DEBT AND TRANSFER OF FINANCIAL ASSETS

6 Months Ended

Jun. 30, 2026

Debt Disclosure [Abstract]

DEBT AND TRANSFER OF FINANCIAL ASSETS

NOTE 5. DEBT AND TRANSFER OF FINANCIAL ASSETS

Factoring Facility

The Company is party to a factoring and security agreement with Gulf Coast Business Credit (“Gulf”) the accounts receivable finance and asset-based lending division of Gulf Coast Bank & Trust Company; which provides liquidity by enabling the Company to obtain advances against eligible accounts receivable (i.e., invoices) to Gulf in exchange for immediate cash advances. The proceeds from this agreement are primarily used to fund operating expenses, including employee compensation, vendor payments, and general overhead.

Under the terms of the agreement, Gulf advances funds at an interest rate equal to the prime rate plus 2%, with an additional advance fee of 15 basis points. The eligible advance amount is up to 93% of the face value of an invoice. The agreement is structured on a month-to-month basis and requires the Company to comply with certain financial covenants, including those related to invoicing activity and minimum reserve account balances.

Eligible receivables are assigned or pledged to Gulf as collateral on a full-recourse basis, meaning the Company retains the risk of collection. Accordingly, the factoring arrangement is accounted for as a secured borrowing under ASC 860, Transfers and Servicing. For the six months ended June 30, 2026, gross proceeds and repayments under the facility were $4,111 and $4,052, respectively, compared with $5,038 and $6,586, respectively, for the six months ended June 30, 2025. The outstanding factoring liability was $514 as of June 30, 2026 and $455 as of December 31, 2025.

The factoring facility is collateralized by substantially all the assets of the Company. In the event of a default, the factor may demand that the Company repurchase the receivable or debit the reserve account.

Receivables Purchase Programs

During 2025, the Company began participating in receivables purchase programs with JPMorgan (“JPM”) and Mitsubishi UFJ Financial Group (“MUFG”) under which certain approved trade receivables may be sold on a non-recourse basis (other than limited breach-based repurchase obligations). Transfers that meet program eligibility are accounted for as sales under ASC 860 and the receivables are derecognized; related program discounts and fees are recorded as loss on sale. Cash proceeds and settlements are presented in operating cash flows.

During the six months ended June 30, 2026, the Company sold $4,126 and $737 of receivables under the JPM and MUFG programs, respectively, and received cash proceeds of $4,077 and $725, respectively. The Company recognized an aggregate of $60 in discounts and fees as loss on sale. Derecognized receivables outstanding at June 30, 2026 were $757 and $143 under the JPM and MUFG programs, respectively. No repurchases occurred. There was no activity under these programs during the six months ended June 30, 2025.

RELIABILITY INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2026

(amounts in thousands, except share data and per share data)

Insurance Financing

MMG also uses short-term, 10-month financing arrangements to fund annual premiums for crime, employment practices liability, errors and omissions, and directors and officers insurance. During the 2025–2026 policy period, MMG entered into two premium-financing arrangements totaling $140, with aggregate finance charges of approximately $6 and a combined annual percentage rate of approximately 5.0%.

Software Financing with Long Term Debt

On October 30, 2024, the Company entered into a deferred payment agreement related to its ADP implementation, completed in January 2024. The total amount of $52 is payable over 24 months with an interest rate of 6.21%. On April 4, 2025, the Company entered into a second deferred payment agreement totaling $39 related to the implementation and multi-year licensing of the Datarails analytics platform. This amount is payable over 36 months and carries a 0.0% interest rate. As of June 30, 2026, the aggregate current portion of these obligations was $17, with the long-term portion totaling $14.