SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act
June 27, 2006
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Date of Report
(Date of earliest event reported)
Reflect Scientific, Inc.
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(Exact name of registrant as specified in its charter)
UTAH 000-31377 87-0642556
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
970 Terra Bella Avenue
Mountain View, California 94043
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(Address of Principal Executive Offices)
(650) 960-0300
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(Registrant's Telephone Number)
N/A
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(Former Name or Former Address if changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the Registrant under any of
the following provisions (see general instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14-a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses acquired.
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
December 31, 2005
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders of
Cryomastor, Inc. (a development stage company)
Mountain View, California
We have audited the accompanying balance sheet of Cryomastor, Inc. (a
development stage company) as of December 31, 2005, and the related statements
of operations, shareholders' equity and cash flows for the year ended December
31, 2005. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cryomastor, Inc. (a
development stage company) as of December 31, 2005, and the results of its
operations and its cash flows for the year ended December 31, 2005 in
conformity with accounting principles generally accepted in the United States
of America.
/S/HJ Associates & Consultants, LLP
HJ Associates & Consultants, LLP
Salt Lake City, Utah
September 7, 2006
C O N T E N T S
Report of Independent Registered Accounting Firm . . . . . . . . . . . .3
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . 6
Statement of Shareholders' Equity. . . . . . . . . . . . . . . . . . . 7
Statement of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . 8
Notes to the Financial Statements. . . . . . . . . . . . . . . . . . . 9
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
Balance Sheet
ASSETS
December 31,
2005
CURRENT ASSETS
Cash $ 4,807
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FIXED ASSETS, NET (Note 3) 70,726
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OTHER ASSETS
Patents, net (Note 4) 9,085
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TOTAL ASSETS $ 84,618
===========
The accompanying notes are an integral part of these financial statements.
F-4
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
Balance Sheet (continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31,
2005
CURRENT LIABILITIES
Accounts payable $ 10,214
Accrued liabilities 76,034
Notes payable 302,671
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Total Current Liabilities 388,919
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock; $0.001 par value, authorized 10,000,000 shares;
10,000,000 shares issued and outstanding 10,000
Stock subscription receivable (Note 5) (4,900)
Deficit accumulated during the development stage (309,401)
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Total Shareholders' Deficit (304,301)
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 84,618
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The accompanying notes are an integral part of these financial statements.
F-5
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
Statement of Operations
From Inception on October 25, 2005 to December 31, 2005
REVENUES $ -
OPERATING EXPENSES
General and administrative 12,301
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OPERATING LOSS (12,301)
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OTHER EXPENSE
Loss on purchase of patent (297,100)
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NET LOSS $(309,401)
=========
Loss per share $ (.017)
=========
Weighted average number of shares outstanding 1,808,219
=========
The accompanying notes are an integral part of these financial statements.
F-6
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
Statement of Shareholders Equity
From Inception on October 25, 2005 to December 31, 2005
Deficit
Accumulated
Stock During the
Common Stock Subscription Development
Shares Amount Receivable Stage
Balance at Inception - $ - $ - $ -
Common stock issued for cash
At $0.001 per share on
October 25, 2006 10,000,000 10,000 - -
Stock subscription
receivable - - (4,900) -
Net income for the year
ended December 31, 2005 - - - (309,401)
----------- --------- --------- ------------
Balance December 31, 2005 10,000,000 $ 10,000 $ (4,900) $ (309,401)
=========== ========= ========= ============
The accompanying notes are an integral part of these financial statements.
F-7
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
Statement of Cash Flows
From Inception on October 25, 2005 to December 31, 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (309,401)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation expense 3,075
Amortization of patent 154
Loss on purchase of patent 297,100
Changes in operating assets and liabilities:
Increase in accounts payable and accrued liabilities 86,248
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Net Cash Provided by Operating Activities 77,176
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (73,801)
Purchase of patent (306,339)
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Net Cash Used by Investing Activities (380,140)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable 302,671
Capital contribution 5,100
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Net Cash Provided by Financing Activities 307,771
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NET INCREASE IN CASH 4,807
CASH AT BEGINNING OF PERIOD -
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CASH AT END OF YEAR $ 4,807
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NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash Paid For:
Interest $ -
Income taxes $ -
The accompanying notes are an integral part of these financial statements.
