UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q10−Q
(Mark One)
☒QUARTERLY REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedended: September 30, 20212022
or
☐TRANSITION REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ofOF 1934
For the transition period from ______________________ to _______________________
Commission File Number Number: 000-31377
REFLECT SCIENTIFIC, INC.
(Exact name of registrant as specified in its charter)
|
| |
| (Exact name of registrant as specified in its charter) |
| Utah | 87-0642556 | |
| (State or other jurisdiction of
| ( | |
1266 South 1380 West, Orem, | 84058 | |
(Address of principal executive offices) | (Zip Code) |
| (801) 226-4100 | ||
| ||
(Registrant’s telephone number, including area code) | ||
| N/A |
| (Former name, former address and formal fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act: None.None
Indicate by check mark whether the Registrant:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrantregistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Yes ☒ No ☐
Indicate by check mark whether the Registrantregistrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
| Accelerated filer | ☐ | ||
Non-accelerated filer ☒ |
| Smaller reporting company | ☒ | ||
Emerging growth company☐ |
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingcomply with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrantregistrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Indicate by check mark whether the Registrant has submitted electronically on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
1
Applicable Only to Issuers Involved in Bankruptcy Proceedings During the Preceding Five Years:
Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Not applicable.
Applicable Only to Corporate Issuers:
Indicate the number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date.
|
|
84,739,086 shares of $0.01 par value common stock on November 15, 2021
As of November 7, 2022, there were 84,989,086 common shares of the registrant issued and outstanding.
2
REFLECT SCIENTIFIC, INC.
Quarterly Report on Form 10-Q
Period Ended September 30, 2022
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
| |
| |
|
|
|
|
|
|
|
|
|
|
| Item 1: | Financial Statements | 3 |
| Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| Item 3: | Quantitative and Qualitative Disclosure about Market Risk | |
| Item 4: | Controls and Procedures | 18 |
PART II
OTHER INFORMATION
| Item 1: | ||
| 18 | ||
| Item | 18 | |
| Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | |
| Item 3: | Defaults Upon Senior Securities | |
| Item 4: | Mine Safety Disclosure | |
| Item 5: | Other Information | |
| Item 6: | ||
2
3
PART I
Part I - FINANCIAL INFORMATION
Item
ITEM 1. Financial StatementsFINANCIAL STATEMENTS.
Reflect Scientific, Inc.
REFLECT SCIENTIFIC, INC.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| Page | ||
| Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021 | 5 | |
| Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited) | 6 | |
| Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited) | 7 | |
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (Unaudited) | 8 | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 9 |
September 30, 2021
The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made. These financial statements should be read in conjunction with the 10-12 6/A for the period ended December 31, 2020, accompanying notes, and with the historical financial information of the Company.
4
REFLECT SCIENTIFIC, INC.
Condensed Consolidated Balance SheetsCONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
| September 30, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 1,324,706 | $ | 1,473,924 | ||||
| Accounts receivable, net | 115,561 | 178,649 | ||||||
| Inventories, net | 904,076 | 624,486 | ||||||
| Prepaid expenses and other current assets | 15,430 | 28,306 | ||||||
| Total Current Assets | 2,359,773 | 2,305,365 | ||||||
| Operating lease right-of-use assets | 68,598 | 110,483 | ||||||
| Goodwill | 60,000 | 60,000 | ||||||
| Other long-term assets | 3,100 | 3,100 | ||||||
| TOTAL ASSETS | $ | 2,491,471 | $ | 2,478,948 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 59,358 | $ | 66,837 | ||||
| Customer deposits | 9,014 | 118,566 | ||||||
| Current portion of operating lease liabilities | 61,286 | 56,446 | ||||||
| Total Current Liabilities | 129,658 | 241,849 | ||||||
| Operating lease liabilities, net of current portion | 10,774 | 57,393 | ||||||
| TOTAL LIABILITIES | 140,432 | 299,242 | ||||||
| Stockholders' Equity | ||||||||
| Preferred Stock, $0.01 par value, 5,000,000 shares authorized; none issued and outstanding | - | - | ||||||
| Common shares, $0.01 par value, 100,000,000 shares authorized; 84,989,086 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | 849,890 | 849,890 | ||||||
| Additional paid-in capital | 20,247,556 | 20,226,931 | ||||||
| Accumulated deficit | (18,746,407 | ) | (18,897,115 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 2,351,039 | 2,179,706 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,491,471 | $ | 2,478,948 | ||||
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
CURRENT ASSETS | ||||||||
| ||||||||
Cash | $ | 1,143,998 | $ | 642,542 | ||||
Accounts receivable, net | 147,688 | 340,427 | ||||||
Inventory, net | 585,057 | 438,606 | ||||||
Prepaid assets | 22,541 | 24,134 | ||||||
| ||||||||
Total Current Assets | 1,899,284 | 1,445,709 | ||||||
| ||||||||
OTHER ASSETS | ||||||||
| ||||||||
Operating lease right-of-use assets | 124,089 | 167,641 | ||||||
Goodwill | 60,000 | 60,000 | ||||||
Deposits | 3,100 | 3,100 | ||||||
| ||||||||
Total Other Assets | 187,189 | 230,741 | ||||||
| ||||||||
TOTAL ASSETS | $ | 2,086,473 | $ | 1,676,450 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
54
REFLECT SCIENTIFIC, INC.
