----

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| x | QUARTERLY      REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---|---------------------------------------------------------------------------------------------------|

| ¨ | TRANSITION      REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|----------------------------------------------------------------------------------------------------|

|   |        TEXAS                                                       |   | 75-0868913                                       |   |
|--------|-------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|   | (State      or other jurisdiction ofincorporation      or organization) |   | (I.R.S.      EmployerIdentification      Number) |   |

|   | 410      Park Avenue - 15 th      Floor, New York, NY  |   | 91362           |   |
|--------|-------------------------------------------------------------|--------|-----------------|--------|
|   | (Address      of principal executive offices)               |   | (Zip      Code) |   |

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| PART I. FINANCIAL      INFORMATION |                                                                                                              |
|------------------------------------|-------------------------------------------------------------------------------------------------------------------|
|                               |                                                                                                              |   |
| Item 1.                            | Financial      Statements                                                                                         |   |
|                               |                                                                                                              |   |
|                               | Consolidated Balance Sheets as of      September 30, 2009 (Unaudited) and December 31,      2008                  | 3 |
|                               |                                                                                                              |   |
|                               | Consolidated Statement of      Operations for the Three Months Ended September 30, 2009 and 2008      (Unaudited) | 4 |
|                               |                                                                                                              |   |
|                               | Consolidated Statement of      Operations for the Nine Months Ended September 30, 2009 and 2008      (Unaudited)  | 5 |
|                               |                                                                                                              |   |
|                               | Consolidated Statements of Cash      Flows for the Nine Months ended September 30, 2009 and 2008      (Unaudited) | 6 |
|                               |                                                                                                              |   |
|                               | Notes to Condensed Consolidated Financial Statements                                                              | 7-12 |
|                               |                                                                                                              |   |
| Item 2.                            | Management’s Discussion and      Analysis of Financial Condition and Results of      Operations             | 13-14 |
|                               |                                                                                                              |   |
| Item 3.                            | Quantitative and Qualitative      Disclosures About Market Risk                                                   | 15 |
|                               |                                                                                                              |   |
| Item 4.                            | Controls and      Procedures                                                                                      | 16 |
|                               |                                                                                                              |   |
| PART II. OTHER      INFORMATION    | 17                                                                                                                |
|                               |                                                                                                              |
| Item 6.                            | Exhibits                                                                                                          | 17 |
|                               |                                                                                                              |   |
| Signatures                         | 17                                                                                                                |

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Financial Statements

RELIABILITY INCORPORATED

|  ASSETS                                                                                                                                                                                                            |    | September      30,2009(unaudited) |   |   | December 31,2008 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|-----------------------------------|--------|--------|-----------------------|--------|
| Current      assets:                                                                                                                                                                                                    |    |                              |   |   |                  |   |   |   |
|        Cash      and cash equivalents                                                                                                                                                |         | $                                 | 29     |   |                  | $      | 43 |   |
|                  Total      current assets                                                                                         |    |                              | 29     |   |                  |   | 43 |   |
|                                                                                                                                                                                                                    |         |                              |   |   |                  |   |   |   |
|                                                                                                                                                                                                                    |         |                              |   |   |                  |   |   |   |
|                                                                                                                                                                                                                    |         |                              |   |   |                  |   |   |   |
|                                                                                                                                                                                                                    |    |                              |   |   |                  |   |   |   |
| Total      Assets                                                                                                                                                                                                       |         | $                                 | 29     |   |                  | $      | 43 |   |
|                                                                                                                                                                                                                    |    |                              |   |   |                  |   |   |   |
|                                                                                                                                                                                                                    |         |                              |
| LIABILITIES AND STOCKHOLDERS’ EQUITY      (DEFICIT)                                                                                                                                                               |    |                              |   |   |                  |   |   |   |
| Current      liabilities:                                                                                                                                                                                               |    |                              |   |   |                  |   |   |   |
| Accounts      payable and accrued liabilities                                                                                                                                                                           |    | $                                 | 3      |   |                  | $      | 31 |   |
| Accrued      liabilities of discontinued operations                                                                                                                                                                     |    |                              | 13     |   |                  |   | 13 |   |
|              Total      current liabilities                                                                                                            |    |                              | 16     |   |                  |   | 44 |   |
|                                                                                                                                                                                                                    |    |                              |   |   |                  |   |   |   |
| Stockholders’      equity (deficit):                                                                                                                                                                              |    |                              |   |   |                  |   |   |   |
|            Common      stock, without par value; 20,000,000 shares authorized; 9,984,300      and 6,690,265 shares issued respectively                 |    |                              | 9,807  |   |                  |   | 9,767 |   |
|            Accumulated      deficit                                                                                                                              |    |                              | (8,700 | )      |                  |   | (8,674 | ) |
|            Less      treasury stock at cost, 354,300 shares                                                                                                      |    |                              | (1,094 | )      |                  |   | (1,094 | ) |
|                                                                                                                                                                                                                    |    |                              |   |   |                  |   |   |   |
|                             Total      stockholders’ equity (deficit) |    |                              | 13     |   |                  |   | (1 | ) |
|                                                                                                                                                                                                                    |    |                              |   |   |                  |   |   |   |
|                                                                                                                                                                                                                    |    | $                                 | 29     |   |                  | $      | 43 |   |

