corresletter.htm

ATTORNEY AT LAW

cduncan@cnduncanlaw.com

5718 Tanglewood Drive	(301) 263-0200
Bethesda, Maryland 20817	Fax (301) 576-5193

February 19, 2010

VIA MESSENGER AND EDGAR FILING AS CORRESPONDENCE

David Burton, Staff Accountant

U.S. Securities and Exchange Commission

Division of Corporation Finance

Mail Stop 3030

Washington, D.C. 20549

Re: Reliability Incorporated (“REAL”); File No. 0-07902

REAL Form 8-K Filed December 30, 2009 Relating to Item 4.01

Dear Mr. Burton:

This letter is in response to the comments of the Division of Corporation Finance staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) with respect to the above-referenced filing of Reliability Incorporated (“REAL” or the “Company”) as set forth in your comment letter dated February 2, 2010 (the “Comment Letter”). The Company hereby responds to each of the Staff’s outstanding Comments.

For the convenience of the Staff, we have reproduced the Staff’s comments from the Comment Letter in Italics. The responses to those Comments immediately follow the reproduced Staff comments. In addition to submitting this letter simultaneously herewith, we are sending you via messenger two (2) copies of this letter being filed overnight as Correspondence on EDGAR. The Form 8-K/A referred to herein is being filed concurrently on EDGAR.

Please note that there was only one accounting treatment at issue with regard to REAL (dealing with development stage characterization), not the two issues associated with SPZR (the development stage issue and the valuation issue growing out of a July 2009 funding transaction). While the language of the two SEC Comment Letter were identical, they should not have been. That different treatment is ad-dressed as appropriate below. By way of background (and as reflected in the prior auditor’s letter dated December 30, 2009 and appended to REAL’s Form 8-K), there were no further disagreements with Schumacher on accounting principle or practice, financial statement disclosure, auditing scope or procedure.

Form 8-K dated December 30, 2009

Item 4-01. Changes in Registrant’s Certifying Accountant

1.	We note your responses to prior comments 1-3 as well as the background information provided on the nature of the disagreements. In regard to these disagreements, please amend your report to comply with the disclosure requirements of Item 304(a)(1)(iv) of Regulation S-K for statements (B) and (C).

David Burton United States Securities and Exchange Commission Division of Corporation Finance
Page 2	February 19, 2010

Response to Comment 1: The requested revisions have been incorporated into the REAL Form 8-K/A being filed concurrently.

2.	Please refer to prior comment 4. We do not see where you have provided all the disclosure required by Item 304(b) of Regulation S-K. Please revise to provide the required disclosures, or otherwise tell us where you have provided the required disclosures.

Response to Comment 2: The requested revisions have been incorporated into the REAL Form 8-K/A being filed concurrently.

3.	To the extent that you amend the Form 8-K to comply with our comments, pleaser obtain and file an Exhibit 16 letter from the former accountant stating whether the accountant agrees with your Item 304 disclosures, or the extent to which the accountant does not agree.

Response to Comment 3: The updated Accountant’s Letter is appended to the Form 8-K/A as Exhibit 16.1.

General

4.	We note that you did not provide all of the acknowledgements previously requested. Please provide, in writing, a statement:

·	The Company is responsible for the adequacy and accuracy of the disclosure in the filing;

·	Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

·	The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Response to Comment 4: Per the above Staff Comment, please be advised that the Company acknowledges (see below execution by REAL’s Chairman and President) the following:

·	The Company is responsible for the adequacy and accuracy of the disclosure in the filing;

·	Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

·	The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

5.	We note that your correspondence dated January 22, 2010 addresses our comments for twodistinct and separate registrants. In responding to the comments above, please prepare andsubmit separate correspondence for each registrant.

David Burton United States Securities and Exchange Commission Division of Corporation Finance
Page 3	February 19, 2010

Response to Comment 5: Separate correspondence is provided for each registrant as requested.

We appreciate your consideration of this matter and trust the Staff has no further comments, believing as we do that this response and the associated Form 8-K/A are fully responsive to the issues posed. We, of course, stand ready to respond to any further questions you may have and/or if you require additional information.

	Sincerely,

	/s/Carl N. Duncan
	Carl N. Duncan
	Title

cc: Jay Gottlieb

Gregg Schneider

Michael C. Pearce

Dave Sherwood

Mick Schumacher/Lois Huston

ACKNOWLEDGED AS

TO COMMENT 4 ABOVE

/s/ Jay Gottlieb
Jay Gottlieb, Chairman and President
Reliability Incorporated