UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
or
For the transition period from ____________ to _____________
Commission File Number:
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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.
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| Large accelerated filer ☐ | 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 comply with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
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As of November 8, 2024, there were
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REFLECT SCIENTIFIC, INC.
Quarterly Report on Form 10-Q
Period Ended September 30, 2024
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
| Item 1: | Financial Statements | 4 |
| Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 |
| Item 3: | Quantitative and Qualitative Disclosure about Market Risk | 16 |
| Item 4: | Controls and Procedures | 17 |
PART II
OTHER INFORMATION
| Item 1: | Legal Proceedings | 17 |
| Item 1A. | Risk Factors | 17 |
| Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds | 17 |
| Item 3: | Defaults Upon Senior Securities | 17 |
| Item 4: | Mine Safety Disclosure | 17 |
| Item 5: | Other Information | 17 |
| Item 6: | Exhibits | 18 |
3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
REFLECT SCIENTIFIC, INC.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Page | ||
| Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023 | 5 | |
| Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited) | 6 | |
| Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited) | 7 | |
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (Unaudited) | 8 | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 9 |
4
REFLECT SCIENTIFIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
September 30, 2024 |
December 31, 2023 | ||||
| ASSETS | (Unaudited) | ||||
| Current Assets | |||||
| Cash and cash equivalents | $ | $ | |||
| Accounts receivable, net | |||||
| Inventories, net | |||||
| Prepaid expenses and other current assets | |||||
| Total Current Assets | |||||
| Operating lease right-of-use assets | |||||
| Goodwill | |||||
| Other long-term assets | |||||
| TOTAL ASSETS | $ | $ | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Current Liabilities | |||||
| Accounts payable and accrued expenses | $ | $ | |||
| Customer deposits | - | ||||
| Current portion of operating lease liabilities | |||||
| Total Current Liabilities | |||||
| Operating lease liabilities, net of current portion | |||||
| TOTAL LIABILITIES | |||||
| Stockholders' Equity | |||||
| Preferred Stock, $ |
|||||
| Common stock, $ |
|||||
| Additional paid-in capital | |||||
| Accumulated deficit | ( |
( | |||
| TOTAL STOCKHOLDERS’ EQUITY | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
REFLECT SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||
| Revenues | $ | $ | $ | $ | |||||||
| Cost of goods sold | |||||||||||
| Gross profit | |||||||||||
| Operating Expenses | |||||||||||
| Salaries and wages | |||||||||||
| General and administrative | |||||||||||
| Research and development | |||||||||||
| Total Operating Expenses | |||||||||||
| INCOME (LOSS) FROM OPERATIONS | ( | ||||||||||
| Other Income (Expense) | |||||||||||
| NET INCOME (LOSS) BEFORE INCOME TAXES | ( | ||||||||||
| INCOME TAX EXPENSE | ( |
( |
( | ||||||||
| NET INCOME (LOSS) | $ | $ | $ | $ | ( | ||||||
| Income (loss) per common share | |||||||||||
| Basic | $ | $ | $ | $ | |||||||
| Diluted | $ | $ | $ | $ | |||||||
| Weighted average shares outstanding | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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REFLECT SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three and Nine Months Ended September 30, 2024
| Common Shares | Additional Paid-In | Accumulated | Total Stockholders' | ||||||||||
| Shares | Amount | Capital | Deficit | Equity | |||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( |
$ | ||||||||
| Net loss | - | ( |
( | ||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( |
$ | ||||||||
| Net income | - | ||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( |
$ | ||||||||
| Net income | |||||||||||||
| Balance at September 30, 2024 | ( |
||||||||||||
Three and Nine Months Ended September 30, 2023
| Common Shares | Additional Paid-In | Accumulated | Total Stockholders' | ||||||||||
