REFLECT SCIENTIFIC, INC. - Quarter Report: 2022 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT of 1934

For the transition period from __________ to __________

Commission File Number 000-31377

REFLECT SCIENTIFIC, INC.

(Exact name of registrant as specified in its charter)

Utah	87-0642556
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

1266 South 1380 West Orem, Utah 84058

 (Address of principal executive offices) (Zip Code)

(801) 226-4100

 (Registrant’s telephone number, including area code)

Title of class	Ticker symbol	Name of exchange on which registered
Common shares, $0.01 par value	RSCF	OTCQB

Indicate by check mark whether the 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 Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]   No [  ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [  ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]   No [X]

Indicate by check mark whether the Registrant has submitted electronically on its corporate Web site, if any, every

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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 [X]   No [  ]

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.

Class

Outstanding as of May 13, 2022

84,989,086 shares of $0.01 par value common stock on May 13, 2022

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TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

PART II – OTHER INFORMATION

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Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

Reflect Scientific, Inc.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

March 31, 2022

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-K for the period ended December 31, 2021, accompanying notes, and with the historical financial information of the Company.

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REFLECT SCIENTIFIC, INC.

Condensed Consolidated Balance Sheets

ASSETS

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

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REFLECT SCIENTIFIC, INC.

Condensed Consolidated Balance Sheets (Continued)

LIABILITIES AND STOCKHOLDERS’ EQUITY

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

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REFLECT SCIENTIFIC, INC.

Condensed Consolidated Statements of Income

(Unaudited)

	For the Three Months Ended March 31,
		2022		2021
REVENUES	$	753,576	$	562,362
COST OF GOODS SOLD		234,289		143,795
GROSS PROFIT		519,287		418,567
OPERATING EXPENSES
Salaries and wages		170,279		136,604
Research and development		25,325		8,697
General and administrative		117,178		136,763
Total Operating Expenses		312,782		282,064
OPERATING INCOME		206,505		136,503
OTHER INCOME (EXPENSE)
Gain on forgiveness of loan		-		111,265
NET INCOME BEFORE TAXES		206,505		247,768
Provision for income taxes		-		-
NET INCOME	$	206,505	$	247,768
NET INCOME PER SHARE – BASIC	$	0.00	$	0.00
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING – BASIC		84,989,086		84,739,086
NET INCOME PER SHARE - DILUTED	$	0.00	$	0.00
WEIGHTED AVAERAGE NUMBER OF SHARES OUTSTANDING - DILUTED		85,739,086		84,739,086

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

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REFLECT SCIENIFIC, INC.

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2022 and 2021

	Common Stock		Additional Paid-In Capital	Accumulated Deficit		Total
	Shares	Amount
Balance, 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 for the three-month period ended March 31, 2022	-	-	-	206,505		206,505
Balance, March 31, 2022	84,989,086	$849,890	$20,239,775	$(18,690,610)		$2,399,055

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

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REFLECT SCIENTIFIC, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

		For the Three Months Ended March 31,
		2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	206,505	$	115,095
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Stock-based compensation		12,844		-
Amortization of operating lease right-of-use asset		13,871		14,969
Gain on forgiveness		-		(111,265)
Changes in operating assets and liabilities:
Accounts receivable		(57,680)		106,848
Inventory		(71,121)		(136,126)
Prepaid expenses		27,796		21,034
Accounts payable and accrued expenses		16,609		73,686
Operating lease liabilities		(13,652)		(13,965)
Customer deposits		(29,563)		61,324
Net Cash from Operating Activities		105,609		264,273
CASH FLOWS FROM INVESTING ACTIVITIES
Net Cash from investing activities		-		-
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash from financing activities		-		-
NET CHANGE IN CASH		105,609		264,273
CASH AT BEGINNING OF PERIOD		1,473,924		642,542
CASH AT END OF PERIOD	$	1,579,533	$	906,815

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid For:
Interest	$	-	$	-
Income taxes	$	-	$	-

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

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REFLECT SCIENTIFIC, INC.