F-8
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
From Inception on October 25, 2005 to December 31, 2005
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was formed on October 25, 2005 and incorporated in the state of
California. The Company is involved in the design and manufacture of ultra
low temperature (ULT) cooling systems. The Cryomastor brand is a newly
invented, liquid nitrogen cooled storage system that provides temperature
versatility, temperature uniformity and eliminates many of the problems
associated with current ULT systems.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year-end.
b. Revenue Recognition
The Company recognizes revenues as required by Staff Accounting Bulletin No.
101 "Revenue Recognition in Financial Statements". Revenue is only recognized
on product sales once the product has been shipped to the customers (FOB
Origin), and all other obligations have been met. The Company had no income
for the year ended December 31, 2005.
c. Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
h. Newly Issued Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123 (Revised 2004) (SFAS 123 (R))
"Share-based payment". SFAS 123 (R) will require compensation costs related to
share-based payment transactions to be recognized in the financial statements.
With limited exceptions, the amount of compensation cost will be measured
based on the grant-date fair value of the equity or liability instruments
issued. In addition, liability awards will be re-measured each reporting
period. Compensation cost will be recognized over the period that an employee
provides service in exchange for the award. FASB 123 (R) replaces FASB 123,
Accounting for Stock-Based Compensation and supersedes APB option No. 25,
Accounting for Stock Issued to Employees. This guidance is effective as of the
first interim or annual reporting period after December 15, 2005 for Small
Business filers.
F-9
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
From Inception on October 25, 2005 to December 31, 2005
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
h. Newly Issued Accounting Pronouncements (Continued)
In November 2004, the FASB issued SFAS No. 151 (SFAS 151), "Inventory Costs".
SFAS 151 amends ARB No. 43, Chapter 4. This statement clarifies the accounting
for abnormal amounts of idle facility expense, freight, handling costs, and
wasted material (spoilage). SFAS 151 is the result of a broader effort by the
FASB and the IASB to improve financial reporting by eliminating certain narrow
differences between their existing accounting standards. This statement is
effective for inventory costs incurred during fiscal years beginning after
June 15, 2005. The adoption of SFAS 151 did not have a material impact on the
results of operations of the Company.
In December 2004, the FASB issued SFAS No. 152, "Accounting for Real Estate
Time-Sharing Transactions," which is effective for years beginning after June
15, 2005. The adoption of this new accounting standard had no material effect
on the Company's financial statements.
In December 2004, the FASB issued SFAS No. 153 (SFAS 153) "Exchange of Non-
monetary assets". This statement was a result of a joint effort by the FASB
and the IASB to improve financial reporting by eliminating certain narrow
differences between their existing accounting standards. One such difference
was the exception from fair value measurement in APB Opinion No. 29,
Accounting for Non-Monetary Transactions, for non-monetary exchanges of
similar productive assets. SFAS 153 replaces this exception with a general
exception from fair value measurement for exchanges of non-monetary assets
that do not have commercial substance. A non-monetary exchange has commercial
substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. This statement is effective for
non-monetary assets exchanges occurring in fiscal periods beginning after June
15, 2005. The adoption of SFAS 153 did not have a material effect on the
Company's financial position or results of operations.
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections," which replaces APB Opinion No. 20 "Accounting Changes," and FASB
Statement No. 3 "Reporting Accounting Changes in Interim Financial
Statements," and changes the requirements for the accounting for and reporting
of a change in accounting principle. This Statement requires retrospective
application to prior periods' financial statements of changes in accounting
principle, unless it is impracticable to determine either the period-specific
effects or the cumulative effect of the change. This Statement shall be
effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. Early adoption is permitted for
accounting changes and corrections of errors made in fiscal years beginning
after the date this Statement is issued. We do not believe that adoption of
SFAS 154 will have a material impact on our financial statements.
F-10
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
From Inception on October 25, 2005 to December 31, 2005
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
h. Newly Issued Accounting Pronouncements (Continued)
The implementation of the provisions of these pronouncements are not expected
to have a significant effect on the Company's financial statement
presentation.
NOTE 3 - FIXED ASSETS
Fixed assets 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.