| Shares | Amount | Capital | Deficit | Equity | |||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( |
$ | ||||||||
| Stock-based compensation | - | ||||||||||||
| Net loss | - | ( |
( | ||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( |
$ | ||||||||
| Stock-based compensation | - | ||||||||||||
| Net loss | - | ( |
( | ||||||||||
| Balance at June 30, 2023 | $ | $ | $ | ( |
$ | ||||||||
| Stock-based compensation | - | ||||||||||||
| Net income | - | ||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | ( |
$ | ||||||||
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
|
For the Nine Months Ended September 30, | |||||
| 2024 | 2023 | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||
| Net income (loss) | $ | $ | ( | ||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||
| Stock-based compensation | |||||
| Amortization of right-of-use assets | |||||
| Changes in operating assets and liabilities: | |||||
| Accounts receivable | ( |
||||
| Inventories | ( | ||||
| Prepaid expenses and other current assets | ( |
||||
| Accounts payable and accrued expenses | ( |
||||
| Customer deposits | ( |
||||
| Operating lease liabilities | ( |
( | |||
| Net cash (used in) provided by operating activities | ( |
( | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||
| Net cash from investing activities | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||
| Net cash from financing activities | |||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | ( |
( | |||
| CASH AND CASH EQUIVALENTS | |||||
| Beginning of the period | |||||
| End of the period | $ | $ | |||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||
| Cash paid for interest | $ | $ | |||
| Cash paid for income taxes | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
REFLECT SCIENTIFIC, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1—BASIS OF PRESENTATION AND OTHER INFORMATION
The accompanying unaudited condensed consolidated financial statements of Reflect Scientific, Inc. (the “Company,” “we,” “us,” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2023 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 no material change in the information disclosed in the notes to the consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 29, 2024. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about reportable segment’s profit or loss and assets that are currently required annually. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.
The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to our condensed consolidated financial statements.
NOTE 2—DISAGGREGATION OF REVENUES
Our revenue is disaggregated based on product category and geographical region. We recognize revenue from the sale of scientific equipment for the life sciences and manufacturing industries. Our products include non-mechanical Cyrometrix freezers, chillers, and original equipment manufacturer (“OEM”) value-added products and components for the life sciences industry.
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| For the Three Months Ended September 30, 2024 | ||||||||
| United States | International | Total | ||||||
| Revenues | ||||||||
| Freezers and chillers | $ | $ | $ | |||||
| OEM and other | ||||||||
| Total Revenues | $ | $ | $ | |||||
| For the Three Months Ended September 30, 2023 | ||||||||
| United States | International | Total | ||||||
| Revenues | ||||||||
| Freezers and chillers | $ | $ | $ | |||||
| OEM and other | ||||||||
| Total Revenues | $ | $ | $ | |||||
| For the Nine Months Ended September 30, 2024 | ||||||||
| United States | International | Total | ||||||
| Revenues | ||||||||
| Freezers and chillers | $ | $ | $ | |||||
| OEM and other | ||||||||
| Total Revenues | $ | $ | $ | |||||
| For the Nine Months Ended September 30, 2023 | ||||||||
| United States | International | Total | ||||||
| Revenues | ||||||||
| Freezers and chillers | $ | $ | $ | |||||
| OEM and other | ||||||||
| Total Revenues | $ | $ | $ | |||||
NOTE 3—INVENTORIES
|
September 30, 2024 |
December 31, 2023 | ||||
| Finish goods | $ | $ | |||
| Raw material | |||||
| Total inventories | |||||
| Less reserve for obsolescence | ( |
( | |||
| Total inventories, net | $ | $ | |||
Inventory balances are composed of finished goods and raw materials. Work in process inventory is immaterial to the condensed consolidated financial statements.