Notes to the Condensed Consolidated Financial Statements

March 31, 2022

(Unaudited)

NOTE 1 -

BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed consolidated financial statements 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 been condensed or omitted in accordance with rules and regulations of the Securities and Exchange Commission.  The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are 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, 2021 financial statements.  Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

NOTE 2 -

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND LINE OF BUSINESS:

Reflect Scientific, Inc. (the Company) was incorporated under the laws of the State of Utah on November 3, 1999 as Cole, Inc. 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.  

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.

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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.

CASH:  The Company considers all deposit accounts and investment accounts with an original maturity of 90 days or less to be cash equivalents.  

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.  

 

Segments								Total																Total
Domestic		$	520,901						520,901									$			243,593				243,593
International			232,675						232,675												318,769				318,769
		$	753,576						753,576									$			562,362				562,362
Components			251,882						251,882												228,533				228,533
Equipment			501,694						501,694												333,829				333,829
		$	753,576						753,576									$			562,362				562,362

COST OF SALES:  Charges to cost of sales are made on a first-in first-out method (FIFO).  In addition to the component costs, some labor costs are allocated to cost of goods for the direct labor utilized to build the sub-assemblies and finished goods.

ACCOUNTS RECEIVABLE:  The Company maintains an allowance for doubtful accounts to provide for losses arising from customers’ inability to make required payments. If there is deterioration of our customers’ credit worthiness and/or there is an increase in the length of time that the receivables are past due greater than the historical assumptions used, additional allowances may be required. The Company estimates allowance for doubtful accounts based on the aged receivable balances and historical losses. The Company charges off uncollectible accounts when management determines there is no possibility of collecting the related receivable. The Company considers accounts receivable to be past due or delinquent based on contractual terms, which is generally net 30 days. At March 31, 2022 and December 31, 2021, the Company had accounts receivable, net of the allowance, of $233,401 and $175,649, respectively.  At March 31, 2022 and December 31, 2021, the allowance for doubtful accounts was $4,000 and $4,000, respectively.

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PROPERTY AND EQUIPMENT:  Property and equipment are stated at cost.  Expenditure for minor repairs, maintenance, and replacement parts which do not increase the useful lives of the assets are charged to expense as incurred.  All major additions and improvements are capitalized.  Depreciation is computed using the straight-line method.  The lives over which the fixed assets are depreciated range from 5 to 7 years, except for computer equipment, which is depreciated over a 3-year life.  

INVENTORIES: Inventories 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 the imaging and inspection systems which it builds, and other scientific items. An allowance is recorded when it is determined that the amount owing is at high risk.At March 31, 2022 and December 31, 2021, the Company had inventory consisting of raw materials and finished goods, net of allowance, of $695,607 and $624,486, respectively. At March 31, 2022 and December 31, 2021, the allowance for obsolescence was $106,044 and $106,044, respectively.

INTANGIBLE ASSETS: Intangible assets include trademarks, trade secrets, patents, customer lists and goodwill acquired through acquisition of subsidiaries. The patents have been registered with the United States Patent and Trademarks Office. The costs of obtaining patents are capitalized as incurred. Intangibles, except for goodwill, are amortized over their estimated useful lives. The Company regularly evaluates whether events or circumstances have occurred that indicate possible impairment and relies on a number of factors, including operating results, business plans, economic projections, and anticipated future cash flows. The Company uses an estimate of the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether the assets are recoverable. Measurement of the amount of impairment, if any, is based upon the difference between the asset’s carrying value and estimated fair value. Fair value is determined through various valuation techniques, including cost-based, market and income approaches as considered necessary. The Company’s analysis did not indicate any impairment of intangible assets as of the impairment analysis conducted December 31, 2021. As of March 31, 2022 and December 31, 2021, all of the intangible assets were fully amortized.