Condensed Consolidated Balance Sheets (Continued)CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
LIABILITIES AND(UNAUDITED)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | 253,233 | $ | 716,145 | $ | 1,562,424 | $ | 1,985,640 | ||||||||
| Cost of goods sold | 122,204 | 242,343 | 552,314 | 621,317 | ||||||||||||
| Gross profit | 131,029 | 473,802 | 1,010,110 | 1,364,323 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Salaries and wages | 154,648 | 146,697 | 484,492 | 429,417 | ||||||||||||
| General and administrative | 94,781 | 149,672 | 315,734 | 422,036 | ||||||||||||
| Research and development | 14,820 | 17,544 | 58,474 | 45,697 | ||||||||||||
| Total Operating Expenses | 264,249 | 313,913 | 858,700 | 897,150 | ||||||||||||
| INCOME (LOSS) FROM OPERATIONS | (133,220 | ) | 159,889 | 151,410 | 467,173 | |||||||||||
| Other Income | ||||||||||||||||
| Gain on forgiveness of debt | - | - | - | 111,265 | ||||||||||||
| Total Other Income | - | - | - | 111,265 | ||||||||||||
| NET INCOME (LOSS) BEFORE INCOME TAXES | (133,220 | ) | 159,889 | 151,410 | 578,438 | |||||||||||
| INCOME TAX BENEFIT (EXPENSE) | (702 | ) | - | (702 | ) | - | ||||||||||
| NET INCOME (LOSS) | $ | (133,922 | ) | $ | 159,889 | $ | 150,708 | $ | 578,438 | |||||||
| Earnings (loss) per common share | ||||||||||||||||
| Basic | $ | (0.00 | ) | $ | 0.00 | $ | 0.00 | $ | 0.01 | |||||||
| Diluted | $ | (0.00 | ) | $ | 0.00 | $ | 0.00 | $ | 0.01 | |||||||
| Weighted average shares outstanding | ||||||||||||||||
| Basic | 84,989,086 | 84,739,086 | 84,989,086 | 84,739,086 | ||||||||||||
| Diluted | 84,989,086 | 84,739,086 | 85,739,086 | 84,739,086 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
REFLECT SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
CURRENT LIABILITIES | ||||||||
| ||||||||
Accounts payable and accrued expense | $ | 89,718 | $ | 70,204 | ||||
Contract liabilities | 78,214 | 113,643 | ||||||
Operating lease liabilities – short term | 54,901 | 58,682 | ||||||
Income taxes payable | 0- | 100 | ||||||
| ||||||||
Total Current Liabilities | 222,833 | 242,629 | ||||||
| ||||||||
| ||||||||
LONG-TERM LIABILITIES | ||||||||
| ||||||||
Operating lease liability – long-term | 72,061 | 109,338 | ||||||
Loan – long-term | 0- | 111,342 | ||||||
| ||||||||
Total Liabilities | 294,894 | 463,309 | ||||||
| ||||||||
STOCKHOLDERS’ EQUITY | ||||||||
| ||||||||
Preferred stock, $0.01 par value, authorized 5,000,000 shares; NaN shares issued and outstanding | 0- | 0- | ||||||
Common stock, $0.01 par value, authorized 100,000,000 shares; 84,739,086 and 84,739,086 issued and outstanding, respectively | 847,390 | 847,390 | ||||||
Additional paid in capital | 20,201,931 | 20,201,931 | ||||||
Accumulated deficit | (19,257,742 | ) | (19,836,180 | ) | ||||
Total Stockholders’ Equity | 1,791,579 | 1,213,141 | ||||||
| ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,086,473 | $ | 1,676,450 | ||||
Three and Nine Months Ended September 30, 2022
| Common Shares | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance at December 31, 2021 | 84,989,086 | $ | 849,890 | $ | 20,226,931 | $ | (18,897,115 | ) | $ | 2,179,706 | ||||||||||
| Stock-based compensation | - | - | 12,844 | - | 12,844 | |||||||||||||||
| Net income | - | - | - | 206,505 | 206,505 | |||||||||||||||
| Balance at March 31, 2022 | 84,989,086 | 849,890 | 20,239,775 | (18,690,610 | ) | 2,399,055 | ||||||||||||||
| Stock-based compensation | - | - | 906 | - | 906 | |||||||||||||||
| Net income | - | - | - | 78,125 | 78,125 | |||||||||||||||
| Balance at June 30, 2022 | 84,989,086 | $ | 849,890 | $ | 20,240,681 | $ | (18,612,485 | ) | $ | 2,478,086 | ||||||||||
| Stock-based compensation | - | - | 6,875 | - | 6,875 | |||||||||||||||
| Net loss | - | - | - | (133,922 | ) | (133,922 | ) | |||||||||||||
| Balance at September 30, 2022 | 84,989,086 | $ | 849,890 | $ | 20,247,556 | $ | (18,746,407 | ) | $ | 2,351,039 | ||||||||||
Three and Nine Months Ended September 30, 2021
| Common Shares | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance at December 31, 2020 | 84,739,086 | $ | 847,390 | $ | 20,201,931 | $ | (19,836,180 | ) | $ | 1,213,141 | ||||||||||
| Net income | - | - | - | 247,768 | 247,768 | |||||||||||||||
| Balance at March 31, 2021 | 84,739,086 | 847,390 | 20,201,931 | (19,588,412 | ) | 1,460,909 | ||||||||||||||
| Net income | - | - | - | 170,781 | 170,781 | |||||||||||||||
| Balance at June 30, 2021 | 84,739,086 | 847,390 | 20,201,931 | (19,417,631 | ) | 1,631,690 | ||||||||||||||
| Net income | - | - | - | 159,889 | 159,889 | |||||||||||||||
| Balance at September 30, 2021 | 84,989,086 | $ | 849,890 | $ | 20,201,931 | $ | (19,257,742 | ) | $ | 1,791,579 | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
REFLECT SCIENTIFIC, INC.
