Reliability Incorporated Reports 6.3% Revenue Growth in Q2 2026, Faces Net Loss

Reliability Incorporated reported its financial results for the second quarter and first half of 2026, revealing a revenue increase of 6.3% to $5.017 million for the three months ended June 30, compared to $4.718 million in the same period of 2025. For the six months, revenue rose 11.7% to $10.568 million from $9.465 million year-over-year. The Employer of Record (EOR) segment, which accounted for approximately 77.2% of consolidated revenue, saw a notable increase in revenue, rising 8.4% to $3.873 million in the second quarter and 14.2% to $8.378 million for the first half. However, the company reported a consolidated net loss of $206, slightly higher than the $205 loss in the prior-year quarter, while the six-month net loss improved to $325 from $538.

The company experienced a significant change in its capital structure following a settlement with the Vivos Group, which resulted in the transfer of 253.3 million shares back to the company, reducing the outstanding shares to 46.7 million. This noncash transaction, valued at $6.422 million, was recorded as treasury stock and contributed to a working capital deficit of $104, down from a surplus of $6.647 million at the end of 2025. The reduction in outstanding shares is expected to provide the company with increased flexibility for future capital-raising activities and strategic initiatives.

Operationally, the company reported a decrease in selling, general, and administrative expenses, which fell 16% to $811,000 for the second quarter and 16.2% to $1.666 million for the first half. This reduction reflects cost-containment measures implemented in late 2025 and early 2026. The company also noted a decrease in interest expenses, which dropped to $23, down from $36 in the prior-year quarter, due to a greater reliance on lower-cost receivables purchase programs. The company’s Days Sales Outstanding (DSO) improved significantly from 51 days in June 2025 to 22 days by June 30, 2026, indicating enhanced cash flow management.

Looking ahead, Reliability Incorporated is focused on mitigating liquidity pressures stemming from extended payment terms from clients, which have increased from 30 days to between 60 and 90 days. The company plans to continue utilizing its factoring and receivables purchase programs to manage working capital needs. Management has also indicated that they are evaluating various strategic and financing alternatives, including potential mergers and acquisitions, to support business development and growth initiatives. However, the company acknowledges that its ability to continue as a going concern is contingent upon effective management of its working capital and timely collections from clients.