GOODWILL: Goodwill represents the excess of the JMST assets acquired over the fair value of net assets acquired. Goodwill is not amortized but instead is tested for impairment, at a reporting unit level, annually and when events and circumstances warrant an evaluation. The Company evaluates goodwill on an annual basis, as of the end of the fourth quarter, and whenever events and changes in circumstances indicate that there may be a potential impairment. In making this assessment, management relies on a number of factors, including operating results, business plans, economic projections, anticipated future cash flows, business trends and market conditions. The Company’s analysis did not indicate any impairment of Goodwill as of the impairment analysis conducted December 31, 2021.

LEASES: In February of 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2016-02 - Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted this update as of January 1, 2019 using the modified retrospective transition method.

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INCOME TAXES:  Deferred taxes are provided on an asset and liability approach whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

STOCK BASED COMPENSATION: The Company, in accordance with ASC 718, Compensation – Stock Compensation, records all share-based payments to employees at the grant-date fair value of the equity instruments issued. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date, the Company uses the closing price of the stock, as quoted by NASDAQ, on the date of the grant.  The Company believes this pricing method provides the best estimate of fair the fair value of the consideration given.  Compensation cost is recognized over the requisite service period.

The Company, in accordance with ASC 718, Compensation – Stock Compensation, establishes the value of equity instruments issued to non-employees for goods and services by using the closing price of the stock, as quoted by NASDAQ, on the date of the grant.  The Company believes this method fairly establishes the value of the goods and/or services received.

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. 

EARNINGS 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 March 31, 2022 the Company had 750,000 common stock equivalents outstanding in the form of restricted stock units (“RSU’s”).  These RSU’s are added to the shares issued and outstanding to calculate the diluted earnings per share.  There were no common stock equivalents outstanding at March 31, 2021.

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 -   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

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calculate right of use (“ROU”) assets and lease liabilities.  

The following was included in our consolidated condensed balance sheet as of March 31, 2022:

Leases	As of March 31, 2022
Assets
ROU operating lease assets	$  96,702
Liabilities
Operating lease liabilities - current portion	$  58,028
Operating lease liabilities	42,249
Total operating lease liabilities	$100,277

We recognize lease expense on a straight-line basis over the term of the lease.  

Lease Cost	Three Months Ended March 31, 2022
Operating lease cost
Administrative expenses	$      1,887
Rent expense	17,609
Total operating lease cost	$    19,496

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.  As of March 31, 2022, the following disclosures for remaining lease term and incremental borrowing rates were applicable:

Supplemental Disclosures	Three Months Ended March 31, 2022
Weighted average remaining lease term	1.67 years
Weighted average discount rate	5.25%

NOTE 4 – INVENTORIES

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 March 31, 2022 and December 31, 2021, the Company had inventory net of allowance, of $695,607 and $624,486, respectively. At March 31, 2022 and December 31, 2021, the allowance for obsolescence was $106,044 and $106,044, respectively.

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Inventories consisted of the following at March 31, 2022 and December 31, 2021:

		March 31, 2022		December 31, 2021
Finished goods	$	522,823	$	342,835
Raw materials		278,828		387,695
Inventory allowance		(106,044)		(106,044)
Total Inventories, net	$	695,607	$	624,486

NOTE 5 -   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.

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

Special Note Regarding ForwardLooking 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 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. Factors that may affect forward- looking statements include a wide range of factors that could materially affect future developments and performance, including the following:

●

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.

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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 financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the unaudited Financial Statements and accompanying notes.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.  The Company believes there have been no other significant changes during the three-month period ended March 31, 2022, to the items disclosed as significant accounting policies in management's Notes to the Financial Statements in the Company's Form 10 for the year ended December 31, 2021.

Plan of Operation and Business Growth

Our efforts continue to be focused on increasing the sales of our life science consumables 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 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.

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 months ended March 31, 2022 and 2021 follows.