Fixed assets and related depreciation for the period are as follows:
December 31,
2005
Machinery and equipment $ 73,801
Accumulated depreciation (3,075)
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Total Fixed Assets $ 70,726
============
Depreciation expense for the year ended December 31, 2005 was $3,075.
NOTE 4 - PATENTS
The patent is stated at lower of cost or market and is being amortized over 15
years as follows:
December 31,
2005
Patent $ 9,239
Accumulated amortization (154)
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Net Patent $ 9,085
============
Amortization expense for the year ended December 31, 2005 was $154.
NOTE 5 - RELATED PARTY TRANSACTIONS
Related party transactions at December 31, 2005 represent amounts owed to and
from a shareholder of the Company.
F-11
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
From Inception on October 25, 2005 to December 31, 2005
NOTE 6 - SUBSEQUENT EVENTS
Subsequent to year-end, the shareholders of Cryomaster, Inc. voted upon, and
approved a merger agreement by and among Reflect Scientific, Inc. ("Reflect")
and Cryomaster, Inc. (a development stage company) (Cryomaster). The merger
agreement provided for the merger of Cryomaster with and into Reflect. As a
result of which, Reflect became the surviving entity and assumed all of
Cryomaster's assets and liabilities. As a result of the merger, the
shareholders of the Company were issued 3,000,000 shares of Reflect's common
stock that are restricted securities, as well as paid $700,000. Cryomaster
was also advanced $300,000 to be utilized for its operations and $300,000 of
Cryomaster's debt for a U.S. patent was paid. An employment agreement will be
executed and the Cryomaster's shareholders will receive 2.5 % of the gross
annual revenue earned by Reflect.
An unaudited pro forma balance sheet as of December 31, 2005, and a pro forma
income statement for the year ended December 31, 2005, for the combined (post
merger) entity, is presented below:
Pro Forma
Combined
Cryomastor Reflect Combined Cryomastor &
As of As of Historical Reflect
December 31, December 31,Cryomastor & Pro Forma December 31,
2005 2005 Reflect Adjustments 2005
ASSETS
Current Assets:
Cash $ 4,807 $ 492,102 $ 496,909 $ - $ 496,909
Receivables - 317,274 317,274 - 317,274
Inventory - 305,684 305,684 - 305,684
Prepaid assets - 4,363 4,363 - 4,363
------- ---------- ---------- ---------- ---------
Total Current
Assets 9,707 1,119,423 1,124,230 - 1,124,230
------- ---------- ---------- ---------- ---------
Fixed assets,
(net) 70,726 20,950 91,676 - 91,676
Other Assets:
Deposits - 5,350 5,350 - 5,350
Intangibles (net) 9,085 - 9,085 4,851,576 4,651,574(1)
Accumulated
amortization - - - (205,452)(205,452)(2)
------- ---------- ---------- ---------- ---------
Total Other
Assets 9,085 5,350 14,435 4,646,124 4,660,559
------- ---------- ---------- ---------- ---------
TOTAL ASSETS $89,518 $1,145,723 $1,235,241 $4,646,124$5,876,465
======= ========== ========== ========== =========
F-12
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
From Inception on October 25, 2005 to December 31, 2005
NOTE 6 - SUBSEQUENT EVENTS (continued)
Pro Forma
Combined
Cryomastor Reflect Combined Cryomastor &
As of As of Historical Reflect
December 31, December 31,Cryomastor & Pro Forma December 31,
2005 2005 Reflect Adjustments 2005
LIABILITIES AND
STOCKHOLDERS'
EQUITY (DEFICIT)
Current Liabilities:
Accounts payable $10,214 $ 176,644 $ 186,858 $ - $ 186,858
Common stock
payable - - - 1,000,000 1,000,000(1)
Accrued
liabilities 76,034 2,343 78,377 - 78,377
Income taxes
payable - 23,077 23,077 - 23,077
------- ---------- ---------- ---------- ---------
Total Current
Liabilities 86,248 202,069 288,312 1,000,000 1,288,312
------- ---------- ---------- ---------- ---------
Non-current liabilities:
Deferred income
taxes - 32,823 32,823 - 32,823
Notes payable 302,671 - 302,671 - 302,671
------- ---------- ---------- ---------- ---------
