0001477932-13-002081.txt : 20130502 0001477932-13-002081.hdr.sgml : 20130502 20130502071934 ACCESSION NUMBER: 0001477932-13-002081 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20130331 FILED AS OF DATE: 20130502 DATE AS OF CHANGE: 20130502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RELIABILITY INC CENTRAL INDEX KEY: 0000034285 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 750868913 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07092 FILM NUMBER: 13805380 BUSINESS ADDRESS: STREET 1: 16400 PARK ROW STREET 2: P O BOX 218370 CITY: HOUSTON STATE: TX ZIP: 77218-8370 BUSINESS PHONE: 281-492-0550 FORMER COMPANY: FORMER CONFORMED NAME: FAIRLANE INDUSTRIES INC DATE OF NAME CHANGE: 19800519 10-Q 1 real_10q.htm FORM 10-Q real_10q.htm


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 March 31, 2013
 
 
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)
 
410 Park Avenue - 15th Floor, New York, NY 
 
91362
(Address of principal executive offices)
 
(Zip Code)
 
(212) 231-8359
(Issuer’s telephone number, including area code)
 
Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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.    Yes x   No o

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
Smaller reporting company    x
   
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes x   No o
 
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date 13,513,333 shares of Common Stock, no par value, as of May 2, 2013.



 
 

 

RELIABILITY INCORPORATED
Quarterly Report on Form 10-Q
For the Three Months Ended March 31, 2013
INDEX

PART I. FINANCIAL INFORMATION
     
         
Item 1.
Financial Statements
     
     
 
 
 
Balance Sheets as of March 31, 2013 and December 31, 2012 (Unaudited)
    3  
           
 
Statements of Operations for the Three Months Ended March 31, 2013 and 2012 (Unaudited)
    4  
           
 
Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012 (Unaudited)
    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.
Controls and Procedures
    10  
           
PART II. OTHER INFORMATION
    11  
           
Signatures
    13  
         
Exhibits        

 
2

 

Item 1.  Financial Statements

RELIABILITY INCORPORATED
UNAUDITED BALANCE SHEETS

 
   
March 31,
2013
   
December 31,
2012
 
ASSETS
Current assets:
               
Cash and cash equivalents
 
$
3,053
   
$
486
 
Total current assets
   
3,053
     
486
 
                 
Total Assets
 
$
3,053
   
$
486
 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
               
Accounts payable and accrued liabilities
 
$
2,266
   
$
10,372
 
Loans from officers
   
18,000
     
3,000
 
Total current liabilities
   
20,266
     
13,372
 
                 
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; 13,867,633 shares issued
   
9,862,150
     
9,862,150
 
Accumulated deficit
   
(8,784,846
)
   
(8,780,519
)
Less treasury stock at cost, 354,300 shares
   
(1,094,517
)
   
(1,094,517
)
                 
Total stockholders’ equity (deficit)
   
(17,213
)
   
(12,886
)
                 
 Total liabilities and stockholders’ equity (deficit)
 
$
3,053
   
$
486
 

The accompanying notes are an integral part of these statements.
 
 
3

 
 
RELIABILITY INCORPORATED
UNAUDITED STATEMENTS OF OPERATIONS
 
   
Three months ended March 31,
 
   
2013
   
2012
 
Operating expenses:
           
General and administrative
 
$
4,327
   
$
4,282
 
Total cost and expenses
   
4,327
     
4,282
 
Operating loss
   
(4,327
)
   
(4,282
)
                 
Net Loss
 
$
(4,327
)
 
$
(4,282
)
                 
Basic and diluted loss per share  
$
Nil
   
$
Nil
 
Weighted average shares:
               
Basic
   
13,513,333
     
12,396,000
 
Diluted
   
13,513,333
     
12,396,000
 

The accompanying notes are an integral part of these statements.

