10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2019

or

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

For the transition period from __________ to __________

Commission File Number 000-31377

REFLECT SCIENTIFIC, INC.

(Exact name of registrant as specified in its charter)

Utah

87-0642556

(State or other jurisdiction of

(IRS Employer Identification No.)

incorporation or organization)

1266 South 1380 West Orem, Utah 84058

 (Address of principal executive offices) (Zip Code)

(801) 226-4100

 (Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None

Indicate by check mark whether the Registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]   No [  ]

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).  

Yes [X]   No [  ]

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

Large Accelerated filer   [  ]

Accelerated filer                    [  ]

Non-accelerated filer      [X]

Smaller reporting company   [X]

Emerging growth company   [X]

1

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended

transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [  ]

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

Yes [  ]   No [X]

Applicable Only to Issuers Involved in Bankruptcy Proceedings During the Preceding Five Years:

Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Not applicable.

Applicable Only to Corporate Issuers:

Indicate the number of shares outstanding of each of the Registrant’s classes of common equity, as of the latest practicable date.

Class

Outstanding as of August 14, 2019

79,108,086 shares of $0.01 par value common stock on August 14, 2019

2

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1:	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited), and December 31, 2018	5
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018 (unaudited)	7
	Condensed Consolidated Statement of Stockholders’ Equity for the three
	and six months ended June 30, 2019 and 2018 (unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018 (unaudited)	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3:	Quantitative and Qualitative Disclosure about Market Risk	19
Item 4:	Controls and Procedures	19

PART II – OTHER INFORMATION

Item 1:	Legal Proceedings	20
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3:	Defaults Upon Senior Securities	20
Item 4:	Mine Safety Disclosure	20
Item 5:	Other Information	21
Item 6:	Exhibits	21
Signatures		23

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Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Reflect Scientific, Inc.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

June 30, 2019

The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.  However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made.  These financial statements should be read in conjunction with the 10-K for the period ended December 31, 2018, accompanying notes, and with the historical financial information of the Company.

4

REFLECT SCIENTIFIC, INC.

Condensed Consolidated Balance Sheets

ASSETS

		June 30, 2019 (Unaudited)		December 31, 2018
CURRENT ASSETS
Cash	$	205,456	$	220,427
Accounts receivable, net		120,605		155,543
Inventory, net		162,593		142,325
Prepaid assets		3,510		3,510
Total Current Assets		492,164		521,805
FIXED ASSETS, NET		5,776		7,766
OTHER ASSETS
Operating lease right-of-use assets		70,590		-
Goodwill		60,000		60,000
Deposits		3,100		3,100
TOTAL ASSETS	$	631,630	$	592,671

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

5

REFLECT SCIENTIFIC, INC.

Condensed Consolidated Balance Sheets (Continued)

LIABILITIES AND STOCKHOLDERS’ EQUITY

		June 30, 2019 (Unaudited)		December 31, 2018
CURRENT LIABILITIES
Accounts payable and accrued expense	$	56,754	$	52,450
Short-term line of credit		9,290		9,878
Customer deposits		-		12,500
Operating lease liabilities – current portion		46,318		-
Income taxes payable		100		100
Total Current Liabilities		112,462		74,928
LONG-TERM LIABILITIES
Operating lease liabilities		25,190		-
Total Liabilities		137,652		74,928
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value, authorized     5,000,000 shares; No shares issued and outstanding		-		-
Common stock, $0.01 par value, authorized     100,000,000 shares; 79,108,086 and 79,108,086         issued and outstanding, respectively		791,081		791,081
Additional paid in capital		20,027,369		20,027,369
Accumulated deficit		(20,324,472)		(20,300,707)
Total Stockholders’ Equity		493,978		517,743
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	631,630	$	592,671