Total non-current
liabilities 302,671 32,823 335,494 - 335,494
------- ---------- ---------- ---------- ---------
Total Liabilities388,919 234,892 623,806 1,000,000 1,623,806
------- ---------- ---------- ---------- ---------
Stockholders' Equity:
Preferred stock - 100 100 - 100
Common stock 10,000 255,300 265,300 30,000 -(1)
- - - (30,000) 285,300(1)
Stock
subscription
receivable (4,900) - (4,900) - (4,900)
Additional
paid-in capital - 1,210,337 1,210,337 3,720,000 -(1)
- - - 73,413 5,003,750(1)
Accumulated deficit
during the
Development
stage (309,401) - (309,401) 309,401 -(1)
Retained
earnings - (554,901) (554,901) (476,690)(1,031,591)
------- ---------- ---------- ---------- ---------
Total
Stockholders'
Equity (299,401) 910,836 611,435 3,646,124 4,252,659
------- ---------- ---------- ---------- ---------
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY (DEFICIT)$ 89,518 $1,145,723 $1,235,241 $4,646,124 $5,876,465
======== ========== ========== ========== ==========
F-13
CRYOMASTOR, INC. (A DEVELOPMENT STAGE COMPANY)
Notes to the Financial Statements
From Inception on October 25, 2005 to December 31, 2005
NOTE 6 - SUBSEQUENT EVENT (Continued)
Pro Forma
Combined
Cryomastor Reflect Combined Cryomastor &
As of As of Historical Reflect
December 31, December 31,Cryomastor & Pro Forma December 31,
2005 2005 Reflect Adjustments 2005
------- ---------- ---------- ---------- ---------
Sales $ - $2,241,069 $2,241,069 $ -$2,241,069
Cost of sales - 1,323,883 1,323,883 - 1,323,883
Salaries & wages - 362,935 362,935 - 362,935
Payroll taxes - 29,795 29,495 - 29,495
Rent expense - 79,587 79,587 - 79,587
General &
Administrative 12,301 380,845 393,146 205,452 598,598(2)
------- ---------- ---------- ---------- ---------
Income (loss)
from operations (12,301) 64,324 52,023 (205,452) (153,429)
------- ---------- ---------- ---------- ---------
Other income
(expense)
Interest expense - (9,261) (9,261) - (9,261)
Loss on purchase
of patent (297,100) - (297,100) - (297,100)
------- ---------- ---------- ---------- ---------
Total other
income (expense)(297,100) (9,261) (306,361) - (306,361)
------- ---------- ---------- ---------- ---------
Income tax
expense - (16,900) (16,900) - (16,900)
------- ---------- ---------- ---------- ---------
Net Income
(loss) $(309,401) $ 38,163 $ (271,238)$ (205,452)$(476,690)
======== ========== ========== ========== =========
Basic loss per
share (0.17) (0.00) (0.00) - (0.02)
======== ========== ========== ========== =========
Weighted average
shares
Outstanding 1,808,219 24,441,014 24,441,014 - 27,441,014
========= ========== ========== ========== ==========
Description of Adjustments and Other Notes
(1) To eliminate the accumulated deficit during the development stage of
Cryomaster and the paid in capital of Reflect as of the date of the merger and
record the issuance of the 3,000,000 shares of Reflect's common stock.
(2) To record 12 months of amortization for patent purchased by Reflect as
a result of the merger.
F-14
(b) Pro forma financial information.
See Note 6, Subsequent Events of the Cryomastor, Inc. financial
statements dated December 31, 2005 and attached to this 8-K/A-1 under Item
9.01 (a).
(c)(I) Registrant's Exhibits:
Attached:
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2.1 Agreement and Plan of Merger*
Exhibit 5.4(b) Written Consent of Cryomastor and
the Cryomastor Shareholders
Exhibit 5.4(c) Investment Letters
Exhibit 6.4(b) Consent of Directors of Reflect and
Consent of Directors and Sole
Stockholder of Merger Subsidiary
Exhibit 6.10 Employment Agreements
Exhibit 6.11 Interim Financing Documents
*Previously filed with original 8-K Current Report.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Current Report to be signed on its
behalf by the undersigned hereunto duly authorized.
REFLECT SCIENTIFIC, INC.
Date: 9/13/2006 /s/Kim Boyce
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Kim Boyce
President and Director