 
4

 
 
RELIABILITY INCORPORATED
UNAUDITED STATEMENTS OF CASH FLOWS
 
   
(unaudited)
 
   
Three months ended March 31,
 
   
2013
   
2012
 
Cash flows from operating activities:
           
Net loss
  $ (4,327 )   $ (4,282 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Changes in operating assets and liabilities:
               
Accounts payable and accrued liabilities
    (8,106 )     (6,683 )
Net cash used by operating activities
    (12,433 )     (10,965 )
                 
Cash flows from financing activities:
               
Loans from officers     15,000       -  
        Issuance of stock for cash
    -       19,000  
Net cash provided by financing activities
    15,000       19,000  
Net increase in cash and cash equivalents
    2,567       8,035  
Cash and cash equivalents:
               
Beginning of period
    486       4,393  
End of period
  $ 3,053     $ 12,428  
Supplemental disclosure of cash flow information:
    -          
       Cash paid during the period for:
               
       Interest
  $ -     $ -  
       Income taxes
  $ -     $ -  
                 
Supplemental disclosure of non-cash financing activity:                
Repayment of loans from officers through issuance of common stock   $ -     $ 5,000  
 
The accompanying notes are an integral part of these statements.

 
5

 
 
RELIABILITY INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2013
 
1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Operations and Liquidity
 
The Company was incorporated under the laws of the State of Texas in 1953, but the principal business of the Company, as described in this report, started in 1971, but was closed down in 2007. The Company had two wholly owned subsidiaries, Reliability Singapore, Pte Ltd. and Reliability Contractors of Florida, neither of which is now operating. The Company has no further operating activities and is now a shell company.
 
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. However, the Company has no further 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.
 
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. We are now quoted on the OTCQB of the OTC Marketplace under the symbol “REAL”.
 
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 March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.
 
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, 2012.
 
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.
 
 
6

 
 
RELIABILITY INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2013
 
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.
 
Income Taxes
 
Income taxes are provided under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company establishes valuation allowances when the realization of specific deferred tax assets is subject to significant uncertainty. The Company has recorded 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 Company generated net losses in each of the periods presented, outstanding stock options would have been anti-dilutive and were not considered in these calculations.
 
2. INCOME TAXES
 
The Company has substantial U.S. net operating loss carryforwards that will expire in 2023 through 2030. 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, 2012.
 
The Company’s income tax returns remain subject to examination for the years 2009 through 2012 for federal and state purposes.
 
 
7

 
 
RELIABILITY INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
March 31, 2013
 
3. STOCK OPTION PLAN
 
Under the Company’s Amended and Restated 1997 Stock Option Plan (Option Plan), no further option grants are allowed after February 26, 2007, but options theretofore granted remain in effect until satisfied or terminated pursuant to the Option Plan.
 
At December 31, 2006, all options were fully vested; thus no further stock option expense has been recorded related to the Option Plan. The weighted-average remaining contractual term, as of December 31, 2012, was 3.80 years for outstanding and exercisable options. There were no options exercised and none that expired or were canceled during the years ended December 31, 2012 and 2011 or during the quarter ended March 31, 2013. As of March 31, 2013 and December 31, 2012, there were 370,000 options outstanding under the Company’s Stock Option Plan which are exercisable at a weighted average price of $.21 until July 18, 2016, when they expire.

4. STOCKHOLDERS’ EQUITY

In January 2012, the Company issued 1,500,000 shares of common stock to its officers, Jay Gottlieb and Gregg Schneider, at $0.016 per share, for a total of $24,000. The issuance provided cash of $19,000 and the repayment of $5,000 of Loans from officers.

5. SUBSEQUENT EVENTS

In April, 2013 Jay Gottlieb, the Company’s President, loaned $3,000 to the Company on an interest-free basis to assist in funding its operating expenses. No other material subsequent events have occurred since March 31, 2013, that require recognition or disclosure in the financial statements.
 
 
 
8

 
 
RELIABILITY INCORPORATED
MANAGEMENT’S DISCUSSION AND ANALYSIS
March 31, 2013
 
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 maintain sufficient working capital, adverse changes in the economy, the ability to attract and maintain key personnel, its ability to identify and complete mergers or acquisitions, and future results related to acquisitions, mergers 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
 
The Company has defined a critical accounting policy as one that is both important to the portrayal of the Company’s financial condition and results of operations and requires the management of the Company to make difficult, subjective or complex judgments. Estimates and assumptions about future events and their effects cannot be perceived with certainty. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments. These estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. 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, 2012.
 