Results of Operations

Three Months Ended March 31, 2022 and 2021

		For the three months ended March 31,
		2022		2021		Change
Revenues	$	753,576	$	562,362	$	191,214
Cost of goods sold		234,289		143,795		90,494
Gross profit		519,287		418,567		100,720
Operating expenses		312,782		282,064		30,718
Net income (loss)	$	206,506	$	247,768	$	(41,263)

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Revenues increased during the three-month period ended March 31, 2022, to $753,576 from $562,362 for the three-month period ended March 31, 2021, an increase of $191,214.  The increase in revenue is primarily attributable to a $167,865 increase in the sale of freezers and chillers.  Cost of goods increased in the quarter ending March 31, 2022, as compared to March 31, 2021, to $234,289 from $143,795, an increase of $90,494. We realized a gross profit percentage of 69% for the three months ended March 31, 2022, compared to 74% for the three months ended March 31, 2021.  The gross profit percentage is dependent on the mix of product sales, which varies from quarter to quarter.  The increased sale of freezers and chillers during the 2022 period was offset slightly by higher costs, resulting in the slightly lower 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 $312,782 for the three months ended March 31, 2022, an increase of $30,718 over the expenses of $282,064 incurred in the three-month period ended March 31, 2021.  The increase results from a $33,675 increase in salaries and wages, as we have hired additional personnel to meet the demand for freezers and chillers, and a $16,628 increase in research and development costs, offset in part by a $19,585 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.

Research and development expenses for the three months ended March 31, 2022 were $25,325, an increase of $16,628 in expenses for the same period in 2021, as enhancements to the ultra-cold CBD oil chiller continue to be made.  

Salaries and wages for the three months ended March 31, 2022 were $170,279, an increase of $33,675 as compared to the expense for the three month period ended March 31, 2021.  Additional personnel have been hired in order to enable the company to meet the sales demand for our chillers and freezers.

General and administrative expenses for the three months ended March 31, 2022 were $117,178, a $19,585 decrease from the $136,763 for the same period in 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.

Net income for the three-month period ended March 31, 2022 was $206,506, a $41,263 decrease from the $282,064 net income for the three-month period ended March 31, 2021.  Management continues to look for opportunities to increase sales, improve gross margins and control ongoing operating expenses.

The net income of $206,506 for the three-month period ended March 31, 2022 represents income of $0.00 per share.  This compares to net income of $282,064, or $0.00 per share, for the three months ended March 31, 2021.

Seasonality and Cyclicality

We do not believe our business is cyclical.

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Liquidity and Capital Resources

Our cash resources at March 31, 2022, were $1,579,533, with accounts receivable of $233,329, net of allowance, and inventory of $695,607, net of allowance. Our working capital on March 31, 2022, was $2,281,502.  Working capital on December 31, 2021 was $2,063,516.

For the three-month period ended March 31, 2022, net cash provided by operating activities was $105,609, which is a decrease of $158,664 over the $264,273 net cash provided by operating activities for the three-month period ended March 31, 2021.

Off-Balance Sheet Arrangements

None.

Item 3.  Quantitative and Qualitative Disclosure about Market Risk

Not required.

Item 4.  Controls and Procedures

(a)

Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this Quarterly Report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based upon this evaluation, our Chief Executive Officer and Principal Financial Officer concluded 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 for the three-month period ended March 31, 2022 that have materially affected, or are like to affect, our internal controls over financial reporting.

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PART II  OTHER INFORMATION

ITEM 1.  Legal Proceedings

None; not applicable.

ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

None; not applicable.

Use of Proceeds of Registered Securities

None; not applicable.

Purchases of Equity Securities by Us and Affiliated Purchasers

During the three months ended March 31, 2022, we have not purchased any equity securities nor have any officers or directors of the Company.

ITEM 3.  Defaults Upon Senior Securities

None

ITEM 4.  Mine Safety Disclosure

Not applicable.

ITEM 5.  Other Information.

None

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*

 

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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

* Previously filed and incorporated by reference.

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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:

May 13, 2022

By:  /s/ Kim Boyce

Kim Boyce, CEO, President and Director

Date:

May 13, 2022

By:  /s/ Tom Tait

        Tom Tait, Vice President and Director

Date:

May 13, 2022

By:  /s/ Kim Boyce___

        Kim Boyce, CFO, Principal Financial Officer

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