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NOTE 4—LEASES
| September 30, | December 31, | |||||
| 2024 | 2023 | |||||
| Operating lease right-of-use assets | $ | $ | ||||
| Lease liabilities, current portion | ||||||
| Lease liabilities, long-term | ||||||
| Total operating lease liabilities | $ | $ | ||||
| Weighted-average remaining lease term (months) | ||||||
| Weighted average discount rate | % | % | ||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Operating lease expense | $ | $ | $ | $ | |||||||||||
| Variable lease expense | |||||||||||||||
| Total lease expense | $ | $ | $ | $ | |||||||||||
Cash payments included in the measurement of our operating
lease liabilities were $
| Year Ending December 31, | Amount | |||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| Total | ||||
| Less: imputed interest | ( |
) | ||
| Total operating lease liabilities | $ | |||
NOTE 5—STOCKHOLDERS’ EQUITY
Common Stock
As of September 30, 2024 and December 31, 2023,
the Company was authorized to issue
11
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 information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following financial information is derived from our financial statements and should be read in conjunction with such financial statements and notes thereto set forth elsewhere herein.
Use of Terms
Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,” “our” and the “Company” refer to Reflect Scientific, Inc., and its consolidated subsidiaries.
Special Note Regarding Forward Looking Statements
This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
| ● | 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.
12
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 philosophy extends into our business strategies and acquisition plans. Through a series of strategic acquisitions, we acquired technology that has enabled us to expand our line of products to align with, and capitalize on, market needs. Our growing product portfolio includes ultra-low temperature freezers, blast freezers, solvent chillers and refrigerated transportation in addition to supplying OEM products to the life sciences industry.
Our Cryometrix brand ultra-low temperature and blast freezers innovative design enables our customers to save substantially on energy costs related to cryogenic storage. Ultra-low temperature freezers are used worldwide for the storage of vaccines, DNA, RNA, proteins and many other biological and chemical substances. There 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.
Critical Accounting Policies and Estimates
The preparation of the unaudited condensed consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, 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 may differ from these estimates.
For a description of the accounting policies that, in management’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 Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 29, 2024.
During the three months and nine months ended September 30, 2024, there were no significant changes in our accounting policies and estimates.
13
Results of Operations
Comparison of the Three Months Ended September 30, 2024 and 2023
The following table sets forth key components of our results of operations during the three months ended September 30, 2024 and 2023:
| Three Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Amount | % of Revenues | Amount | % of Revenues | ||||||||
| Revenues | $ | 514,023 | 100 | % | $ | 525,874 | 100.0 | % | |||
| Cost of goods sold | 186,197 | 36.2 | % | 195,888 | 37.2 | % | |||||
| Gross Profit | 327,826 | 63.8 | % | 329,986 | 62.8 | % | |||||
| Operating Expenses | |||||||||||
| Salaries and wages | 137,943 | 26.8 | % | 155,677 | 29.6 | % | |||||
| General and administrative | 87,552 | 17.0 | % | 84,331 | 16.0 | % | |||||
| Research and development | 3,092 | 0.6 | % | 9,082 | 1.7 | % | |||||
| Total Operating Expenses | 228,587 | 44.5 | % | 249,090 | 47.4 | % | |||||
| Income (loss) from operations | 99,239 | 19.3 | % | 80,896 | 15.4 | % | |||||
| Other income | 10,791 | 2.1 | % | 5,368 | 1.0 | % | |||||
| Net income (loss) before income taxes | 110,030 | 21.4 | % | 86,264 | 16.4 | % | |||||
| Income tax expense | (100) | (0.0) | % | - | - | % | |||||
| Net income (loss) | $ | 109,930 | 21.4 | % | $ | 86,264 | 16.4 | % | |||
Revenues. Revenues decreased by $11,851, or -2.3%, to $514,023 for the three months ended September 30, 2024, as compared to $525,874 for the three months ended September 30, 2023. Revenues were consistent between years due to freezer and chiller sales driven by customer needs.
Cost of goods sold. Cost of goods sold decreased by $9,691, or -4.9%, to $186,197 for the three months ended September 30, 2024, as compared to $195,888 for the three months ended September 30, 2023. Decrease was primarily due to slightly lower revenues for the same time period.
Gross profit. Our gross profit as a percentage of sales increased to 63.8%for the three months ended September 30, 2024, as compared to 62.8% for the three months ended September 30, 2023. The increase in gross profit percentage was primarily due to the margins in freezer and chiller sales during the current period.