Condensed Consolidated Statements of OperationsCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)(UNAUDITED)
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 | ||||||
REVENUES | $ | 716,145 | $ | 610,085 | $ | 1,985,640 | $ | 2,096,799 | ||||||||
| ||||||||||||||||
COST OF GOODS SOLD | 242,343 | 252,112 | 621,317 | 845,281 | ||||||||||||
| ||||||||||||||||
GROSS PROFIT | 473,802 | 357,973 | 1,364,323 | 1,251,518 | ||||||||||||
| ||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Salaries and wages | 146,697 | 77,701 | 429,417 | 406,611 | ||||||||||||
Research and development expense | 17,544 | 754 | 45,697 | 190,610 | ||||||||||||
General and administrative expense | 149,672 | 75,330 | 422,036 | 309,836 | ||||||||||||
Total Operating Expenses | 313,913 | 153,785 | 897,150 | 907,057 | ||||||||||||
| ||||||||||||||||
OPERATING INCOME (LOSS) | 159,889 | 204,188 | 467,173 | 344,461 | ||||||||||||
| ||||||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
Gain on forgiveness of SBA loan | 0- | 0- | 111,265 | 0- | ||||||||||||
Other income | 0- | 0- | 0- | (132) | ||||||||||||
Total Other Income (Expenses) | 0- | 0- | 111,265 | (132) | ||||||||||||
| ||||||||||||||||
NET INCOME (LOSS) BEFORE TAXES | 159,889 | 204,188 | 578,438 | 344,329 | ||||||||||||
| ||||||||||||||||
Income tax benefit (expense) | 0- | 0- | 0- | 0- | ||||||||||||
| ||||||||||||||||
NET INCOME (LOSS) | $ | 159,889 | $ | 204,188 | $ | 578,438 | $ | 344,329 | ||||||||
| ||||||||||||||||
NET INCOME (LOSS) PER SHARE – BASIC AND DILUTED | $ | 0.00 | $ | 0.00 | $ | 0.01 | $ | 0.00 | ||||||||
| ||||||||||||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED | 84,739,086 | 84,739,086 | 84,739,086 | 84,739,086 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
REFLECT SCIENIFIC, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 150,708 | $ | 578,438 | ||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Stock-based compensation | 20,625 | - | ||||||
| Gain on forgiveness of debt | - | (111,265 | ) | |||||
| Amortization of right-of-use assets | 41,885 | 43,552 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 60,088 | 192,739 | ||||||
| Inventories | (279,590 | ) | (146,451 | ) | ||||
| Prepaid expenses and other current assets | 15,876 | 1,493 | ||||||
| Accounts payable and accrued expenses | (7,479 | ) | 19,437 | |||||
| Customer deposits | (109,552 | ) | (41,058 | ) | ||||
| Operating lease liabilities | (41,779 | ) | (35,429 | ) | ||||
| Net cash (used in) provided by operating activities | (149,218 | ) | 501,456 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Net cash provided by investing activities | - | - | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Net cash provided by financing activities | - | - | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (149,218 | ) | 501,456 | |||||
| CASH AND CASH EQUIVALENTS | ||||||||
| Beginning of the period | 1,473,924 | 642,542 | ||||||
| End of the period | $ | 1,324,706 | $ | 1,143,998 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
For the Three and Nine Months Ended September 30, 2021
Additional | |||||||||||||||||||
Common Stock | Paid-In | Accumulated | |||||||||||||||||
Shares | Amount | Capital | Deficit | Total | |||||||||||||||
Balance, December 31, 2020 | 84,739,086 | $ | 847,390 | $ | 20,201,931 | $ | (19,836,180) | $ | 1,213,141 | ||||||||||
| |||||||||||||||||||
Net income for the three-month period ended March 31, 2021 | - | - | - | 247,768 | 247,768 | ||||||||||||||
| |||||||||||||||||||
Balance, March 31, 2021 | 84,739,086 | 847,390 | 20,201,931 | (19,588,412) | 1,460,909 | ||||||||||||||
| |||||||||||||||||||
Net income for the three-month period ended June 30, 2021 | - | - | - | 170,781 | 170,781 | ||||||||||||||
| |||||||||||||||||||
Balance – June 30, 2021 | 84,739,086 | 847,390 | 20,201,931 | (19,417,631) | 1,631,690 | ||||||||||||||
| |||||||||||||||||||
Net income for the three-month period ended September 30, 2021 | - | - | - | 159,889 | 159,889 | ||||||||||||||
| |||||||||||||||||||
Balance, September 30, 2021 | 84,739,086 | $ | 847,390 | $ | 20,201,931 | $ | (19,257,742) | $ | 1,791,579 | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
REFLECT SCIENIFIC, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
For the Three and Nine Months Ended September 30, 2020
Additional | |||||||||||||||||||
Common Stock | Paid-In | Accumulated | |||||||||||||||||
Shares | Amount | Capital | Deficit | Total | |||||||||||||||
Balance, December 31, 2019 | 84,739,086 | $ | 847,390 | $ | 20,201,931 | $ | (20,496,295) | $ | 553,026 | ||||||||||
| |||||||||||||||||||
Net income for the three-month period ended March 31, 2020 | - | - | - | 165,595 | 165,595 | ||||||||||||||
| |||||||||||||||||||
Balance, March 31, 2020 | 84,739,086 | 847,390 | 20,201,931 | (20,330,700) | 718,621 | ||||||||||||||
| |||||||||||||||||||
Net loss for the three-month period ended June 30, 2020 | - | - | - | (25,454) | (25,454) | ||||||||||||||
| |||||||||||||||||||
Balance – June 20, 2020 | 84,739,086 | 847,390 | 20,201,931 | (20,356,154) | 693,167 | ||||||||||||||
| |||||||||||||||||||
Net profit for the three-month period ended September 30, 2020 | - | - | - | 204,188 | 204,188 | ||||||||||||||
| |||||||||||||||||||
Balance, September 30, 2020 | 84,739,086 | $ | 847,390 | $ | 20,201,931 | $ | (20,151,966) | $ | 897,355 | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
97
REFLECT SCIENTIFIC, INC.
Condensed Consolidated Statements of Cash FlowsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)SEPTEMBER 30, 2022
For the Nine Months Ended September 30, | ||||||||
2021 | 2020 | |||||||
| ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 578,438 | $ | 344,329 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 0- | 2,985 | ||||||
Amortization of operating lease right-of-use asset | 43,552 | 45,376 | ||||||
Gain on forgiveness of SBA loan | (111,265) | 0- | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 192,739 | (17,438) | ||||||
Inventory | (146,451) | (59,237) | ||||||
Prepaid expenses | 1,493 | 21,221 | ||||||
Accounts payable and accrued expenses | 19,437 | (62,831) | ||||||
Operating lease liabilities | (41,058) | (45,992) | ||||||
Customer deposits | (35,429) | (325,902) | ||||||
Net Cash provided by (used in) Operating Activities | 501,456 | (97,489) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | - | - | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Net funds received from PPP loan | 0- | 121,297 | ||||||
Net funds received from line of credit | 0- | (8,238) | ||||||
Net cash provided by financing activities | 0- | 113,059 | ||||||
| ||||||||
NET CHANGE IN CASH | 501,456 | 15,570 | ||||||
| ||||||||
CASH AT BEGINNING OF PERIOD | 642,542 | 555,156 | ||||||
CASH AT END OF PERIOD | $ | 1,143,998 | $ | 570,726 | ||||
| ||||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
Cash Paid For: | ||||||||
Interest | $ | 0- | $ | 588 | ||||
Income taxes | $ | 0- | $ | 0- | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.(UNAUDITED)
10
REFLECT SCIENTIFIC, INC.
Notes to the Condensed Consolidated Financial Statements
September 30, 2021
(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, 2021 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, 2021 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, 2022. 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, 2020 financial statements.consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine months ended September 30, 20212022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.2022.
NOTE 2 - ORGANIZATION AND SUMMARY OF SIGNIFICANT2—RECENT ACCOUNTING POLICIESPRONOUNCEMENTS
ORGANIZATION AND LINE OF BUSINESS:
Reflect Scientific, Inc. (the Company)The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s condensed consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2019. This pronouncement was incorporatedamended under ASU 2019-10 to allow an extension on the lawsadoption date for entities that qualify as a small reporting company. The Company has elected this extension and the effective date for the Company to adopt this standard will be for fiscal years beginning after December 15, 2022. The Company has not completed its assessment of the Statestandard but does not expect the adoption to have a material impact on our condensed consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08 Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU amends ASC 805 to require acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in business combinations. The ASU is effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This ASU should be applied prospectively to acquisitions occurring on or after the effective date of Utah on November 3, 1999 as Cole, Inc.December 15, 2022, and early adoption is permitted. The Company was organizedhas not completed its assessment of the standard but does not expect the adoption to engage in any lawful activity for which corporations may be organized underhave a material impact on our condensed consolidated financial statements.
