0000034285
2012-01-01
2012-03-31
0000034285
2012-05-03
0000034285
2012-03-31
0000034285
2011-12-31
0000034285
2011-01-01
2011-03-31
0000034285
2010-12-31
0000034285
2011-03-31
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
RELIABILITY INCORPORATED
0000034285
10-Q
2012-03-31
true
--12-31
No
No
Yes
Smaller Reporting Company
Q1
2012
13513333
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Operations and Liquidity</i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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 operating. The Company has no further operating activities and is now a shell company.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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”.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Basis of presentation</i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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 period ended
March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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, 2011.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Accounting Estimates</i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Cash Equivalents</i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Earnings Per Share</i></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Deferred income taxes are provided under the asset and
liability method and reflect the net tax effects of temporary differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements. 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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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 in the Company’s Form 10-K dated
December 31, 2011.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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, 2011, was 4.80 years for outstanding and exercisable options. There were no options exercised
and none that expired or were canceled during the years ended December 31, 2011 and 2010 or during the quarter ended March 31,
2012. As of March 31, 2012 and December 31, 2011, 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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">No material subsequent events have occurred
since March 31, 2012, that require recognition or disclosure in the financial statements.</p>
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On May 3, 2012, Registrant filed Form 10-Q for the period ended March 31, 2012 prior to the completion of the review of its interim financial statements by its independent registered public accounting firm. The accompanying filing is intended to supersede the May 3, 2012 filing.
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