Management’s Discussion included in the Form 10-K for the year ended December 31, 2012 includes discussion of various factors related to the decline in the Company’s revenues 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 2012 operations; thus the reader of this report should read Management’s Discussion included in Form 10-K for the year ended December 31, 2012.
 
RESULTS OF OPERATIONS
 
Three months ended March 31, 2013 compared to three months ended March 31, 2012.
 
Revenues and Gross Profit.
 
Revenues and gross profit for the three months ended March 31, 2013, and March 31, 2012 were both reported as zero, since all operations have been discontinued.

General and Administrative
 
General and administrative expenses increased to $4,327 for the three months ended March 31, 2013 from $4,282 for the same period in 2012.
 
 
9

 

RELIABILITY INCORPORATED
MANAGEMENT’S DISCUSSION AND ANALYSIS
March 31, 2013

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 has 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 three months ended March 31, 2013 was $12,433 compared to $10,965 in the comparable period of 2012.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. 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 Office and Principal Financial Officer concluded that, as of March 31, 2013, these disclosure controls and procedures were effective to ensure that all information required to be disclosed by us 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.

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.
 
 
10

 
 
RELIABILITY INCORPORATED
OTHER INFORMATION
 
PART II - OTHER INFORMATION
March 31, 2013

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be involved in various disputes and litigation matters arising in the normal course of business. We are not involved in any legal proceedings that are expected to have a material adverse effect on our financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties. Were an unfavorable ruling to occur, given the size of our Company, there exists the possibility of a material adverse impact on our results of operations of the period in which the ruling occurs. Our estimate of the potential impact on our financial position or overall results of operations for new legal proceedings could change in the future.

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, 2012, 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
 
None

 
11

 
 
ITEM  6EXHIBITS:
 
The following exhibits are filed as part of this report:
 
31.1
  
CEO Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Amended
     
31.2
  
CFO Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Amended
     
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.INS**
 
XBRL Instance Document
     
101.SCH**
 
XBRL Taxonomy Extension Schema Document
     
101.CAL**
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF**
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB**
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE**
 
XBRL Taxonomy Extension Presentation Linkbase Document
____________
** 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.
 
 
12

 
 
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)  
       
Date: May 2, 2013
By:
/s/ Jay Gottlieb  
    Jay Gottlieb  
    President and Chief Executive Officer  
       
       
    /s/ Greggory Schneider  
    Greggory Schneider  
    Chief Financial Officer  
 
 
 
13


EX-31.1 2 real_ex311.htm CERTIFICATION real_ex311.htm
Exhibit 31.1

 
CERTIFICATION BY JAY GOTTLIEB PURSUANT TO SECURITIES EXCHANGE ACT RULE 13(A)-14(A)
 
I, Jay Gottlieb, certify that:
 
 
1.
I have reviewed this quarterly report on Form 10-Q of Reliability Incorporated for the period ended March 31, 2013;
 
 
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: May 2, 2013
By:
/s/ Jay Gottlieb  
    Jay Gottlieb  
    Chief and Principal Executive Officer  
       

 
EX-31.2 3 real_ex312.htm CERTIFICATION real_ex312.htm
Exhibit 31.2

CERTIFICATION BY GREGG SCHNEIDER PURSUANT TO SECURITIES EXCHANGE ACT RULE 13(A)-14(A)

I, Greggory Schneider, certify that:
 
 
1.
I have reviewed this quarterly report on Form 10-Q of Reliability Incorporated  (“registrant”) for the period ended March 31, 2013;
 
 
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 those entities, 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 the 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.
 
 
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: May 2, 2013
By:
 /s/  Greggory Schneider  
    Greggory Schneider  
    Chief Financial Officer  
       

EX-32.1 4 real_ex321.htm CERTIFICATION real_ex321.htm
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 March 31, 2013 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.
 
       
Dated: May 2, 2013
By:
/s/ Jay Gottlieb  
    Jay Gottlieb  
    Chief and Principal Executive Officer  
       
EX-32.2 5 real_ex322.htm CERTIFICATION real_ex322.htm
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 March 31, 2013 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 and 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.
 
