REFLECT SCIENTIFIC, INC.

Condensed Consolidated Statements of OperationsCONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS

(Unaudited)(UNAUDITED)

The accompanying notes are an integral part of these condensed consolidated financial statements.

REFLECT SCIENTIFIC, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

For the

Nine Months Ended

September 30,

The accompanying notes are an integral part of these condensed consolidated financial statements.

REFLECT SCIENTIFIC, INC.

Notes to the Condensed Consolidated Financial Statements

September 30, 2017March 31, 2023

(Unaudited)

NOTE 1 -

1—BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Reflect Scientific, Inc. (the “Company,” “we,” “us,” or “our”) have been prepared by the Company pursuant to accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have(“GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all information and footnotes required by GAAP for complete financial statements. The December 31, 2022 consolidated balance sheet data was derived from audited financial statements but do not include all disclosures required by GAAP. However, except as disclosed herein, there has been condensed or omittedno material change in accordancethe information disclosed in the notes to the consolidated financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K, as filed with rules and regulations of the Securities and Exchange Commission.Commission on March 31, 2023. The information furnished in the interim unaudited condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which,should be read in conjunction with those consolidated financial statements included in the Form 10-K. In the opinion of management, areall adjustments considered necessary for a fair presentation of such financial statements.  Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements, be read in conjunction with the Company’s most recent audited consolidated financial statements and notes thereto included in its December 31, 2016 financial statements.consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine months ended September 30, 2017March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.2023.

NOTE 2 -

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND LINE OF BUSINESS:

Cole, Inc. (the Company) was incorporated under the laws of the State of Utah on November 3, 1999. The Company was organized to engage in any lawful activity for which corporations may be organized under the Utah Revised Business Corporation Act.  On December 30, 2003 the Company changed its name to Reflect Scientific, Inc.

Reflect Scientific designs, develops and sells scientific equipment for the Life Science and Manufacturing industries. The Company’s business activities include the manufacture and distribution of unique laboratory consumables and disposables such as filtration and purification products, customized sample handling vials, electronic wiring assemblies, high temperature silicone, graphite and vespel/graphite sealing components for use by original equipment manufacturers (“OEM”) in the chemical analysis industries, primarily in the field of gas/liquid chromatography.  

The Company’s chemical detector products serve the analytical instrumentation sector of the Life Sciences market. These optically based chemical detection instruments provide a cost-effective, high-performance alternative for original equipment manufacturers (OEM).   One major use for these detectors is the analysis of whole blood for metabolic diseases.

SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements include the accounts of Reflect Scientific, Inc. and its wholly owned subsidiaries, Cryometrix and Julie Martin Scientific Technology.  Intercompany transactions and accounts have been eliminated in consolidation.

NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS

USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.

REVENUE RECOGNITION:  Revenue is only recognized on product sales once the product has been shipped to the customer, persuasive evidence of an agreement exists, the price is fixed or determinable, and collectability is reasonably assured.  The Company sells its products in bothconsiders the USapplicability and internationally through direct sales and independent distributors.  

ACCOUNTS RECEIVABLE:  Accounts receivables are presented netimpact of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. At September 30, 2017 and December 31, 2016, the Company had accounts receivable, net of the allowance, of $206,000 and $73,424, respectively.  At September 30, 2017 and December 31, 2016 the allowance for doubtful accounts was $4,000 and $4,000, respectively.

INVENTORY:

Inventories are presented net of an allowance for obsolescence and are stated at the lower of cost or market value based upon the average cost inventory method.  The Company’s inventory consists of parts for scientific vial kits, refrigerant gases, components for detectors and ultra-low temperature freezers which it builds and other scientific items.  At September 30, 2017, inventory was made up of $254,258 of finished goods, less an allowance for obsolescence of $22,652.  At December 31, 2016, inventory was comprised of $249,619 of finished goods, less an allowance for obsolescence of $22,652.  There were no raw materials or work in progress for either period presented.

