
 
 
RELIABILITY INCORPORATED
UNAUDITED BALANCE SHEETS
As of September 30, 2016 and December 31, 2015
 
 
 
September 30,
2016
   
December 31,
2015
 
  ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
38,517
   
$
11,924
 
Total current assets
   
38,517
     
11,924
 
 
               
Total assets
 
$
38,517
   
$
11,924
 
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
               
Current liabilities:
               
Accounts payable and accrued liabilities
 
$
7,326
   
$
8,035
 
 
               
Total current liabilities
 
$
7,326
     
8,035
 
 
               
Long term liabilities:
               
Loans from shareholder and affiliate
   
90,000
     
50,000
 
Accrued interest 
     12,262        7,863  
       Total long term liabilities
   
102,262
     
57,863
 
 
               
Total liabilities
   
109,588
     
65,898
 
 
               
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
   
(8,888,704
)
   
(8,871,607
)
Less treasury stock at cost, 354,300 shares
   
(1,094,517
)
   
(1,094,517
)
 
               
Total stockholders' deficit
   
(71,071
)
   
(53,974
)
 
               
Total Liabilities and stockholders' deficit
 
$
38,517
   
$
11,924
 
 
 
The accompanying notes are an integral part of these statements.
 
 
 
 
- 3 -
 
 

 
 
RELIABILITY INCORPORATED
UNAUDITED STATEMENTS OF OPERATIONS
  FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

 
 
Three months ended
September 30,
 
 
 
2016
   
2015
 
Operating expenses:
           
General and administrative
 
$
4,446
   
$
4,809
 
Interest expense
   
1,913
     
1,260
 
Total expenses
   
6,359
     
6,069
 
Operating loss
   
(6,359
)
   
(6,069
)
Loss before taxes
   
(6,359
)
   
(6,069
)
Taxes
   
250
     
-
 
                 
Net loss
 
$
(6,609
)
 
$
(6,069
)
Basic and diluted loss per share
   
(0.00
)
   
(0.00
)
Weighted average shares:
               
Basic
   
16,914,693
     
16,914,693
 
Diluted
   
16,914,693
     
16,914,693
 


The accompanying notes are an integral part of these statements.
 
 
 
- 4 -
 
 
 
 
 

RELIABILITY INCORPORATED
UNAUDITED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
 
 
 
Nine months ended
September 30,
 
 
 
2016
   
2015
 
Operating expenses:
           
General and administrative
 
$
12,448
   
$
15,949
 
Interest expense
   
4,399
     
3,740
 
Total expenses
   
16,847
     
19,689
 
 
               
Loss before taxes
   
(16,847
)
   
(19,689
)
Taxes
   
250
     
-
 
 
               
Net loss
 
$
(17,097
)
 
$
(19,689
)
Basic and diluted loss per share
   
(0.00
)
   
(0.00
)
Weighted average shares:
               
Basic
   
16,914,693
     
16,914,693
 
Diluted
   
16,914,693
     
16,914,693
 

 
The accompanying notes are an integral part of these statements.
 
 
 
 
 
- 5 -
 
 



RELIABILITY INCORPORATED
UNAUDITED STATEMENTS OF CASH FLOWS
  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
 
 
 
Nine months ended
September 30,
 
 
 
2016
   
2015
 
Cash flows from operating activities:
           
Net loss
 
$
(17,097
)
 
$
(19,689
)
Adjustments to reconcile net loss to net cash used in operating activities:
Accrued interest on loans from shareholder and affiliate
   
4,399
     
3,740
 
Changes in operating assets and liabilities:
               
Accounts payable and accrued liabilities
   
(709
)
   
(7,001
)
Net cash used in operating activities
   
(13,407
)
   
(22,950
)
 
               
Cash flows from financing activities:
               
Loan from affiliate
   
40,000
     
-
 
Net cash provided by financing activities
   
40,000
     
-
 
Net (decrease) increase in cash and cash equivalents
   
26,593
     
(22,950
)
Cash and cash equivalents:
               
Beginning of period
   
11,924
     
37,735
 
End of period
 
$
38,517
   
$
14,785
 
 
               
Supplemental disclosure of cash flow information:
               
 
               
Cash paid during the period for:
               
Interest
 
$
-
   
$
-
 
Taxes
 
$
250
   
$
-
 

The accompanying notes are an integral part of these statements.
 
 
 
- 6 -
 
 
 
RELIABILITY INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 2016

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.  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, 2016   are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

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, 2015.

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.
 
 
 
- 7 -



RELIABILITY INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 2016


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 , which provides guidance under U.S. GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The ASU is effective for all entities and for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. The adoption of ASU No. 2014-15 is not expected to have a significant impact on the Company's financial statements and related disclosures.