       
Dated: May 2, 2013
By:
 /s/  Greggory Schneider  
    Greggory Schneider  
    Chief Financial and Principal Financial Officer  
       
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STOCKHOLDERS' EQUITY
3 Months Ended
Mar. 31, 2013
Stockholders' equity (deficit):  
Note 4. STOCKHOLDERS' EQUITY

In January 2012, the Company issued 1,500,000 shares of common stock to its officers, Jay Gottlieb and Gregg Schneider, at $0.016 per share, for a total of $24,000. The issuance provided cash of $19,000 and the repayment of $5,000 of Loans from officers.

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v2.4.0.6
STOCK OPTION PLAN
3 Months Ended
Mar. 31, 2013
Stock Option Plan  
Note 3. STOCK OPTION PLAN

Under the Company’s Amended and Restated 1997 Stock Option Plan (Option Plan), no further option grants are allowed after February 26, 2007, but options theretofore granted remain in effect until satisfied or terminated pursuant to the Option Plan.

At December 31, 2006, all options were fully vested; thus no further stock option expense has been recorded related to the Option Plan. The weighted-average remaining contractual term, as of December 31, 2012, was 3.80 years for outstanding and exercisable options. There were no options exercised and none that expired or were canceled during the years ended December 31, 2012 and 2011 or during the quarter ended March 31, 2013. As of March 31, 2013 and December 31, 2012, there were 370,000 options outstanding under the Company’s Stock Option Plan which are exercisable at a weighted average price of $.21 until July 18, 2016, when they expire.

XML 16 R2.htm IDEA: XBRL DOCUMENT v2.4.0.6
BALANCE SHEETS (UNAUDITED) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
ASSETS    
Cash and cash equivalents $ 3,053 $ 486
Total current assets 3,053 486
Total Assets 3,053 486
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)    
Accounts payable and accrued liabilities 2,266 10,372
Loans from officers 18,000 3,000
Total current liabilities 20,266 13,372
Preferred stock, without par value; 1,000,000 shares authorized, none issued and outstanding      
Common stock, without par value; 300,000,000 shares authorized; 13,867,633 shares issued 9,862,150 9,862,150
Accumulated deficit (8,784,846) (8,780,519)
Less treasury stock at cost, 354,300 shares (1,094,517) (1,094,517)
Total stockholders' equity (deficit) (17,213) (12,886)
Total Liabilities and Stockholders' Equity (Deficit) $ 3,053 $ 486
XML 17 R6.htm IDEA: XBRL DOCUMENT v2.4.0.6
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2013
Operations And Summary Of Significant Accounting Policies  
Note 1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Operations and Liquidity

 

The Company was incorporated under the laws of the State of Texas in 1953, but the principal business of the Company, as described in this report, started in 1971, but was closed down in 2007. The Company had two wholly owned subsidiaries, Reliability Singapore, Pte Ltd. and Reliability Contractors of Florida, neither of which is now operating. The Company has no further operating activities and is now a shell company.

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. However, the Company has no further 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.

 

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. We are now quoted on the OTCQB of the OTC Marketplace under the symbol “REAL”.

 

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 March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

 

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, 2012.

 

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.

 

Income Taxes

 

Income taxes are provided under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company establishes valuation allowances when the realization of specific deferred tax assets is subject to significant uncertainty. The Company has recorded 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 Company generated net losses in each of the periods presented, outstanding stock options would have been anti-dilutive and were not considered in these calculations.

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XML 20 R7.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAXES
3 Months Ended
Mar. 31, 2013
Income Taxes  
Note 2. INCOME TAXES

The Company has substantial U.S. net operating loss carryforwards that will expire in 2023 through 2030. 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, 2012.

 

The Company’s income tax returns remain subject to examination for the years 2009 through 2012 for federal and state purposes.