8
REFLECT SCIENTIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
NOTE 3—DISAGGREGATION OF REVENUES
Our revenue is disaggregated based on product category and geographical region. We recognize revenue from the Utah Revised Business Corporation Act. On December 30, 2003 the Company changed its name to Reflect Scientific, Inc.
Reflect Scientific designs, develops and sellssale of scientific equipment for the Life Sciencelife sciences and Manufacturingmanufacturing 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’s business activities includerevenues for the manufacturethree 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.
SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements include the accounts of Reflect Scientific, Inc. and its wholly owned subsidiary, Cryometrix. Intercompany transactions and accounts have been eliminated in consolidation.
11
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.
We have applied the new revenue standard to all contracts from the date of initial application. We recognize revenue when or as we satisfy a performance obligation. We generally satisfy performance obligations at a point in time upon shipment of goods or, with our freezers, upon final acceptance of the unit by the customer, in accordance with the terms of each contract with the customer.
A part of our customer base is made up of international customers. The table below allocates revenue between domestic and international customers.
For the Three Months Ended | For the Three Months Ended | |||||||||||
September 30, 2021 | September 30, 2020 | |||||||||||
Segments | Total | Total | ||||||||||
Domestic | $ | 422,866 | $ | 422,866 | $ | 373,468 | $ | 373,468 | ||||
International | 293,279 | 293,279 | 236,617 | 236,617 | ||||||||
$ | 716,145 | $ | 716,145 | $ | 610,085 | $ | 610,085 | |||||
| ||||||||||||
| ||||||||||||
Components | $ | 293,266 | $ | 293,266 | $ | 304,995 | $ | 304,995 | ||||
Equipment | 422,879 | 422,879 | 305,090 | 305,090 | ||||||||
$ | 716,145 | $ | 716,145 | $ | 610,085 | $ | 610,085 | |||||
For the Nine Months Ended | For the Nine Months Ended | |||||||||||
September 30, 2021 | September 30, 2020 | |||||||||||
Segments | Total | Total | ||||||||||
Domestic | $ | 1,023,314 | $ | 1,023,314 | $ | 1,523,545 | $ | 1,523,545 | ||||
International | 962,326 | 962,326 | 573,254 | 573,254 | ||||||||
$ | 1,985,640 | $ | 1,985,640 | $ | 2,096,799 | $ | 2,096,799 | |||||
| ||||||||||||
| ||||||||||||
Components | $ | 735,539 | $ | 735,539 | $ | 768,409 | $ | 768,409 | ||||
Equipment | 1,250,101 | 1,250,101 | 1,328,390 | 1,328,390 | ||||||||
$ | 1,985,640 | $ | 1,985,640 | $ | 2,096,799 | $ | 2,096,799 | |||||
12
ACCOUNTS RECEIVABLE: Accounts receivables are presented net 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. Atnine months ended September 30, 2022 and 2021 are disaggregated as follows:
| Three Months Ended September 30, 2022 | ||||||||||||
| United States | International | Total | ||||||||||
| Revenues | ||||||||||||
| Freezers and chillers | $ | 54,768 | $ | - | $ | 54,768 | ||||||
| OEM and other | 129,695 | 68,770 | 198,465 | |||||||||
| Total Revenues | $ | 184,463 | $ | 68,770 | $ | 253,233 | ||||||
| Three Months Ended September 30, 2021 | ||||||||||||
| United States | International | Total | ||||||||||
| Revenues | ||||||||||||
| Freezers and chillers | $ | 236,884 | $ | 56,381 | $ | 293,265 | ||||||
| OEM and other | 190,200 | 232,680 | 422,880 | |||||||||
| Total Revenues | $ | 427,084 | $ | 289,061 | $ | 716,145 | ||||||
| Nine Months Ended September 30, 2022 | ||||||||||||
| United States | International | Total | ||||||||||
| Revenues | ||||||||||||
| Freezers and chillers | $ | 712,930 | $ | 153,236 | $ | 866,166 | ||||||
| OEM and other | 497,742 | 198,516 | 696,258 | |||||||||
| Total Revenues | $ | 1,210,672 | $ | 351,752 | $ | 1,562,424 | ||||||
| Nine Months Ended September 30, 2021 | ||||||||||||
| United States | International | Total | ||||||||||
| Revenues | ||||||||||||
| Freezers and chillers | $ | 507,982 | $ | 612,505 | $ | 1,120,487 | ||||||
| OEM and other | 519,550 | 345,603 | 865,153 | |||||||||
| Total Revenues | $ | 1,027,532 | $ | 958,108 | $ | 1,985,640 | ||||||
9
REFLECT SCIENTIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
NOTE 4—INVENTORIES
Inventories at September 30, 2022 and December 31, 2020, the Company had accounts receivable, net2021 consisted of the allowance, of $147,688 and $340,427, respectively. At September 30, 2021 and December 31, 2020, the allowance for doubtful accounts was $4,000 and $4,000, respectively.following:
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, 2021 and December 31, 2020, the Company had inventory consisting of raw materials and finished goods, net of allowance, of $585,057 and $438,606, respectively. Of the total raw materials represented $5,353 at September 30, 2021 and $10,767 at December 31, 2020. At September 30, 2021 and December 31, 2020, the allowance for obsolescence was $106,044 and $106,044, respectively.
| September 30, 2022 | December 31, 2021 | |||||||
| Finished goods | $ | 299,258 | $ | 342,835 | ||||
| Raw materials | 710,862 | 387,695 | ||||||
| Total inventories | 1,010,120 | 730,530 | ||||||
| Less reserve for obsolescence | (106,044 | ) | (106,044 | ) | ||||
| Total inventories, net | $ | 904,076 | $ | 624,486 | ||||
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, 2020. As of September 30, 2021 and December 31, 2020, all of the intangible assets were fully amortized.
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 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.
LEASES: The Company, in accordance with ASC 842, accounts for leases as right-of-use assets (“ROU”) and lease liabilities on the balance sheet. The Company elected not to separate lease and non-lease components, but to treat as single lease costs. We estimate our incremental borrowing rate, which is defined as the interest rate we would pay to borrow on a collateralized basis, considering such factors as length of lease term and the risks of the economic environment in which the leased asset operates. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised.