Salaries and wages. Salaries and wages decreased by $17,334, or -11.4%, to $137,943 for the three months ended September 30, 2024, as compared to $155,677 for the three months ended September 30, 2023. Decrease was primarily due reduction of hours during the current period and decreased employee headcount.
General and administrative. General and administrative expenses increased by $3,221 or 3.8%, to $87,552 for the three months ended September 30, 2024, as compared to $84,331 for the three months ended September 30, 2023. Increase was primarily due to increased advertising and marketing during the current period.
Research and development. Research and development expenses decreased by $5,990, or -66.0%, to $3,092 for the three months ended September 30, 2024, as compared to $9,082 for the three months ended September 30, 2023. Such decrease was primarily a result of resource allocation to marketing and production.
14
Other income. Other income was $10,791 for the three months ended September 30, 2024, as compared to $5,368 for the three months ended September 30, 2023. The increase is from interest income earned on business money market savings accounts. These were opened during the third quarter of 2023.
Net income. As a result of the cumulative effect of the factors described above, our net income was $109,930 for the three months ended September 30, 2024, as compared to a net income of $86,264 for the three months ended September 30, 2023. Management continues to look for opportunities to increase sales, improve gross margins and control ongoing operating expenses.
Comparison of the Nine Months Ended September 30, 2024 and 2023
The following table sets forth key components of our results of operations during the nine months ended September 30, 2024 and 2023, both in dollars and as a percentage of our revenues.
| Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Amount | % of Revenues | Amount | % of Revenues | ||||||||
| Revenues | $ | 1,532,849 | 100.0 | % | $ | 891,385 | 100.0 | % | |||
| Cost of goods sold | 604,677 | 39.4 | % | 373,371 | 41.9 | % | |||||
| Gross Profit | 928,172 | 60.6 | % | 518,014 | 58.1 | % | |||||
| Operating Expenses | |||||||||||
| Salaries and wages | 428,611 | 28.0 | % | 472,521 | 53.0 | % | |||||
| General and administrative | 327,411 | 21.4 | % | 272,684 | 30.6 | % | |||||
| Research and development | 15,072 | 1.0 | % | 20,528 | 2.3 | % | |||||
| Total Operating Expenses | 771,094 | 50.3 | % | 765,733 | 85.9 | % | |||||
| Income (loss) from operations | 157,078 | 10.2 | % | (247,719) | (27.8) | % | |||||
| Other income | 29,968 | 2.0 | % | 5,368 | 0.6 | % | |||||
| Net income (loss) before income taxes | 187,046 | 12.2 | % | (242,351) | (27.2) | % | |||||
| Income tax expense | (100) | (0.0) | % | (312) | (0.0) | % | |||||
| Net income (loss) | $ | 186,946 | 12.2 | % | $ | (242,663) | (27.2) | % | |||
Revenues. Revenues increased by $641,464 or 72.0%, to $1,532,849 for the nine months ended September 30, 2024, from $891,385 for the nine months ended September 30, 2023. Such increase was primarily due to a significant increase in freezer and chiller sales throughout the year.
Cost of goods sold. Cost of goods sold increased by $231,306 or 62.0%, to $604,677 for the nine months ended September 30, 2024, from $373,371 for the nine months ended September 30, 2023. Such increase was primarily due to increased revenue and increased production.
Gross profit. Our gross profit as a percentage of sales increased to 60.6% for the nine months ended September 30, 2024, compared to 58.1% for the nine months ended June 30, 2023. The increase in gross profit percentage was primarily due to the increase in freezer and chiller sales, which have higher margins than other products.
Salaries and wages. Salaries and wages decreased by $43,910, or -9.3%, to $428,611 for the nine months ended September 30, 2024, from $472,521 for the nine months ended September 30, 2023. Such decrease was primarily due to decreased headcount and reduction in hours.
General and administrative. General and administrative expenses increased by $54,727, or 20.1%, to $327,411 for the nine months ended September 30, 2024, from $272,684 for the nine months ended September 30, 2023. Such increase was primarily due to the increased in public filing and insurance costs.