2. INCOME TAXES

The Company has substantial U.S. net operating loss carryforwards that will expire in 2024 through 2034. 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, 2015.

The Company's income tax returns remain subject to examination for the years 2012 through 2015 for federal and state purposes.
 
 
 
- 8 -
 
 

 

RELIABILITY INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
September 30, 2016
 
 
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 (Lone Star Value), 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.

4.  LOANS FROM SHAREHOLDER AND AFFILIATE

On June 6, 2014, a shareholder issued a promissory note to the Company in the amount of $50,000 (2014 Note).  The proceeds of the 2014 Note are used for ongoing operating expenses.   The 2014 Note bears interest at 10% per annum.  Interest on the 2014 Note 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 a shareholder 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.

During the three and nine months ended September 30, 2016, the Company recognized interest expense on the 2014 and 2016  Notes in the amount of $1,913 and $4,399, respectively.   Total accrued interest on the loans is $12,262 as of September 30, 2016 and for this period is included as a long-term liability. Previously the interest was included a component of accounts payable and accrued expenses on the accompanying balance sheet.

5. SUBSEQUENT EVENTS

Effective November 11, 2016 Kyle Hartley resigned from his position as Chief Financial Officer, Secretary and Treasurer of the Company.  Mr. Hartley's resignation was for personal reasons and not the result of any disagreementMs. Hannah Bible, a current director, was appointed, immediately following the effectiveness of Mr. Hartley's resignation, to the executive positions of Chief Financial Officer, Secretary and Treasurer of the Company, as well as Chairman of the Board of Directors.
Also effective November 11, 2016, Alexander Rosenbluth was appointed to the Company's board of directors to fill a vacancy on the board of directors.

On November 14, 2016, the Company submitted a Certificate of Amendment to the Restated Articles of Incorporation for filing with the Office of the Secretary of the State of Texas to identify the directors as Hannah Bible and Alexander Rosenbluth, each with an address c/o Reliability, Inc., 53 Forest Avenue, First Floor, Old Greenwich, Connecticut 06870.  A copy of the Certificate of Amendment that was submitted to the Office of the Secretary of State of Texas is attached hereto as Exhibit 5.03

No other material subsequent events have occurred since September 30, 2016 that require recognition or disclosure in the financial statements.
 
 
 
 
- 9 -
 


RELIABILITY INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2016
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis and other parts of this report contain forward-looking statements that involve risks and uncertainties, as well as current expectations and assumptions. From time to time, the Company may publish forward-looking statements, including those that are contained in this report, relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of the Company's business include, but are not limited to, its ability to maintain sufficient working capital, adverse changes in the economy, the ability to attract and maintain key personnel, its ability to identify or complete an acceptable merger or acquisition, and future results related to acquisition, merger or investment activities. The Company's actual results could differ materially from those anticipated in these forward-looking statements, including those set forth elsewhere in this report. The Company assumes no obligation to update any such forward-looking statements .

CRITICAL ACCOUNTING POLICIES AND COMMENTS RELATED TO OPERATIONS

This discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes or developments in the Company's evaluation of the accounting estimates and the underlying assumptions or methodologies that it believes to be Critical Accounting Policies and Estimates as disclosed in its Form 10-K for the year ended December 31, 2015.

Management's Discussion included in the Form 10-K for the year ended December 31, 2015 includes discussion of various factors and items related to the Company's results of operations and liquidity. There have been no other significant changes in most of the factors discussed in the Form 10-K and many of the items discussed in the Form 10-K are relevant to 2016 operations; thus the reader of this report should read Management's Discussion included in Form 10-K for the year ended December 31, 2015.
 
RESULTS OF OPERATIONS

Revenues
Revenues for the three and nine months ended September 30, 2016 were zero, since all operations were discontinued as of September 30, 2007.

General and Administrative
General and administrative expenses for the three and nine months ended September 30, 2016   were $4,446 and $ 12,448, respectively, as compared to $4,809 and $15,949 in the comparable periods in 2015.  The decrease over the nine month period is due to lower legal expenses in 2016 as compared to 2015.
 
 
 
 
- 10 -

 
 

 

Interest Expense
The Company recognized interest expense in the amount of $1,913 and $4,399 during the three and nine months ended September 30, 2016, respectively, compared to $1,260 and $3,740, respectively, during the prior year periods.  The increase is due to the $40,000 note from affiliate issued in August 2016.

LIQUIDITY AND CAPITAL RESOURCES

The Company has undertaken steps to reduce its expenses and improve the Company's liquidity, including the previous sale and discontinuance of all operations.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. However, the Company currently has no operating activities. There can be no assurances that the Company will be able to successfully complete a merger or acquisition or be able to maintain sufficient liquidity to continue to seek a merger or acquisition, in which case the Company might be forced to liquidate or seek protection under the Federal bankruptcy statutes, or both.