13
RESEARCH AND DEVELOPMENT - The Company accounts for research and development costs in accordance with the Financial 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.
NET INCOME (LOSS) PER SHARE: The computation of basic profit and loss 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, 2021 and 2020, the Company had no common stock equivalents.
RECENT ACCOUNTING PRONOUNCEMENTS: The Company has reviewed all recently issued, but not yet adopted, accounting standards in order 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 will have a significant effect on its current or future earnings or operations.
NOTE 3 - 5—LEASES
We have operating leases for our office and warehouse facility as well as for an automobile. We used the lease termination dates of November 30, 2023 for the building and July 7, 2021 for the automobile to calculate right of use (“ROU”) assets and lease liabilities.
The following was included in our condensed consolidated condensed balance sheet as ofat September 30, 2022 and December 31, 2021:
Leases | As of September 30, 2021 | |||
Assets | ||||
ROU operating lease assets | $ | 124,089 | ||
| ||||
Liabilities | ||||
Operating lease liabilities – current portion | $ | 54,901 | ||
Operating lease liabilities | $ | 72,061 | ||
Total operating lease liabilities | $ | 126,962 | ||
| September 30, 2022 | December 31, 2021 | |||||||
| Operating lease right-of-use assets | $ | 68,598 | $ | 110,483 | ||||
| Lease liabilities, current portion | 61,286 | 56,446 | ||||||
| Lease liabilities, long-term | 10,774 | 57,393 | ||||||
| Total operating lease liabilities | $ | 72,060 | $ | 113,839 | ||||
| Weighted-average remaining lease term (months) | 14 | 23 | ||||||
| Weighted average discount rate | 5.25% | 5.25% | ||||||
14
We recognizeTotal lease expense on a straight-line basis overfor the term of the lease.three and nine months ended September 30, 2022 and 2021 is as follows:
Three Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Operating lease expense | $ | 15,216 | $ | 15,216 | ||||
| Variable lease expense | 1,334 | 1,887 | ||||||
| Total lease expense | $ | 16,550 | $ | 17,103 | ||||
Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Operating lease expense | $ | 45,648 | $ | 45,648 | ||||
| Variable lease expense | 5,122 | 5,661 | ||||||
| Total lease expense | $ | 50,770 | $ | 51,309 | ||||
Nine Months Ended | ||||
Lease Cost | September 30, 2021 | |||
Operating lease cost | ||||
Administrative expenses | $ | 5,661 | ||
Rent expense | 43,259 | |||
Total operating lease cost | $ | 48,920 | ||
10
Our building lease does not specify an implicit rate of interest. Therefore, we estimate our incremental borrowing rate, which is defined as the interest rate we would pay to borrow on a collateralized basis, considering such factors as length of lease term and the risks of the economic environment in which the leased asset operates. REFLECT SCIENTIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
As of September 30, 2021, the following disclosures for remaining2022, maturities of operating lease term and incremental borrowing ratesliabilities were applicable:as follows:
|
| |||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
NOTE 4 - INVENTORY6—STOCKHOLDERS’ EQUITY
Inventories are presented net
Common Stock
As 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, 20212022, the Company was authorized to issue 100,000,000 common shares. As of September 30, 2022 and December 31, 2020,2021, the Company had inventory consisting84,989,086 common shares issued and outstanding.
Restricted Stock Awards
On December 28, 2021, the Company granted 1,000,000 shares of finished goods, net of allowance, of $585,057restricted common stock to its patent attorney. The restricted stock vest over three years, with 250,000 shares vesting immediately on the grant date and $438,606, respectively. At250,000 shares vesting on the next three anniversary dates.
Below is a table summarizing the changes in restricted stock awards outstanding during the nine months ended September 30, 20212022:
| Restricted Stock Awards | Weighted-Average Exercise Price | |||||||
| Outstanding at December 31, 2021 | 750,000 | $ | 0.11 | |||||
| Granted | - | - | ||||||
| Vested | - | - | ||||||
| Forfeited | - | - | ||||||
| Outstanding at September 30, 2022 | 750,000 | $ | 0.11 | |||||
Stock-based compensation expense of $6,875 and December 31, 2020,$20,625 was recorded during the allowance for obsolescencethree and nine months ended September 30, 2022, respectively. Stock-based compensation expense was $106,044$nil during the three and $106,044, respectively.nine months ended September 30, 2021.
NOTE 5 - NOTE PAYABLE
On April 5, 2020, we received approval from our bank Chase Bank forAs of September 30, 2022, the Paycheck Protection Program Loan (“PPP”). The terms of the loan were for 24 months at 0.98% per annum. The Company received notification that the PPP loan was fully forgiven by the Small Business Administration on February 7, 2021, both asremaining unrecognized stock-based compensation expense related to principalnon-vested restricted stock awards is $61,875 and interest, resulting in a $111,265 gain.is expected to be recognized over 2.25 years.
NOTE 6 - SUBSEQUENT EVENTS
In accordance with ASC 855-10 management reviewed all material events through the date of this report. There are no material subsequent events to report.
1511
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsREFLECT SCIENTIFIC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
Special Note Regarding Forward-Looking StatementsNOTE 7—EARNINGS (LOSS) PER SHARE
The Private Securities Litigation Reform Actcomputation of 1995 (the “Act”)weighted average shares outstanding and the basic and diluted earnings per share for the three and nine months ended September 30, 2022 and 2021 consisted of the following:
Three Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Net income (loss) | $ | (133,922 | ) | $ | 159,889 | |||
| Weighted average shares outstanding | 84,989,086 | 84,739,086 | ||||||
| Basic earnings (loss) per share | $ | (0.00 | ) | $ | 0.00 | |||
| Weighted average shares outstanding | 84,989,086 | 84,739,086 | ||||||
| Effect on dilutive stock awards | - | - | ||||||
| Total potential shares outstanding | 84,989,086 | 84,739,086 | ||||||
| Diluted earnings (loss) per share | $ | (0.00 | ) | $ | 0.00 | |||
Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Net income | $ | 150,708 | $ | 578,438 | ||||
| Weighted average shares outstanding | 84,989,086 | 84,739,086 | ||||||
| Basic earnings per share | $ | 0.00 | $ | 0.01 | ||||
| Weighted average shares outstanding | 84,989,086 | 84,739,086 | ||||||
| Effect on dilutive stock awards | 750,000 | - | ||||||
| Total potential shares outstanding | 85,739,086 | 84,739,086 | ||||||
| Diluted earnings per share | $ | 0.00 | $ | 0.01 | ||||
For the three months ended September 30, 2022 there were 750,000 common share equivalents excluded from the diluted earnings per share calculation as their effect is anti-dilutive. For the nine months ended September 30, 2022 there were 750,000 potentially dilutive shares that needed to be considered as common share equivalents.