15
Research and development. Research and development expenses decreased by $5,456, or -26.6%, to $15,072 for the nine months ended September 30, 2024, from $20,528 for the nine months ended September 30, 2023. Such decrease was primarily a result of a shift in company priorities.
Other income. Other income was $29,968 for the nine months ended September 30, 2024, as compared to $5,368 for the nine months ended September 30, 2023. The increase is from interest income earned on business money market savings accounts. These were opened during the third quarter of 2023.
Net income (loss). As a result of the cumulative effect of the factors described above, our net income was $186,946 for the nine months ended September 30, 2024, as compared to net loss of $242,663 for the nine months ended September 30, 2023. Management has looked for opportunities to increase sales, improve gross margins and control ongoing operating expenses.
Liquidity and Capital Resources
As of September 30, 2024 and December 31, 2023, our current assets exceeded current liabilities by $1,954,096 and $1,773,784, respectively, and we had cash and cash equivalents of $1,030,408 and $1,277,951, 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 cash flow for the period indicated:
|
Nine Months Ended September 30, | |||||
| 2024 | 2023 | ||||
| Net cash (used in) provided by operating activities | $ | (247,543) | $ | (42,481) | |
| Net cash provided by investing activities | - | ||||
| Net cash provided by financing activities | - | ||||
| Net change in cash and cash equivalents | (247,543) | (42,481) | |||
| Cash and cash equivalents at beginning of period | 1,277,951 | 1,381,927 | |||
| Cash and cash equivalents at end of period | $ | 1,030,408 | $ | 1,339,446 | |
Net cash used in operating activities was $247,543 and used in operating activities $42,481 for the nine months ended September 30, 2024 and 2023, respectively. Significant factors affecting operating cash flows were primarily a result of increased accounts receivable during the current period.
We continue working to enhance our on-line ordering system to increase sales, develop the market for our ultra-low temperature freezers, work with current vendors to obtain more favorable pricing, and locate new vendors to provide opportunities to further reduce our cost of goods.
We will continue to focus our efforts on our core business activities while pursuing capital resources and evaluating potential future acquisitions which fit within and enhance our core business.
Off-Balance Sheet Arrangements
We 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
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ITEM 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 Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as of September 30, 2024. Based upon, and as of the date of this evaluation, our chief executive officer and principal financial officer determined that there have been no changes in our internal controls over financial reporting as of September 30, 2024 to the material weaknesses described in Item 9A “Controls and Procedures” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, our disclosure controls and procedures were not effective.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
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 PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
During the quarter ended September 30, 2024, none of the Company’s
directors or executive officers
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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* |
| 10.3 | JMST Purchase Agreement | 8-K Current Report dated April 4, 2006* |
| 10.4 | Cryomastor Merger Agreement | 8-K Current Report dated April 19, 2006* |
| 10.5 | Image Labs Merger Agreement | 8-K Current Report dated November 15, 2006* |
| 10.7 | Debenture Settlement | 8-K Current Report dated August 17, 2010* |
| 14 | Code of Ethics | December 31, 2003 10-K Annual Report* |
| 21 | Subsidiaries of the Company | December 31, 2003 10-K Annual Report* |
| Exhibit No. | Title of Document | Location if other than attached hereto |
| 31.1 | 302 Certification of Kim Boyce | This Filing |
| 31.2 | 302 Certification of Kim Boyce | This Filing |
| 32 | 906 Certification | This Filing |
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 June 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, filed with the Securities and Exchange Commission on January 23, 2007 |
| * | Image Labs Merger Agreement Closing | 8-KA Current Report dated November 15, 2006, filed with the Securities and Exchange Commission on March 6, 2007 |
| * | Debenture Placement | 8-K Current Report dated June 29, 2007 |
* 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: | November 12, 2024 | By: | /s/ Kim Boyce | |
| Chief Executive Officer, and Director | ||||
| Date: | November 12, 2024 | By: | /s/ Kim Boyce | |
| Principal Financial Officer |
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