Net cash used by operating activities during the nine months ended September 30, 2016   was $13,407 compared to $22,950 in the comparable period of 2015.  The decrease was attributable to a decrease in accounts payable and accrued liabilities during the nine months ended September 30, 2016 along with a lower net loss.

As previously reported, 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 and on June 6, 2014, Lone Star Value issued a promissory note to the Company in the principal amount of $50,000, the 2014 Note.  Under the terms of the 2014 Note, interest on the outstanding principal amount accrues at a rate of 10% per annum and all amounts outstanding under the 2014 Note are due and payable on or before June 30, 2019.  The proceeds of the private placement and Note are used to assist in funding the Company's operating expenses. Additionally, on August 2, 2016, the Company issued a promissory note to an affiliate of a shareholder in the amount of $40,000 (2016 Note). The loan bears interest at 10% per annum and 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.


Item 3.   Quantitative and Qualitative Disclosures About Market Risk
 

Not applicable.
 

Item 4.   Risk Controls and Procedures
 

(a)   Evaluation of Disclosure Controls and Procedures .  The Principal Executive Officer and Principal Financial Officer evaluated the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to the Principal Executive Officer and Principal Financial Officer to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b)   Changes in Internal Control over Financial Reporting . There were no changes in the Company's internal controls over financial reporting, known to the Principal Executive Officer and Principal Financial Officer,that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
 
 

- 11 -



RELIABILITY INCORPORATED
OTHER INFORMATION
September 30, 2016
 
 
PART II - OTHER INFORMATION

 
Item 1. Legal Proceedings

None.
 

Item 1a. Risk Factors

In addition to the other information set forth in this Quarterly Report, stockholders 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, 2015, 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.
 

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.
 

Item 5. Other Information

None.
 
 
- 12 -




Item  6.
Exhibits :
 
The following exhibits are filed as part of this report:
5.03
  
Certificate of Amendment to the Articles of Incorporation, dated November 14, 2016.
31.1
 
CEO Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
31.2
  
CFO Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
32.1
  
CEO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
  
CFO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
 
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Cash Flows and (iv) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail (XBRL).
 
 
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 thereunto duly authorized.


   
RELIABILITY INCORPORATED
(Registrant)
     
November 14, 2016
 
 
 
 
/s/ Hannah Bible
   
Hannah Bible
   
President and Chief Executive Officer
   
 
 
 
/s/ Hannah Bible
   
Hannah Bible
   
Chief Financial Officer
 






.
- 13 -
 
 
INDEX TO EXHIBITS


 
5.03
  
Certificate of Amendment to the Articles of Incorporation, dated November 14, 2016.
31.1
 
CEO Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
31.2
  
CFO Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
32.1
  
CEO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
  
CFO Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
 
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Cash Flows and (iv) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail (XBRL).
_______
 
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections



 
 
 
- 14 -
Exhibit 5.03
 
 

Form 424
 
This space reserved for office use.
(Revised 05/11)
   
     
 
   
Submit in duplicate to: Secretary of State 
   
P.O. Box 13697
   
Austin, TX 78711-3697
Certificate of Amendment
 
512 463-5555
   
FAX: 512/463-5709
   
Filing Fee: See instructions
 
 
 
Entity Information

The name of the filing entity is:

RELIABILITY  INCORPORATED ______________________________________________________________________________________________________________________________________________________________
State the name of the entity as currently shown in the records of the secretary of state. If the amendment changes the name of the entity, state the old name and not the new name.

The filing entity is a: (Select the appropriate entity type below.)

☑
For-profit Corporation
☐
Professional Corporation
☐
Nonprofit Corporation
☐
Professional Limited Liability Company
☐
Cooperative Association
☐
Professional Association
☐
Limited Liability Company
☐
Limited Partnership

The file number issued to the filing entity by the secretary of state is:  0011672900
The date of formation of the entity is:  September 21, 1953  
 
Amendments

1. Amended Name
(If the purpose of the certificate of amendment is to change the name of the entity, use the following statement)
 
The amendment changes the certificate of formation to change the article or provision that names the filing entity. The article or provision is amended to read as follows:

The name of the filing entity is: (state the new name of the entity below)


                                                                                                                                                                                                                                                 
The name of the entity must contain an organizational designation or accepted abbreviation of such term, as applicable.

2. Amended Registered Agent/Registered Office

The amendment changes the certificate of formation to change the article or provision stating the name of the registered agent and the registered office address of the filing entity. The article or provision is amended to read as follows:

 

 

Registered Agent
(Complete either A or B, but not both. Also complete C.)