12
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following management’s discussion and analysis of financial condition and results of operations provides a safe harbor for forward-looking statements made by or on behalfinformation that management believes is relevant to an assessment and understanding of our Company. Our Companyplans and financial condition. The following financial information is derived from our representatives may from timefinancial 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 time make written or oral“we,” “us,” “our” and the “Company” refer to Reflect Scientific, Inc., and its consolidated subsidiaries.
Special Note Regarding Forward Looking Statements
This report contains forward-looking statements that are “forward-looking,” includingbased on our management’s beliefs and assumptions and on information currently available to us. All statements contained in this Annual Reportother 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 filings with the Securities and Exchange Commission and in reports to our Company’s stockholders. Management believes that all statements that express expectations and projections with respect to future matters, 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 made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance however, that management’s expectations will necessarily come to pass. Factorsfactors that may affect forward- lookingcause 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, a wide range of factors that could materially affect future developments and performance, including the following:but are not limited to, statements about:
| Changes in Company-wide strategies, which may result in changes in the types or mix 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; |
| 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. |
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.
13
The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in 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 listphilosophy extends into our business strategies and acquisition plans. Through a series of factorsstrategic 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 is 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 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 could 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 impact our business, operations and financial results.
The pandemic has impacted and may continue to impact 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 future performanceemerge concerning the severity of the pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic and the accuracycurrent financial, economic and capital markets environment, and future developments in the global supply chain and other areas present material uncertainty and risk with respect to our performance, financial condition, results 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.operations and cash flows.
14
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 has adoptedestimates.
For a description of the new revenue recognition and lease accounting standards. The Company believes there have been no other significant changes during the nine-month period ended September 30, 2021, 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 1010-K for the fiscal year ended December 31, 2020.2021 filed with the SEC on March 31, 2022.
16
Plan of OperationDuring the three and Business Growthnine months ended September 30, 2022, there were no significant changes in our accounting policies and estimates.
Our efforts continue to be focused on increasingResults of Operations
Comparison of the salesThree Months Ended September 30, 2022 and 2021
The following table sets forth key components of our life science consumables while, atresults of operations during the same time, working to enhance the designthree months ended September 30, 2022 and 2021, both in dollars and as a percentage 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.”revenues.
We are receiving considerable interest in our latest product introduction, which is an ultra-cold chiller used in the manufacture of CBD oil. This unit improves the efficiency of the manufacturing process and enables the production of a higher purity in the CBD oil produced.
| Three Months Ended September 30, | ||||||||||||||||
| 2022 | 2021 | |||||||||||||||
| Amount | % of Revenues | Amount | % of Revenues | |||||||||||||
| Revenues | $ | 253,233 | 100.0 | % | $ | 716,145 | 100.0 | % | ||||||||
| Cost of goods sold | 122,204 | 48.3 | % | 242,343 | 33.8 | % | ||||||||||
| Gross profit | 131,029 | 51.7 | % | 473,802 | 66.2 | % | ||||||||||
| Operating expenses | ||||||||||||||||
| Salaries and wages | 154,648 | 61.1 | % | 146,697 | 20.5 | % | ||||||||||
| General and administrative | 94,781 | 37.4 | % | 149,672 | 20.9 | % | ||||||||||
| Research and development | 14,820 | 5.9 | % | 17,544 | 2.4 | % | ||||||||||
| Total operating expenses | 264,249 | 104.4 | % | 313,913 | 43.8 | % | ||||||||||
| Income (loss) from operations | (133,220 | ) | (52.6) | % | 159,889 | 22.3 | % | |||||||||
| Other income | ||||||||||||||||
| Gain on forgiveness of debt | - | - | % | - | - | % | ||||||||||
| Net income before income taxes | (133,220 | ) | (52.6) | % | 159,889 | 22.3 | % | |||||||||
| Income tax expense | (702 | ) | (0.3) | % | - | - | % | |||||||||
| Net income | $ | (133,922 | ) | (52.9) | % | $ | 159,889 | 22.3 | % | |||||||
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 resultsRevenues. Revenues decreased by $462,912, or 64.6%, to $253,233 for the three months ended September 30, 2021 and 2020 follows.
Results of Operations
Three Months Ended September 30, 2021 and 2020
| For the three months ended September 30, | ||||||
| 2021 | 2020 | Change | ||||
| Revenues | $ | 716,145 | $ | 610,085 | $ | 106,060 |
| Cost of goods sold | 242,343 | 252,112 | (9,769) | |||
| Gross profit | 473,802 | 357,973 | 115,829 | |||
| Operating expenses | 313,913 | 153,785 | 160,128 | |||
Net income (loss) |
$ |
159,889 |
$ |
204,188 |
$ |
(44,299) |
Revenues increased during the three-month period ended September 30, 2021, to2022 from $716,145 from $610,085 for the three-month period ended September 30, 2020, an increase of $106,060. The increase is attributable to the increased sales of ultra-low temperature freezers and chillers. We are continuing work to increase our market penetration in the ultra-low temperature freezer market and in the ultra-cold chiller.
Cost of goods decreased in the quarter ending September 30, 2021, as compared to September 30, 2020, to $242,343 from $2252,112, an decrease of $(9,769). We realized a gross profit percentage of 66% for the three months ended September 30, 2021, compared2021. Such decrease was primarily due to 59%a significant decrease in freezer and chiller sales during the third quarter and ongoing supply chain delays with manufactures.
Cost of goods sold. Cost of good sold decreased by $120,139, or 49.6%, to $122,204 for the three months ended September 30, 2020. The gross profit percentage is dependent on the mix of product sales, which varies2022 from quarter to quarter. The increased sale of freezers and chillers during 2021 period resulted in the slightly higher margins. 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 were $313,913$242,343 for the three months ended September 30, 2021, a increase of $160,128 over the expenses of $153,785 incurred in the three-month period ended September 30, 2020. The2021. Such decrease resultswas primarily from the $16,790 decrease in researchdue to decreased freezer and development costschillers sales, offset by increased product and a $68,996 reduction in salaries and wages and a $74,392 decrease in general and administrative expenses. 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.shipping costs.
1715
Research and development expensesGross profit. Our gross profit as a percentage of sales decreased to 51.7% for the three months ended September 30, 2021 were $17,544, an increase of $754 in expenses for the same period in 2020, as the development work on the ultra-cold CBD oil chiller was escalated.