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RELIABILITYINCORPORATED

|                                                                                                                   |   | (unaudited)                           |   |
|------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                                                                   |   | Three      months ended September 30, |   |
|                                                                                                                   |   | 2009                                  |   |   | 2008 |   |
| Operating      expenses:                                                                                               |   |                                  |   |   |   |   |
| General      and administrative                                                                                        |   | $                                     | 11     |   |   | $ | 18 |   |
|                Total      cost and expenses |   |                                  | 11     |   |   |   | 18 |   |
| Operating      loss                                                                                                    |   |                                  | (11    | ) |   |   | (18 | ) |
| Other      income (expense)                                                                                            |   |                                  |   |   |   |   |   |   |
|          Other      (expense)                                             |   |                                  | -      |   |   |   | (4 | ) |
|               Total      other income (expense)  |   |                                  | -      |   |   |   | (4 | ) |
| Net      Loss                                                                                                          |   | $                                     | (11    | ) |   | $ | (22 | ) |
| Weighted      average shares:                                                                                          |   |                                  |   |   |   |   |   |   |
|        Basic                                                                        |   |                                  | 9,630  |   |   |   | 6,336 |   |
|        Diluted                                                                      |   |                                  | 9,630  |   |   |   | 6,336 |   |

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CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                                                        |         | (unaudited)                          |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------------|--------------------------------------|--------|
|                                                                                                                        |         | Nine      months ended September 30, |   |
|                                                                                                                        |    | 2009                                 |   |   | 2008 |   |
| Operating      expenses:                                                                                                    |         |                                 |   |   |   |   |
| General      and administrative                                                                                             |    | $                                    | 25     |   |   | $ | 68 |   |
| Impairment      on real estate held for sale                                                                                |         |                                 | -      |   |   |   | 126 |   |
|                Total      cost and expenses      |    |                                 | 25     |   |   |   | 194 |   |
| Operating      loss from continuing operations                                                                              |    |                                 | (25    | ) |   |   | (194 | ) |
| Other      income (expense):                                                                                                |         |                                 |   |   |   |   |   |   |
|         Other      income (expense)                                                 |         |                                 | -      |   |   |   | (4 | ) |
|                Total      other income (expense) |         |                                 | -      |   |   |   | (4 | ) |
|                                                                                                                        |         |                                 |   |   |   |   |   |   |
| Loss      from continuing operations, before income taxes                                                                   |    |                                 | (25    | ) |   |   | (198 | ) |
| Provision      for income taxes                                                                                             |    |                                 | (1     | ) |   |   | - |   |
| Loss      from continuing operations                                                                                        |    |                                 | (26    | ) |   |   | (198 | ) |
| Loss      from discontinued operations, net of income tax provisions of      nil                                            |    |                                 | -      |   |   |   | (10 | ) |
| Net      Loss                                                                                                               |    | $                                    | (26    | ) |   | $ | (208 | ) |
| Basic      and diluted loss per share:                                                                                      |    |                                 |   |   |   |   |   |   |
|         Continuing      operations                                                  |    | $                                    | Nil    |   |   | $ | (.03 | ) |
|         Discontinued      operations                                                |    |                                 | Nil    |   |   |   | Nil |   |
|         Net      (loss)                                                             |    | $                                    | Nil    |   |   | $ | (.03 | ) |
| Weighted      average shares:                                                                                               |    |                                 |   |   |   |   |   |   |
|        Basic                                                                             |    |                                 | 9,630  |   |   |   | 6,336 |   |
|        Diluted                                                                           |    |                                 | 9,630  |   |   |   | 6,336 |   |