XML 21 R3.htm IDEA: XBRL DOCUMENT v2.4.0.6
BALANCE SHEETS (Parenthetical) (USD $)
Mar. 31, 2013
Dec. 31, 2012
Statement of Financial Position [Abstract]    
Preferred stock par value $ 0 $ 0
Preferred stock shares authorized 1,000,000 1,000,000
Preferred stock shares issued 0 0
Preferred stock shares outstanding 0 0
Common stock par value $ 0 $ 0
Common stock shares authorized 300,000,000 300,000,000
Common stock shares issued 13,867,633 13,867,633
Common stock shares outstanding 13,867,633 13,867,633
Treasury stock shares 354,300 354,300
XML 22 R1.htm IDEA: XBRL DOCUMENT v2.4.0.6
Document and Entity Information
3 Months Ended
Mar. 31, 2013
May 02, 2013
Document And Entity Information    
Entity Registrant Name RELIABILITY INCORPORATED  
Entity Central Index Key 0000034285  
Document Type 10-Q  
Document Period End Date Mar. 31, 2013  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   13,513,333
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2013  
XML 23 R4.htm IDEA: XBRL DOCUMENT v2.4.0.6
STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Operating expenses:    
General and administrative $ 4,327 $ 4,282
Total cost and expenses 4,327 4,282
Operating loss (4,327) (4,282)
Net Loss $ (4,327) $ (4,282)
Basic and diluted loss per share $ 0 $ 0
Weighted average shares:    
Basic 13,513,333 12,396,000
Diluted 13,513,333 12,396,000
XML 24 R12.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAXES (Details Narrative)
3 Months Ended
Mar. 31, 2013
Income Taxes  
Net operating loss carryforwards expiration dates 2023 through 2030
XML 25 R11.htm IDEA: XBRL DOCUMENT v2.4.0.6
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Mar. 31, 2013
Operations And Summary Of Significant Accounting Policies Policies  
Operations and Liquidity

The Company was incorporated under the laws of the State of Texas in 1953, but the principal business of the Company, as described in this report, started in 1971, but was closed down in 2007. The Company had two wholly owned subsidiaries, Reliability Singapore, Pte Ltd. and Reliability Contractors of Florida, neither of which is now operating. The Company has no further operating activities and is now a shell company.

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. However, the Company has no further 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.

 

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. We are now quoted on the OTCQB of the OTC Marketplace under the symbol “REAL”.

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 March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

 

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, 2012.

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.

Income Taxes

Income taxes are provided under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company establishes valuation allowances when the realization of specific deferred tax assets is subject to significant uncertainty. The Company has recorded 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 Company generated net losses in each of the periods presented, outstanding stock options would have been anti-dilutive and were not considered in these calculations.

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STOCK OPTION PLAN (Details Narrative) (USD $)
3 Months Ended
Mar. 31, 2013
Dec. 31, 2012
Stock Option Plan    
Date after which no further option grants are allowed Feb. 26, 2007  
Weighted-average remaining contractual term   3 years 9 months 18 days
Options outstanding 370,000 370,000
Exercisable at a weighted average price $ 0.21 $ 0.21
Expiration date Jul. 18, 2016 Jul. 18, 2016
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STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Cash flows from operating activities:    
Net loss $ (4,327) $ (4,282)
Changes in operating assets and liabilities:    
Accounts payable and accrued liabilities (8,106) (6,683)
Net cash used by operating activities (12,433) (10,965)
Cash flows from financing activities:    
Loans from officers 15,000   
Issuance of stock for cash    19,000
Net cash provided by financing activities 15,000 19,000
Net increase in cash and cash equivalents 2,567 8,035
Cash and cash equivalents:    
Beginning of period 486 4,393
End of period 3,053 12,428
Supplemental disclosure of cash flow information:    
Interest      
Income taxes      
Repayment of loans from officers through issuance of common stock    $ 5,000
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SUBSEQUENT EVENTS
3 Months Ended
Mar. 31, 2013
Subsequent Events [Abstract]  
Note 5. SUBSEQUENT EVENTS

In April, 2013 Jay Gottlieb, the Company’s President, loaned $3,000 to the Company on an interest-free basis to assist in funding its operating expenses. No other material subsequent events have occurred since March 31, 2013, that require recognition or disclosure in the financial statements.

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