Salaries and wages2022, compared to 66.2% for the three months ended September 30, 2021 were reduced2021. The decrease in gross profit percentage was primarily due to the decrease in freezer and chiller sales, and increased product and shipping costs.
Salaries and wages. Salaries and wages increased by $74,342$7,951, or 5.4%, to $154,648 for the three months ended September 30, 2022 from $146,697 for the three months ended September 30, 2021. Such increase was primarily due to increased headcount as well as stock-based compensation.
General and administrative. General and administrative expenses decreased by $54,891, or 36.7%, to $94,781 for the three months ended September 30, 2022 from $149,672 for the three months ended September 30, 2021. 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.
Research and development. Research and development expenses decreased by $2,724, or 15.5%, to $14,820 for the three months ended September 30, 2022 from $17,544 for the three months ended September 30, 2021. Such decrease was primarily a result of decreased enhancements to the ultra-cold CBD oil chiller during the third quarter.
Net income (loss). As a result of the cumulative effect of the factors described above, our net loss was $133,220 for the three months ended September 30, 2022, as compared to the expensenet income of $159,889 for the three month periodmonths ended September 30, 2020. The termination2021. Management continues to look for opportunities to increase sales, improve gross margins and control ongoing operating expenses.
Comparison of two employees resulted in the lower expense level.Nine Months Ended September 30, 2022 and 2021
Net incomeThe following table sets forth key components of our results of operations during the nine months ended September 30, 2022 and 2021, both in dollars and as a percentage of our revenues.
| Nine Months Ended September 30, | ||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||
| Amount | % of Revenues | Amount | % of Revenues | |||||||||||||||
| Revenues | $ | 1,562,424 | 100.0 | % | $ | 1,985,640 | 100.0 | % | ||||||||||
| Cost of goods sold | 552,314 | 35.3 | % | 621,317 | 31.3 | % | ||||||||||||
| Gross profit | 1,010,110 | 64.7 | % | 1,364,323 | 68.7 | % | ||||||||||||
| Operating expenses | ||||||||||||||||||
| Salaries and wages | 484,492 | 31.0 | % | 429,417 | 21.6 | % | ||||||||||||
| General and administrative | 315,734 | 20.2 | % | 422,036 | 21.3 | % | ||||||||||||
| Research and development | 58,474 | 3.7 | % | 45,697 | 2.3 | % | ||||||||||||
| Total operating expenses | 858,700 | 55.0 | % | 897,150 | 45.2 | % | ||||||||||||
| Income from operations | 151,410 | 9.7 | % | 467,173 | 23.5 | % | ||||||||||||
| Other income | ||||||||||||||||||
| Gain on forgiveness of debt | - | % | 111,265 | 5.6 | % | |||||||||||||
| Net income before income taxes | 151,410 | 9.7 | % | 578,438 | 29.1 | % | ||||||||||||
| Income tax expense | (702) | (0.0) | % | - | - | % | ||||||||||||
| Net income | $ | 150,708 | 9.6 | % | $ | 578,438 | 29.1 | % | ||||||||||
Revenues. Revenues decreased by $423,216, or 21.3%, to $1,562,424 for the three-month periodnine months ended September 30, 2022 from $1,985,640 for the nine months ended September 30, 2021. Such decrease was primarily due to a significant decrease in freezer and chiller sales during the third quarter and ongoing supply chain delays with manufactures.
16
Cost of goods sold. Cost of good sold decreased by $69,003, or 11.1%, to $552,314 for the nine months ended September 30, 2022 from $621,317 for the nine months ended September 30, 2021. Such decrease was primarily due to decreased freezer and chillers sales, offset by increased product and shipping costs.
Gross profit. Our gross profit as a percentage of sales decreased to 64.7% for the nine months ended September 30, 2022, compared to 68.7% for the nine months ended September 30, 2021. The decrease in gross profit percentage was primarily due to the decrease in freezer and chiller sales, and increased product and shipping costs.
Salaries and wages. Salaries and wages increased by $55,075, or 12.8%, to $484,492 for the nine months ended September 30, 2022 from $429,417 for the nine months ended September 30, 2021. Such increase was primarily due to increased headcount as well as stock-based compensation.
General and administrative. General and administrative expenses decreased by $106,302, or 25.2%, to $315,734 for the nine months ended September 30, 2022 from $422,036 for the nine months ended September 30, 2021. Such decrease is a result of decreased revenues and operations, as well as, the cumulative result of small savings in numerous expenses.
Research and development. Research and development expenses increased by $12,777, or 28.0%, to $58,474 for the nine months ended September 30, 2022 from $45,697 for the nine months ended September 30, 2021. Such increase is a result of continued enhancements to the ultra-cold CBD oil chiller during the period.
Other income. Other income was $0 for the nine months ended September 30, 2022 as compared to $111,265 for the nine months ended September 30, 2021, a result of forgiveness of our PPP loans.
Net income. As a result of the cumulative effect of the factors described above, our net income was $159,889, a decrease of $44,299 from the $204,188$150,708 for the three-month periodnine months ended September 30, 2020.2022, as compared to net income of $578,438 for the nine months ended September 30, 2021. Management continues to look for opportunities to increase sales, improve gross margins and control ongoing operating expenses.
Liquidity and Capital Resources
As of September 30, 2022 and December 31, 2021, our current assets exceeded current liabilities by $2,230,115 and $2,063,516, respectively, and we had cash and cash equivalents of $1,324,706 and $1,473,924, 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.
Summary of Cash Flow
The following table provides detailed information about our net income of $159,889cash flow for the three-month period ended September 30, 2021 represents income of $0.00 per share. This compares to net income of $204,188, or $0.00 per share, for the three months ended September 30, 2020.indicated:
Nine Months Ended September 30, 2021 and 2020
| For the nine months ended September 30, | ||||||
| 2021 | 2020 | Change | ||||
| Revenues | $ | 1,985,640 | $ | 2,096,799 | $ | (111,159) |
| Cost of goods sold | 621,317 | 845,281 | (223,964) | |||
| Gross profit | 1,364,323 | 1,251,518 | 112,805 | |||
| Operating expenses | 897,150 | 907,057 | (9,907) | |||
Other income (expense) |
111,265 |
(132) |
111,397 | |||
Net profit (loss) |
$ |
578,438 |
$ |
344,329 |
$ |
234,109 |
| Nine Months Ended September 30, | ||||||||
| 2022 | 2021 | |||||||
| Net cash (used in) provided by operating activities | $ | (149,218 | ) | $ | 501,456 | |||
| Net cash provided by investing activities | - | - | ||||||
| Net cash provided by financing activities | - | - | ||||||
| Net change in cash and cash equivalents | (149,218 | ) | 501,456 | |||||
| Cash and cash equivalents at beginning of period | 1,473,924 | 642,542 | ||||||
| Cash and cash equivalents at end of period | $ | 1,324,706 | $ | 1,143,998 | ||||
Revenues decreased during the nine-month period ended September 30, 2021, to $1,985,640 from $2,096,799 for the nine-month period ended September 30, 2020, a decrease of $111,159. The decrease is attributable to the additional chillers shippedNet cash used in 2020 as the backlog of orders resulting from delays in receiving component parts were assembled and shipped. We are continuing work to increase our market penetration in the ultra-low temperature freezer market and in the ultra-cold chiller.
