Reliability Incorporated reported a decline in financial performance for the third quarter and the first nine months of 2025, as detailed in its latest 10-Q filing. For the three months ended September 30, 2025, the company generated $5.4 million in service revenue, a decrease of 13.1% from $6.2 million in the same period of 2024. The nine-month revenue also fell by 15.3%, totaling $14.9 million compared to $17.6 million in the prior year. The company recorded a consolidated net loss of $203,000 for the third quarter and $742,000 for the nine months, compared to losses of $66,000 and $334,000, respectively, in the previous year.
The decline in revenue was primarily driven by the Employer of Record (EOR) segment, which saw a significant drop of 18.8% in revenue, largely due to reduced spending from two major clients. One client alone accounted for a $967,000 decrease in revenue, attributed to decreased media spending in a non-election year and funding cuts from the Department of Government Efficiency. Conversely, the Staffing segment experienced growth, with revenue increasing by 28.1% to $1.1 million in the third quarter, supported by new contracts and a transition of clients to managed staffing services.
Operationally, the company reported a gross profit of $749,000 for the third quarter, down from $834,000 a year earlier, although the gross margin improved slightly to 13.8%. The EOR segment's gross profit fell to 11.0%, while the Staffing segment saw a significant increase in gross profit margin to 25.2%. The company’s general and administrative expenses rose to $977,000 in the third quarter, influenced by a one-time legal settlement accrual of $125,000.
Reliability's balance sheet showed total assets of $9.2 million as of September 30, 2025, down from $11.6 million at the end of 2024. Current liabilities also decreased to $2.6 million from $4.2 million, reflecting a reduction in factoring liabilities. The company’s working capital stood at $6.6 million, a decline from $7.3 million at the end of 2024. Management remains optimistic about the company's future, citing a cash flow forecast that projects sufficient liquidity to meet obligations through November 2026, alongside anticipated collections from related party notes receivable.
Looking ahead, Reliability plans to continue focusing on its core segments while managing costs and improving operational efficiencies. The company is also pursuing legal actions related to arbitration awards against the Vivos Group, which could provide additional liquidity. However, the timing and amount of any recovery remain uncertain. The company’s management is committed to aligning costs with revenue fluctuations and expects to navigate the current challenges while positioning for future growth.
About RELIABILITY INC
Reliability Inc. provides workforce solutions through Employer of Record (EOR) services, staffing, recruiting, and multimedia production. Serving diverse industries globally, it offers compliant employment management, contingent staffing, and video/media production. The company leverages human and technological resources to deliver flexible, cost-effective workforce management, focusing on client retention, industry growth trends, and strategic acquisitions within the fragmented staffing and outsourcing markets.
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