UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10−Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2024

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 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

incorporation or organization)

(I.R.S. Employer

Identification No.)

1266 South 1380 West, Orem, UT		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)

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 ☒ No ☐

Indicate by check mark whether the registrant 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting 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 comply 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 ☒

As of November 8, 2024, there were 85,664,086 common shares of the registrant issued and outstanding.

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

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

REFLECT SCIENTIFIC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2024		December 31, 2023
ASSETS	(Unaudited)

Current Assets
Cash and cash equivalents	$	1,030,408	$	1,277,951
Accounts receivable, net		272,098		108,191
Inventories, net		775,676		972,293
Prepaid expenses and other current assets		15,166		11,715
Total Current Assets		2,093,348		2,370,150

Operating lease right-of-use assets		181,618		235,653
Goodwill		60,000		60,000
Other long-term assets		3,100		3,100
TOTAL ASSETS	$	2,338,066	$	2,668,903

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable and accrued expenses	$	61,187	$	86,241
Customer deposits		-		447,444
Current portion of operating lease liabilities		78,065		62,681
Total Current Liabilities		139,252		596,366

Operating lease liabilities, net of current portion		119,294		179,963
TOTAL LIABILITIES		258,546		776,329

Stockholders' Equity
Preferred Stock, $0.01 par value, 5,000,000 shares authorized; none issued and outstanding as of September 30, 2024 and December 31, 2023		-		-
Common stock, $0.01 par value, 100,000,000 shares authorized; 85,664,086 shares issued and outstanding as of September 30, 2024 and December 31, 2023		856,640		856,640
Additional paid-in capital		20,302,681		20,302,681
Accumulated deficit		(19,079,801)		(19,266,747)
TOTAL STOCKHOLDERS’ EQUITY		2,079,520		1,892,574
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,338,066	$	2,668,903

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

REFLECT SCIENTIFIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues	$	514,023	$	525,874	$	1,532,849	$	891,385
Cost of goods sold		186,197		195,888		604,677		373,371
Gross profit		327,826		329,986		928,172		518,014

Operating Expenses
Salaries and wages		137,943		155,677		428,611		472,521
General and administrative		87,552		84,331		327,411		272,684
Research and development		3,092		9,082		15,072		20,528
Total Operating Expenses		228,587		249,090		771,094		765,733

INCOME (LOSS) FROM OPERATIONS		99,239		80,896		157,078		(247,719)

Other Income (Expense)		10,791		5,368		29,968		5,368

NET INCOME (LOSS) BEFORE INCOME TAXES		110,030		86,264		187,046		(242,351)
INCOME TAX EXPENSE		(100)		-		(100)		(312)
NET INCOME (LOSS)	$	109,930	$	86,264	$	186,946	$	(242,663)

Income (loss) per common share
Basic	$	0.00	$	0.00	$	0.00	$	0.00
Diluted	$	0.00	$	0.00	$	0.00	$	0.00

Weighted average shares outstanding
Basic		85,664,086		85,214,086		85,664,086		85,214,086
Diluted		85,664,086		85,664,086		85,664,086		85,214,086

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

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	85,664,086	$	856,640	$	20,302,681	$	(19,266,747)	$	1,892,574
Net loss	-		-		-		(31,971)		(31,971)
Balance at March 31, 2024	85,664,086	$	856,640	$	20,302,681	$	(19,298,718)	$	1,860,603
Net income	-		-		-		108,987		108,987
Balance at June 30, 2024	85,664,086	$	856,640	$	20,302,681	$	(19,189,731)	$	1,969,590
Net income							109,930		109,930
Balance at September 30, 2024	85,664,086		856,640		20,302,681		(19,079,801)		2,079,520

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	85,214,086	$	852,140	$	20,252,181	$	(18,807,719)	$	2,296,602
Stock-based compensation	-		-		6,875		-		6,875
Net loss	-		-		-		(147,839)		(147,839)
Balance at March 31, 2023	85,214,086	$	852,140	$	20,259,056	$	(18,955,558)	$	2,155,638
Stock-based compensation	-		-		6,875		-		6,875
Net loss	-		-		-		(181,088)		(181,088)
Balance at June 30, 2023	85,214,086	$	852,140	$	20,265,931	$	(19,136,646)	$	1,981,425
Stock-based compensation	-		-		6,875		-		6,875
Net income	-		-		-		86,264		86,264
Balance at September 30, 2023	85,214,086	$	852,140	$	20,272,806	$	(19,050,382)	$	2,074,564