Cost of goods decreased in the nine months ended September 30, 2021, as compared to September 30, 2020, to $621,317 from $845,281, a decrease of $223,964. We realized a gross profit percentage of 69%operating activities was $149,218 for the nine months ended September 30, 2021,2022, as compared to 58%net cash provided by operating activities of $501,456 for the nine months ended September 30, 2020.
18
The gross profit percentage is dependent on the mix2021. Significant factors affecting operating cash flows was primarily a result of product sales, which varies from quarter to quarter. Work has been done to reduce the componentincreased inventory purchases, decreased customer deposits, and assembly costs of the freezers and chillers. 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 were $897,150 fordecreased net income during the nine months ended September 30, 2021, a decrease of $9,907 over the expenses of $907,057 incurred in the nine-month period ended September 30, 2020. The decrease results primarily from the $144,913 decrease in research and development costs and a $22,806 decrease in salaries and wages, offset in part by a $112,200 increase in general and administrative expenses. 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.2022.
Research and development expenses for the nine months ended September 30, 2021 were $45,697, a decrease of $144,913 in expenses for the same period in 2020, as the development work on the ultra-cold CBD oil chiller was minimized.17
Operating expenses were also reduced due to lower salaries and wages in the nine month period ended September 30, 2021 as compared to 2020. The $22,806 reduction resulted from the reduction of two full-time employees.
Net income for the nine-month period ended September 30, 2021 was $578,438, which compares to net income of $344,329 for the nine-month period ended September 30, 2020. Management continues to look for opportunities to increase sales, improve gross margins and control ongoing operating expenses.
The net income of $578,438 for the nine-month period ended September 30, 2021 represents income of $0.01 per share. This compares to net income of $344,329, or income of $0.00 per share, for the nine months ended September 30, 2020.
Seasonality and Cyclicality
We do not believe our business is cyclical.
Liquidity and Capital Resources
Our cash resources at September 30, 2021, were $1,143,998, with accounts receivable of $147,688, net of allowance, and inventory of $585,057, net of allowance. Our working capital on September 30, 2021, was $1,676,451. Working capital on December 31, 2020 was $1,203,080.
For the nine-month period ended September 30, 2021, net cash provided by operating activities was $501,456, which is an improvement of $598,944 over the $97,488 net cash used by operating activities for the nine-month period ended September 30, 2020.
Off-Balance Sheet Arrangements
None.We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
19
ItemITEM 3. Quantitative and Qualitative Disclosure about Market RiskQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required.applicable.
ItemITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and 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 September 30, 2022. 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
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 September 30, 2022 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,December 31, 2021, that have materially affected, or are like to affect, 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 Securities
None; not applicable.None.
2018
Use of Proceeds of Registered SecuritiesITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None; not applicable.
Purchases of Equity Securities by Us and Affiliated Purchasers
During the nine months ended September 30, 2021, we have not purchased any equity securities nor have any officers or directors of the Company.
ITEM 3. Defaults Upon Senior Securities
NoneNone.
ITEM 4. Mine Safety DisclosureMINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. Other Information.OTHER INFORMATION.
NoneNone.
21
ITEM 6. Exhibits
(a)Exhibits.
| Exhibit No. | Title of Document | Location if other than attached hereto |
| 3.1 | Articles of Incorporation | 10-SB Registration Statement* |
| 3.2 | Articles of Amendment to Articles of Incorporation | 10-SB Registration Statement* |
| 3.3 | By-Laws | 10-SB Registration Statement* |
| 3.4 | Articles of Amendment to Articles of Incorporation | 8-K Current Report dated December 31, 2003* |
| 3.5 | Articles of Amendment to Articles of Incorporation | 8-K Current Report dated December 31, 2003* |
| 3.6 | Articles of Amendment | September 30, 2004 10-QSB Quarterly Report* |
| 3.7 | By-Laws Amendment | September 30, 2004 10-QSB Quarterly Report* |
| 4.1 | Debenture | 8-K Current Report dated June 29, 2007* |
| 4.2 | Form of Purchasers Warrant | 8-K Current Report dated June 29, 2007* |
| 4.3 | Registration Rights Agreement | 8-K Current Report dated June 29, 2007* |
| 4.4 | Form of Placement Agreement | 8-K Current Report dated June 29, 2007* |
| 10.1 | Securities Purchase Agreement | 8-K Current Report dated June 29, 2007* |
| 10.2 | Placement Agent Agreement | 8-K Current Report dated June 29, 2007* |
| 14 | Code of Ethics | December 31, 2003 10-KSB Annual Report* |
| 21 | Subsidiaries of the Company | December 31, 2004 10-KSB Annual Report* |
| Exhibit No. | Title of Document | Location if other than attached hereto |
| 31.1 | 302 Certification of Kim Boyce | |
| 31.2 | 302 Certification of Keith Merrell | |
| 32 | 906 Certification |
Exhibits
Additional Exhibits Incorporated by Reference
| * | Reflect California Reorganization | 8-K Current Report dated December 31, 2003 |
| * | JMST Acquisition | 8-K Current Report dated April 4, 2006 |
| * | Cryomastor Reorganization | 8-K Current Report dated September 27, 2006 |
| * | Image Labs Merger Agreement Signing | 8-K Current Report dated November 15, 2006 |
| * | All Temp Merger Agreement Signing | 8-K Current Report dated November 17, 2006 |
| * | All Temp Merger Agreement Closing | 8-KA Current Report dated November 17, 2006 |
| * | Image Labs Merger Agreement Closing | 8-KA Current Report dated November 15, 2006 |
* Previously filed and incorporated by reference.
2219
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 | By: | ||
| Kim Boyce, CEO, President and Director | ||||
| Date: | November | By: | ||
| Tom Tait, Vice President and Director | ||||
| Date: | November | By: | ||
| Kim Boyce, CFO, Principal Financial Officer |