INTANGIBLE ASSETS:  Costs to obtain or develop patents are capitalized and amortized over the life of the patents. Patents are amortized from the date the Company acquires or is awarded the patent over their estimated useful lives, which range from 5 to 15 years.  An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. We perform an impairment analysis on an annual basis.  The Company’s analysis did not indicate any impairment of intangible assets as of the impairment analysis conducted December 31, 2016.

GOODWILL: Goodwill represents the excess of the Company’s acquisition cost over the fair value of net assets of the acquisition. Goodwill is not amortized, but is tested for impairment annually, or when a

triggering event occurs. As described in ACS 360, the Company has adopted the two step goodwill impairment analysis that includes quantitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. A fair-value-based test is applied at the overall Company level. The test compares the estimated fair value of the Company at the date of the analysis to the carrying value of its net assets. The analysis also requires various judgments and estimates, including general and macroeconomic conditions, industry and the Company’s targeted market conditions, as well as relevant entity-specific events, such as a change in the market for the Company’s products and services. After considering the qualitative factors that would indicate a need for interim impairment of goodwill and applying the two-step process described in ASC 360, management has determined that the value of Company’s assets is not more likely than not less than the carrying value of the Company including goodwill, and that no impairment charge needs be recognized during the reporting periods.

RESEARCH AND DEVELOPMENT EXPENSE - The Company accounts for research and development costs in accordance with the Financialall Accounting Standards Board's Accounting Standard Codification Topic 730 “Research and Development".  Under ASC 730, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred.  Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved.  Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. 

EARNINGS PER SHARE: The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the period.  Diluted EPS is computed by dividing net earnings by the weighted-average number of common shares and dilutive common stock equivalents during the period.  Common stock equivalents are not used in calculating dilutive EPS when their inclusion would be anti-dilutive.  At September 30, 2017 and 2016, the Company had no common stock equivalents.

RECENT ACCOUNTING PRONOUNCEMENTS:  In May 2017, the Financial Accounting Standards Board ("FASB"Updates (“ASUs”) issued ASU No. 2017-09, "Stock Compensation - Scope of Modification Accounting". This ASU requires all modifications to be accounted for as a modification unless the fair value, vesting conditions and classification of the award as equity or liability are the same as the classification of the original award immediately before the original award is modified. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017 and for interim periods therein. The Company does not believe this ASU will have a material impact on its consolidated financial position, results of operation or cash flows.

In February 2016,by the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2016-02, “Leases.”  This ASU requires lessees to put most leases on their balance sheets but recognize expenses in the income statement in a manner similar to current accounting treatment.  This ASU changes the guidance on sale-leaseback transactions, initial direct costs and lease execution costs, and, for lessors, modifies the classification criteria and the accounting for sales-type and direct financing leases.  For public business entities, this ASU is effective for annual periods beginning after December 15, 2018, and interim periods therein.  Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial

statements.  The Company is currently evaluating the impact of this ASU on its financial statements and disclosures.

In August 2015, the ASB issued ASU 2015-14, Revenue from Contracts with Customer (Topic 606): Deferral of the Effective Date. This ASU defers the effective date of ASU 2014-09, Revenue from Contracts with Customer (Topic 606) for all entities by one year. As a result, all entities will be required to apply the provisions of ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently assessing the adoption date and impact the guidance in this ASU will have, if any, on our consolidated results of operations, cash flows, or financial position.

The Company has reviewedevaluated all other recently issued, but not yet adopted,recent accounting standards in orderpronouncements and determined that the adoption of pronouncements applicable to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. Based on that review, the Company believes that none of these pronouncements willhas not had or is not expected to have a significant effectmaterial impact on its current or future earnings or operations.the Company's condensed consolidated financial statements.

