RELIABILITY INC 10-K

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks from transactions we enter into the normal course of business. Our primary market risk exposure relates to interest rate risk, which currently is tied to the Prime Interest rate. INTEREST RATES Our Factoring Facility is priced at a variable interest rate of prime plus 2% with a 15-basis point advance rate with a floor of 4%. Accordingly, future interest rate increases could potentially put us at risk for an adverse impact on future earnings and cash flows. Our Amex BIP interest rate is paid upon invoice submission at a fixed percentage based on the submission total. Invoice(s) under $10 cost 2.05%, those between $10 and $200 cost 1.55 % of the invoice total, and a submission of invoice or invoices greater than $200 is subject to a 1.05% cost. Since MMG submissions for most of 2024 averaged between $10 and $100, our average fee was 1.74% for invoices payable in 90 days, averaging $34 per submission. This translates into an approximate APR of 7.0% which is 4.3% better than our factoring rate given the 2024 average prime interest rate of 7.9% in 2024. At 90 days our Factoring APR average in 2024 was approximately 11.3%. Given the current prime interest rate is 7.50% at a DSO of 52, our current average APR as of March 7, 2025 is 10.55%. 38