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RELIABILITY INCORPORATED

|                                                                                                                         |         | (unaudited)                          |                                                      |
|------------------------------------------------------------------------------------------------------------------------------|--------------|--------------------------------------|-----------------------------------------------------------|
|                                                                                                                         |         | Nine      months ended September 30, |                                                      |
|                                                                                                                         |    | 2009                                 |                                                      |   | 2008 |   |
| Cash      flows from operating activities:                                                                                   |    |                                 |                                                      |   |   |   |   |   |
| Net      loss                                                                                                                |    | $                                    | (26                                                       | ) |   | $ | (208 | ) |
|        Loss      from discontinued operations                                             |    |                                 | -                                                         |   |   |   | (10 | ) |
|        Loss      from continuing operations                                               |    |                                 |          (26 | ) |   |   | (198 | ) |
| Impairment      of Real Estate                                                                                               |         |                                 | -                                                         |   |   |   | 126 |   |
| Changes      in operating assets and liabilities:                                                                            |    |                                 |                                                      |   |   |   |   |   |
|        Prepaid      expenses                                                              |    |                                 | -                                                         |   |   |   | 33 |   |
|        Accounts      payable and accrued liabilities                                      |    |                                 | (28                                                       | ) |   |   |          (21 | ) |
|                  Total      adjustments |    |                                 | (28                                                       | ) |   |   | 138 |   |
|                                                                                                                         |         |                                 |                                                      |   |   |   |   |   |
| Net      cash (used by) operating activities                                                                                 |    |                                 | (54                                                       | ) |   |   | (60 | ) |
| Cash      flows from investing activities:                                                                                   |         |                                 |                                                      |   |   |   |   |   |
|        Proceeds      from sale of assets                                                  |         |                                 | -                                                         |   |   |   | 99 |   |
| Net      cash (used) provided by investing activities                                                                        |    |                                 | -                                                         |   |   |   | 99 |   |
| Cash      flows from financing activities:                                                                                   |         |                                 |                                                      |   |   |   |   |   |
|        Issuance      of stock for cash                                                    |         |                                 | 40                                                        |   |   |   | - |   |
| Net      cash provided by financing activities                                                                               |    |                                 | 40                                                        |   |   |   | -  |   |
| Net      (decrease) increase in cash                                                                                         |    |                                 | (14                                                       | ) |   |   | 39 |   |
| Cash      and cash equivalents:                                                                                              |    |                                 |                                                      |   |   |   |   |   |
|        Beginning      of period                                                           |    |                                 | 43                                                        |   |   |   | 32 |   |
|        End      of period                                                                 |    | $                                    | 29                                                        |   |   | $ | 71 |   |
| Supplemental      disclosure of cash flow information:                                                                       |         |                                 |                                                      |   |   |   |   |   |
|        Cash      paid during the period for:                                              |         |                                 |                                                      |   |   |   |   |   |
|        Interest                                                                           |         | $                                    | -                                                         |   |   | $ | - |   |
|        Income      taxes                                                                  |         | $                                    | -                                                         |   |   | $ | - |   |

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RELIABILITY INCORPORATED

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RELIABILITY INCORPORATED

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2008.

|                                            |   | 2009   |    |   | 2008   |   |
|-------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Professional      Fees                          |   |   | 3       |   |   |   | 27 |   |
| Other                                           |   |   | — |   |   |   | 4 |   |
|        Total |   | $      | 3       |   |   | $      | 31 |   |

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|                                                     |   | Number ofOptions |    |   | WeightedAveragePrice |   |
|----------------------------------------------------------|--------|-----------------------|---------|--------|----------------------|--------|
| Balance      as of December 31, 2008                |   |                  | 370,000 |   |                 | $      | .21 |   |
|      Forfeited      or canceled |   |                  | — |   |                 |   | — |   |
|      Exercised                  |   |                  | — |   |                 |   | — |   |
|      Granted                    |   |                  | — |   |                 |   | — |   |
|  Balance      as of September 30, 2009              |   |                  | 370,000 |   |                 | $      | .21 |   |

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RELIABILITY INCORPORATED

MANAGEMENT’S DISCUSSION ANDANALYSIS

Item 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations

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----

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Item 3.      Quantitative and QualitativeDisclosures About Market Risk

Item 4 and 4T.       Controls and Procedures.

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PART II - OTHERINFORMATION

Item 6.     Exhibits:

| 31.1   |    | Certification      Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of      1934, as Amended                   |
|--------|--------------|-----------------------------------------------------------------------------------------------------------------------------------|
|   |         |                                                                                                                              |
| 31.2   |    | Certification      Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of      1934, as Amended                   |
|   |         |                                                                                                                              |
| 32.1   |    | Certification      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002. |
|   |         |                                                                                                                              |

| 32.2 |    | Certification      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002. |
|------|--------------|-----------------------------------------------------------------------------------------------------------------------------------|

SIGNATURES

|                        | RELIABILITY      INCORPORATED(Registrant)                   |   |
|-----------------------------|-------------------------------------------------------------|--------|
|                        |                                                        |   |
| November 13,      2009 | /s/ Jay      Gottlieb                                  |   |
|                        | Jay      GottliebPresident      and Chief Executive Officer |   |
|   | /s/      Gregg Schneider                         |   |
|--------|--------------------------------------------------|--------|
|   | Gregg      SchneiderChief      Financial Officer |   |

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