NOTE 3   GOING CONCERN3—DISAGGREGATION OF REVENUES

Our revenue is disaggregated based on product category and geographical region. We recognize revenue from the sale of scientific equipment for the life sciences and manufacturing industries. Our products range from non-mechanical Cyrometrix freezers, chillers, and original equipment manufacturer (“OEM”) value-added products and components for the life sciences industry.

The Company continues to accumulate significant operating lossesCompany’s revenues for the three months ended March 31, 2023 and has an accumulated deficit of $19,579,2292022 are disaggregated as follows:

NOTE 4—INVENTORIES

Inventories at September 30, 2017.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Management has taken a number of actions to reduce expenses. Management is seeking additional funding through the capital markets to facilitate the settlementMarch 31, 2023 and December 31, 2022 consisted of the following:

Inventory balances are composed of finished goods. Raw materials and work in process inventory are immaterial to the condensed consolidated financial statements.

NOTE 5—LEASES

The following was included in our condensed consolidated balance sheet at March 31, 2023 and December 31, 2022:

Total lease expense for the three months ended March 31, 2023 and 2022 is as follows:

As of March 31, 2023, maturities of operating lease liabilities were as follows:

NOTE 6—STOCKHOLDERS’ EQUITY

Common Stock

As of March 31, 2023, the Company was authorized to issue 100,000,000 common shares. As of March 31, 2023 and December 31, 2022, the Company had 85,214,086 common shares issued and outstanding.

Restricted Stock Awards

Below is a table summarizing the changes in restricted stock awards outstanding during the three months ended March 31, 2023: 

Stock-based compensation expense of $6,875 and $12,844 was recorded during the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, the remaining debentures, as well asunrecognized stock-based compensation expense related to provide operating capital for its operations.  However, therenon-vested restricted stock awards is no assurance that additional funding will$48,125 and is expected to be available on acceptable terms, if at all.recognized over 1.75 years.

NOTE 4 – SUBSEQUENT EVENTS7—EARNINGS (LOSS) PER SHARE

In accordance with ASC 855-10 management reviewed all material events throughThe computation of weighted average shares outstanding and the datebasic and diluted earnings per share for the three months ended March 31, 2023 and 2022 consisted of this report. There are no material subsequent events to report.the following:

For the three months ended March 31, 2023,there were 450,000 common share equivalents excluded from the diluted earnings per share calculation as their effect is anti-dilutive.

Item

ITEM 2. Management’s DiscussionMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management’s discussion and Analysisanalysis of Financial Conditionfinancial condition and Resultsresults of Operationsoperations provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following financial information is derived from our financial statements and should be read in conjunction with such financial statements and notes thereto set forth elsewhere herein.

Use of Terms

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,” “our” and the “Company” refer to Reflect Scientific, Inc., and its consolidated subsidiaries.

Special Note Regarding Forward-LookingForward Looking Statements

This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

The Private Securities Litigation Reform Act of 1995 (the “Act”) provides a safe harbor for forward-looking statements made by or on behalf of our Company. Our Company and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this Annual Report and other filings with the Securities and Exchange Commission and in reportsreport relate only to our Company’s stockholders. Management believes that all statements that express expectations and projections with respect to future matters,events or information as well as from developments beyond our Company’s control including changes in global economic conditions are forward-looking statements within the meaning of the Act. These statements are madedate on the basis of management’s views and assumptions, as

of the timewhich the statements are made regardingin this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Overview

Reflect Scientific is engaged in the manufacture and distribution of innovative products targeted at the life science market. Our customers include hospitals, diagnostic laboratories, pharmaceutical and biotech companies, cold chain management, universities, government and private sector research facilities, chemical and industrial companies.

Our goal is to provide our customers with the best solution for their needs. This philosophy extends into our business performance.strategies and acquisition plans. Through a series of strategic acquisitions, we acquired technology that has enabled us to expand our line of products to align with, and capitalize on, market needs. Our growing product portfolio includes ultra-low temperature freezers, blast freezers, solvent chillers and refrigerated transportation in addition to supplying OEM products to the life sciences industry.