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

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)	$	186,946	$	(242,663)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation		-		20,625
Amortization of right-of-use assets		54,035		44,192
Changes in operating assets and liabilities:
Accounts receivable		(163,907)		9,147
Inventories		196,617		(123,602)
Prepaid expenses and other current assets		(3,451)		10,528
Accounts payable and accrued expenses		(25,054)		25,307
Customer deposits		(447,444)		260,604
Operating lease liabilities		(45,285)		(46,619)
Net cash (used in) provided by operating activities		(247,543)		(42,481)

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		(247,543)		(42,481)

CASH AND CASH EQUIVALENTS
Beginning of the period		1,277,951		1,381,927
End of the period	$	1,030,408	$	1,339,446

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.

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.

The Company’s revenues for the three months ended September 30, 2024 and 2023 are disaggregated as follows:

	For the Three Months Ended September 30, 2024
	United States		International		Total
Revenues
Freezers and chillers	$	-	$	225,600	$	225,600
OEM and other		211,252		77,171		288,423
Total Revenues	$	211,252	$	302,771	$	514,023

	For the Three Months Ended September 30, 2023
	United States		International		Total
Revenues
Freezers and chillers	$	355,561	$	-	$	355,561
OEM and other		122,980		47,333		170,313
Total Revenues	$	478,541	$	47,333	$	525,874

The Company’s revenues for the nine months ended September 30, 2024 and 2023 are disaggregated as follows:

	For the Nine Months Ended September 30, 2024
	United States		International		Total
Revenues
Freezers and chillers	$	655,468	$	225,600	$	881,068
OEM and other		508,433		143,348		651,781
Total Revenues	$	1,163,901	$	368,948	$	1,532,849

	For the Nine Months Ended September 30, 2023
	United States		International		Total
Revenues
Freezers and chillers	$	411,319	$	-	$	411,319
OEM and other		332,015		148,051		480,066
Total Revenues	$	743,334	$	148,051	$	891,385

NOTE 3—INVENTORIES

Inventories at September 30, 2024 and December 31, 2023 consisted of the following:

	September 30, 2024		December 31, 2023
Finish goods	$	126,629	$	493,565
Raw material		755,091		584,772
Total inventories		881,720		1,078,337
Less reserve for obsolescence		(106,044)		(106,044)
Total inventories, net	$	775,676	$	972,293

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

NOTE 4—LEASES

The following was included in our condensed consolidated balance sheets at September 30, 2024 and December 31, 2023:

	September 30,			December 31,
	2024			2023
Operating lease right-of-use assets	$	181,618		$	235,653

Lease liabilities, current portion		78,065			62,681
Lease liabilities, long-term		119,294			179,963
Total operating lease liabilities	$	197,359		$	242,644

Weighted-average remaining lease term (months)		26			35
Weighted average discount rate		10.5	%		10.5	%

Total lease expense for the three and nine months ended September 30, 2024 and 2023 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating lease expense	$	23,878	$	15,216	$	71,628	$	45,648
Variable lease expense		2,598		5,300		2,598		16,939
Total lease expense	$	26,476	$	20,516	$	74,226	$	62,587

Cash payments included in the measurement of our operating lease liabilities were $21,878 and $16,267 for the three months ended and $62,880 and $48,075 for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, maturities of operating lease liabilities were as follows:

Year Ending December 31,	Amount
2024	$	22,429
2025		98,532
2026		101,708
Total		222,669
Less: imputed interest		(25,310	)
Total operating lease liabilities	$	197,359

NOTE 5—STOCKHOLDERS’ EQUITY

Common Stock

As of September 30, 2024 and December 31, 2023, the Company was authorized to issue 100,000,000 common shares, of which 85,664,086 common shares were issued and outstanding.

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.

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.

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.

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.

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.

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 adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K.

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.

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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REFLECT SCIENTIFIC, INC. 10-Q