 
☐  A. The registered agent is an organization (cannot be entity named above) by the name of:
 
OR
☐  B. The registered agent is an individual resident of the state whose name is:

____________________________________________________________________________________________________________________________________________________________________
First Name                                           M.I.                                Last Name                                                      Suffix
The person executing this instrument affirms that the person designated as the new registered agent has consented to serve as registered agent.

C. The business address of the registered agent and the registered office address is:
 
 
   815 Brazos Street, Suite 500
   Austin
   TX
   78701
 
Street Address (No P.O. Box)
City
State
Zip Code
 
3. Other Added, Altered, or Deleted Provisions

Other changes or additions to the certificate of formation may be made in the space provided below. If the space provided is insufficient, incorporate the additional text by providing an attachment to this form. Please read the instructions to this form for further information on format.

Text Area (The attached addendum, if any, is incorporated herein by reference.)

☐   Add  each of the following provisions to the certificate of formation. The identification or reference of the added provision and the full text are as follows:

 
 
☑  Alter  each of the following provisions of the certificate of formation. The identification or reference of the altered provision and the full text of the provision as amended are as follows:
 
ARTICLE FIVE
The current directors are as follows:
 
Hannah Bible
Alexander Rosenbluth
C/O Reliability Incorporated 53 Forest Ave., 1st Floor, Old Greenwich, CT 06870


☐   Delete  each of the provisions identified below from the certificate of formation.
 
 
Statement of Approval

The amendments to the certificate of formation have been approved in the manner required by the Texas Business Organizations Code and by the governing documents of the entity.


 
 
 
 Effectiveness of Filing  (Select either A, B, or C.)

A. ☑ This document becomes effective when the document is filed by the secretary of state.
 
B.  ☐  This document becomes effective at a later date, which is not more than ninety (90) days from the date of signing. The delayed effective date is: _____________________________________________________________________
 
C.  ☐  This document takes effect upon the occurrence of a future event or fact, other than the passage of time. The 90th day after the date of signing is: ____________________________________________________________________
 
The following event or fact will cause the document to take effect in the manner described below:
 
 
 
 

 
Execution

The undersigned signs this document subject to the penalties imposed by law for the submission of a materially false or fraudulent instrument and certifies under penalty of perjury that the undersigned is authorized under the provisions of law governing the entity to execute the filing instrument.


Date:
November 14, 2016
By:
 Hannah Bible
 
 
  /s/ Hannah Bible
 
 
Signature of authorized person
 
 
 
Hannah Bible
 
 
Printed or typed name of authorized person (see instructions)
 
 
 
 
 
 
 
 

 
 

 




 
Exhibit 31.1

CERTIFICATION BY HANNAH BIBLE PURSUANT TO SECURITIES EXCHANGE ACT RULE 13(A)-14(A)

I, Hannah Bible, certify that:
 
 
1.
I have reviewed this quarterly report on Form 10-Q of Reliability Incorporated for the period ended September 30, 2016;
 
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this report;
 
 
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to
the registrant is made known to us by others
within that entity, particularly during the period in which this report is being prepared;
 
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
 
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
Dated  November 14, 2016
 
 
 
 
/s/   Hannah Bible
 
Hannah Bible
 
Chief Executive Officer and Principal Executive Officer
 
 
 
 
 
Exhibit 31.2

CERTIFICATION BY HANNAH BIBLE PURSUANT TO SECURITIES EXCHANGE ACT RULE 13(A)-14(A)

I, Hannah Bible, certify that:

 
1.
I have reviewed this quarterly report on Form 10-Q of Reliability Incorporated for the period ended September 30, 2016;
 
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this report;
 
 
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to
the registrant is made known to us by others
within that entity, particularly during the period in which this report is being prepared;
 
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
 
5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
 Date: November 14, 2016
 
 
 
/s/  Hannah Bible
 
Hannah Bible
 
Chief Financial Officer and Principal Financial Officer
 
 

 

 
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of Title 18, United States Code), the undersigned officer of Reliability Incorporated (the "Company") hereby certifies with respect to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2016 as filed with the Securities and Exchange Commission (the "Report") that to his knowledge:
 
 
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 Date: November 14, 2016
 
 
 
/s/ Hannah Bible
 
Hannah Bible
 
Chief Executive Officer and Principal Executive Officer
 
 
Exhibit 32.2
 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of Title 18, United States Code), the undersigned officer of Reliability Incorporated (the "Company") hereby certifies with respect to the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2016 as filed with the Securities and Exchange Commission (the "Report") that to his knowledge:
 
 
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 Date: November 14, 2016
 
 
 
/s/ Hannah Bible
 
Hannah Bible
 
Chief Financial Officer and Principal Financial Officer