Our Cryometrix brand ultra-low temperature and blast freezers innovative design enables our customers to save substantially on energy costs related to cryogenic storage. Ultra-low temperature freezers are used worldwide for the storage of vaccines, DNA, RNA, proteins and many other biological and chemical substances. There canis a growing need for energy efficient, reliable ultra-low temperature storage units. Our Cryometrix freezers are targeted to this growing market and we have had tremendous success in blood storage and pharmaceutical manufacturing applications. The application of this technology for use in refrigerated trailers (commonly called “reefers”) used to transport goods which need to be no assurance however,maintained in a cold environment significantly broadens the market for this technology. The utilization of this technology in reefers eliminates the current method of cooling, which uses engines run on hydrocarbon fuels. The Cryometrix technology is pollutant free and is more efficient and cost effective than the technologies currently used. Reflect Scientific has added a new product line of solvent chillers. Solvent chillers are used in natural products extraction for optimizing product yield and purity.

Recent Developments

None.

Impact of Coronavirus Pandemic

Starting in late 2019, a novel strain of the coronavirus, or COVID-19, began to rapidly spread around the world and every state in the United States. Most states and cities have at various times instituted quarantines, restrictions on travel, “stay at home” rules, social distancing measures and restrictions on the types of businesses that management’s expectationscould continue to operate, as well as guidance in response to the pandemic and the need to contain it. At this time, there continues to be significant volatility and uncertainty relating to the full extent to which the COVID-19 pandemic and the various responses to it will necessarily comeimpact our business, operations and financial results.

The pandemic has impacted and may continue to pass. Factorsimpact some suppliers and manufacturers on some of our products. As a result, we have faced and may continue to face longer supply chain lead-times and higher logistics costs. Additionally, costs for raw materials have also started to increase due to availability, which could negatively affect its business and financial results.

The extent to which the pandemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this report, including the effectiveness of vaccines and other treatments for COVID-19, and other new information that may affect forward- looking statements include a wide rangeemerge concerning the severity of factors that could materially affectthe pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic and the current financial, economic and capital markets environment, and future developments and performance, including the following:

·

Changes in Company-wide strategies, which may result in changes in the types or mixglobal supply chain and other areas present material uncertainty and risk with respect to our performance, financial condition, results of businesses in which our Company is involved or chooses to invest;

·

Changes in U.S., global or regional economic conditions;

·

Changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external financing for our operations and investments;cash flows.

·

Increased competitive pressures, both domestically and internationally;

·

Legal and regulatory developments, such as regulatory actions affecting environmental activities;

·

The imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls;

·

Adverse weather conditions or natural disasters, such as hurricanes and earthquakes, labor disputes, which may lead to increased costs or disruption of operations.

This list of factors that may affect future performance and the accuracy of forward-looking statements are illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

Critical Accounting Policies and Estimates

The preparation of the unaudited condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts reported in the unaudited Financial Statementsof assets, liabilities, revenues and accompanying notes.  Management bases itsexpenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results couldmay differ from these estimates under different assumptions or conditions.  The Company believes there have been no significant changes duringestimates.

For a description of the nine month period ended September 30, 2017, to the items disclosed as significant accounting policies that, in management's Notes tomanagement’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial StatementsCondition and Results of Operations – Critical Accounting Policies and Estimates” in the Company'sour Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2022 filed with the SEC on March 31, 2023.

PlanDuring the three months ended March 31, 2023, there were no significant changes in our accounting policies and estimates.

Results of OperationOperations

Comparison of the Three Months Ended March 31, 2023 and Business Growth2022

Our revenuesThe following table sets forth key components of our results of operations during the three month reporting periods increased 52% during 2017 compared to 2016 revenues.  

Our efforts continue to be focused on increasing the salesmonths ended March 31, 2023 and 2022, both in dollars and as a percentage of our life science consumables and detectors while, at the same time, working to enhance the design of our liquid nitrogen refrigeration products.  Of those liquid nitrogen refrigeration products, the ultra-low temperature freezer is receiving highest priority. We have received positive feedback of the improvements and enhancements made to the design of the ultra-low temperature freezer.  We also continue work on the refrigerated trailer, or “reefer.”  We have our first manufactured unit operational, have conducted a number of road tests and are working to develop alliances with contract manufacturers for those products.

revenues.

We also continue

Revenues. Revenues decreased by $512,449, or 68.0%, to focus on the expansion of our detector.  We believe that the enhanced functionality of our latest detector design, coupled with its low cost, provides us with a competitive edge over products currently being sold in that specialized market.

Concurrent with the development and commercialization of the above products, we have completed our on-line catalog and are making progress in enrolling new distributors for our consumable products.  

An analysis of operating results for the three and nine months ended September 30, 2017 follows.

Results of Operations

Three Months Ended September 30, 2017 and 2016

Revenues increased during the quarter ended September 30, 2017, to $325,870 from $214,404 for the quarter ended September 30, 2016, an increase of $111,466.  The increase results primarily from the sale of ultra-low temperature freezers which generated revenue of $106,400 in 2017 but no revenue in 2016. We are continuing work to increase our market penetration in the ultra-low temperature freezer market.

Cost of goods increased in the quarter ending September 30, 2017, as compared to September 30, 2016, to $84,636 from $74,581, an increase of $10,055. The small cost of goods increase, in comparison to the increase in revenue, is attributable to the sale of ultra-low temperature freezers, which carry higher margins than the specialty laboratory products.  We realized a gross profit percentage of 74%$241,127 for the three months ended September 30, 2017, compared to 65%March 31, 2023 from $753,576 for the three months ended September 30, 2016.March 31, 2022. The gross profit percentage is dependent on the mixchange was primarily due to a significant decrease in freezer and chiller sales and ongoing supply chain delays with manufacturers.

Cost of product sales, which varies from quartergoods sold. Cost of good sold decreased by $120,656, or 51.5%, to quarter.  We continue to actively work to obtain more favorable pricing from our vendors in order to increase the margins realized on all product lines.  

Operating expenses decreased to $182,177 in the three months ended September 30, 2017, a decrease of $7,511 over the expenses of $189,688 incurred in the three month period ended September 30, 2016.  The reduction is attributable to decreases in licenses, bank fees and auto expenses, offset by small increases in a number of other expense categories. While we continue to monitor and minimize operating costs, we also realize that certain levels of expenditures are required in order to commercialize the products and achieve market penetration.  

The net profit for the three month period ended September 30, 2017 was $59,057, an increase of $108,977 from the $49,920 loss for the three month period ended September 30, 2016.  Management continues to

look for opportunities to increase sales, improve gross margins and control ongoing operating expenses.

The net profit of $59,057 for the three month period ended September 30, 2017 represents a profit of $0.00 per share.  This compares to the net loss of $49,920, or $(0.00) per share,$113,633 for the three months ended September 30, 2016.March 31, 2023 from $234,289 for the three months ended March 31, 2022. The change was primarily due to decreased freezer and chillers sales.

Nine Months Ended September 30, 2017Gross profit. Our gross profit as a percentage of sales decreased to 52.9% for the three months ended March 31, 2023, compared to 68.9% for the three months ended March 31, 2022. The change in gross profit percentage was primarily due to the decrease in freezer and 2016chiller sales (freezer and chillers have higher margins than other products) and increased product costs.

RevenuesSalaries and wages. Salaries and wages decreased by $8,004, or 4.7%, to $162,275 for the three months ended March 31, 2023 from $170,279 for the three months ended March 31, 2022. Such decrease was primarily due to decreased headcount.

General and administrative. General and administrative expenses decreased by $10,186, or 8.7%, to $106,992 for the three months ended March 31, 2023 from $117,178 for the three months ended March 31, 2022. The lower expense level was not the result of significant savings in any one expense category but is, rather, the cumulative result of small savings in numerous expenses, offset by increased public filing and insurance costs.

Research and development. Research and development expenses decreased by $19,259, or 76.0%, to $6,066 for the three months ended March 31, 2023 from $25,325 for the three months ended March 31, 2022. The change was primarily a result of decreased enhancements to the ultra-cold CBD oil chiller during the nine month period ended September 30, 2017, to $880,072 from $975,761quarter.

Net income (loss). As a result of the cumulative effect of the factors described above, our net loss was $147,839 for the nine month periodthree months ended September 30, 2016, a decrease of $95,489.  The decrease results primarily from the sale of ultra-low temperature freezers which generated revenue of $170,253 in 2017 compared to $231,340 in 2016. We are continuing work to increase our market penetration in the ultra-low temperature freezer market.

Due to lower sales during the reporting period, cost of goods decreased in the nine month period ending September 30, 2017,March 31, 2023, as compared to September 30, 2016, to $266,328 from $286,946, a decreasenet income of $20,618. The change results from lower ultra-low temperature freezer sales, which carry higher margins than the specialty lab products.  We realized a gross profit percentage of 70%$206,505 for the ninethree months ended September 30, 2017, compared to 71% for the nine months ended September 30, 2016.  The gross profit percentage is dependent on the mix of product sales, which varies from quarter to quarter. We continue to actively work to obtain more favorable pricing from our vendors in order to increase the margins realized on all product lines.  

Operating expenses decreased to $543,978 in the nine months ended September 30, 2017, a decrease of $76,733 over the expenses of $620,751 incurred in the nine month period ended September 30, 2016.  The reduction was primarily the result of lower expenditures for research and development of $27,047, promotion expense of commission expense of $6,783, licenses of $11,031 and promotion expense of $3,313. While we continue to monitor and minimize operating costs, we also realize that certain levels of expenditures are required in order to commercialize the products and achieve market penetration.  

The net profit for the nine month period ended September 30, 2017 was $69,766, an increase of $2,002 from the $67,764 profit for the nine month period ended September 30, 2016.March 31, 2022. Management continues to look for opportunities to increase sales, improve gross margins and control ongoing operating expenses.

The net profit of $69,766 for the nine month period ended September 30, 2017 represents a profit of $0.00 per share.  This compares to the net profit of $67,764, or $0.00 per share for the nine months ended September 30, 2016.

Seasonality and Cyclicality

We do not believe our business is cyclical.

Liquidity and Capital Resources

Our cash resources at September 30, 2017, were $175,357, with accounts receivableAs of $206,000, net of allowance,March 31, 2023 and inventory of $231,606, net of allowance. Our working capital on September 30, 2017, was $578,174.  Working capital on December 31, 2016 was $508,387.2022, our current assets exceeded current liabilities by $2,052,802 and $2,179,237, respectively, and we had cash and cash equivalents of $1,199,069 and $1,381,927, respectively. To date, we have financed our operations primarily through revenue generated from operations, cash proceeds from financing activities, borrowings, and equity contributions by our shareholders.

For the nine month period ended September 30, 2017,Summary of Cash Flow

The following table provides detailed information about our net cash flow for the period indicated:

Net cash used byin operating activities was $88,607 which compares$182,858 for the three months ended March 31, 2023, as compared to $32,145 net cash provided by operating activities of $105,609 for the nine month periodthree months ended September 30, 2016.  March 31, 2022. Significant factors affecting operating cash flows was primarily a result of increased accounts payable and accrued expense payments and decreased net income during the three months ended March 31, 2023.

We continue working to enhance our on-line ordering system to increase sales, develop the market for our ultra-low temperature freezers, work with current vendors to obtain more favorable pricing, and locate new vendors to provide opportunities to further reduce our cost of goods.

We will continue to focus our efforts on our core business activities while pursuing capital resources and evaluating potential future acquisitions which fit within and enhance our core business.

Off-Balance Sheet Arrangements

We lease office and warehouse space underhave no off-balance sheet arrangements that have or are reasonably likely to have a non-cancelable operating leasecurrent or future effect on our financial condition, changes in Utah.  The office lease has been extended through November 30, 2020.  Future minimum lease payments under the operating lease at September 30, 2017, are $135,277 for that facility.  In addition, on July 7, 2017, the Company entered into an automobile lease with a termfinancial condition, revenues or expenses, results of four years.  . Future minimum lease payments under this lease are $30,816 at September 30, 2017.  The lease has an expiration date of July 7, 2021.operations, liquidity, capital expenditures or capital resources.

ItemITEM 3. Quantitative and Qualitative Disclosure about Market RiskQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required.applicable.

ItemITEM 4. Controls and ProceduresCONTROLS AND PROCEDURES.

(a)

Evaluation of Disclosure Controls and Procedures.Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to our management, including our chief executive officer and chief principal officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e) of the end of the period covered by this Quarterly Report, weExchange Act, our management has carried out an evaluation, with the participation and under the supervision and with the participation of our Chief Executive Officerchief executive officer and Principal Financial Officer,principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.procedures, as of March 31, 2023. Based upon, and as of the date of this evaluation, our Chief Executive Officerchief executive officer and Principal Financial Officer concludedprincipal financial officer determined that information required to be disclosed is recorded, processed, summarized and reported within the specified periods, and is accumulated and communicated to management, including our Chief Executive Officer and Principal Financial Officer, to allow for timely decisions regarding required disclosure of material information required to be included in our periodic Securities and Exchange Commission reports.  Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures are not effective at that reasonable assurance level as of the end of the period covered by this report based upon our current level of transactions and staff.  However, it should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote

(b)

Changes in Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act.  Management reviewed our internal controls over financial reporting, and there have been no changes in our internal controls over financial reporting as of March 31, 2023 to the material weaknesses described in Item 9A “Controls and Procedures” of our Annual Report on Form 10-K for the nine month periodfiscal year ended September 30, 2017 that have materially affected, or are like to affect,December 31, 2022, our internaldisclosure controls over financial reporting.and procedures were not effective.

PART II -

OTHER INFORMATION

ITEM 1. Legal ProceedingsLEGAL PROCEEDINGS.

None;From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 2. Unregistered Sales of Equity Securities and Use of ProceedsUNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Recent Sales of Unregistered SecuritiesNone.

None; not applicable.

Use of Proceeds of Registered Securities

None; not applicable.

Purchases of Equity Securities by Us and Affiliated Purchasers

During the nine months ended September 30, 2017, we have not purchased any equity securities nor have any officers or directors of the Company.

ITEM 3. Defaults Upon Senior SecuritiesDEFAULTS UPON SENIOR SECURITIES.

NoneNone.

ITEM 4. Mine Safety DisclosureMINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. Other Information.OTHER INFORMATION.

NoneNone.

ITEM 6. Exhibits

(a)Exhibits.

Exhibits.

Exhibits

Additional Exhibits Incorporated by Reference

* Previously filed and incorporated by reference.

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.

Reflect Scientific, Inc.

(Registrant)

Date:

November 13, 2017

May 11, 2023                                                        By: /s/ Kim Boyce

Kim Boyce, CEO, President and Director

Date:

November 13, 2017

May 11, 2023                                                         By: /s/ Tom Tait

Tom Tait, Vice President and Director

Date:

November 13, 2017

May 11, 2023                                                         By: /s/ Keith MerrellKim Boyce

        Keith Merrell,Kim Boyce, CFO, Principal Financial

Officer