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

6

REFLECT SCIENTIFIC, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended June 30,							For the Six Months Ended June 30,
			2019			2018		2019			2018
REVENUES	$	284,567		$	334,659		$		610,881	$	760,340
COST OF GOODS SOLD		105,629			120,527				199,535		229,837
GROSS PROFIT		178,938			214,132				411,346		530,503
OPERATING EXPENSES
Salaries and wages		112,190			159,773				230,313		272,534
Rent expense		9,179			12,468				19,196		21,451
Research and      development expense		4,462			-				29,623		14,905
General and      administrative expense		72,669			259,638				157,112		340,639
Total Operating        Expenses		198,500			431,879				436,244		649,529
OPERATING LOSS		(19,562)			(217,747)				(24,898)		(119,026)
OTHER INCOME (EXPENSE)
Total Other Income       (Expenses)		1,332			-				1,133		-
NET LOSS BEFORE TAXES		(18,230)			(217,747)				(23,765)		(119,026)
Income tax benefit (expense)		-			-				-		-
NET LOSS	$	(18,230)		$	(217,747)		$		(23,765)	$	(119,026)
NET LOSS PER SHARE – BASIC AND DILUTED	$	(0.00)		$	(0.00)		$		(0.00)	$	(0.00)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED		79,108,086			73,997,800				79,108,086		72,662,362

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

7

REFLECT SCIENIFIC, INC.

Consolidated Statements of Shareholders’ Equity (Deficit)

For the Three and Six Months Ended June 30, 2019 and 2018

	Common Stock		Additional Paid-In Capital	Accumulated Deficit	Total
	Shares	Amount
Balance, December 31, 2018	79,108,086	$ 791,081	$ 20,027,369	$ (20,300,707)	$ 517,743
Net loss for the three-month period ended March 31, 2019	-	-	-	(5,535)	(5,535)
Balance, March 31, 2019	79,108,086	791,081	20,027,369	(20,306,242)	512,208
Net loss for the three-month      period ended June 30, 2019	-	-	-	(18,230)	(18,230)
Balance, June 30, 2019	79,108,086	$ 791,081	$ 20,027,369	$ (20,324,472)	$493,978

	Common Stock		Additional Paid-In Capital	Accumulated Deficit	Total
	Shares	Amount
Balance, December 31, 2017	71,312,086	$ 713,121	$19,793,489	$(20,051,184)	$ 455,426
Net profit for the three-month period ended March 31, 2018	-	-	-	98,721	98,721
Balance, March 31, 2018	71,312,086	713,121	19,793,489	(19,952,463)	554,147
Stock issued for consulting services	4,200,000	42,000	126,000	-	168,000
Stock issued for compensation	1,000,000	10,000	30,000	-	40,000
Net loss for the three-month period ended June 30, 2018	-	-	-	(217,747)	(217,747)
Balance, June 30, 2018	76,512,086	$ 765,121	$19,949,489	$(20,170,210)	$ 544,400

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

8

REFLECT SCIENTIFIC, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

For the

Six Months Ended

June 30,

		2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(23,765)	$	(119,026)
Adjustments to reconcile net income to net cash
used in operating activities:
Common stock issued for services		-		148,645
Stock-based compensation		-		40,000
Depreciation		1,990		-
Changes in operating assets and liabilities:
Accounts receivable		34,938		(40,292)
Inventory		(20,268)		(9,952)
Prepaid expenses		-		(10,750)
Accounts payable and accrued expenses		4,304		(33,800)
Operating lease right-of-use asset		24,497		-
Operating lease liabilities		(23,579)		-
Customer deposits		(12,500)		(67,002)
Net Cash used in Operating Activities		(14,383)		(92,177)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments on short-term line of credit		(588)		-
Net Cash used in investing Activities		(588)		-
CASH FLOWS FROM FINANCING ACTIVITIES
Net funds received from line of credit		-		10,750
Net Cash provided by Financing Activities		-		10,750
NET CHANGE IN CASH		(14,971)		(81,427)
CASH AT BEGINNING OF PERIOD		220,427		235,858
CASH AT END OF PERIOD	$	205,456	$	154,431

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid For:
Interest	$	588	$	-
Income taxes	$	-	$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for prepaid expenses			$	19,356

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

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REFLECT SCIENTIFIC, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2019

(Unaudited)

NOTE 1 -

BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with rules and regulations of the Securities and Exchange Commission.  The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements.  Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company’s most recent audited consolidated financial statements and notes thereto included in its December 31, 2018 financial statements.  Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

NOTE 2 -

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND LINE OF BUSINESS:

Cole, Inc. (the Company) was incorporated under the laws of the State of Utah on November 3, 1999. The Company was organized to engage in any lawful activity for which corporations may be organized under the Utah Revised Business Corporation Act.  On December 30, 2003 the Company changed its name to Reflect Scientific, Inc.

Reflect Scientific designs, develops and sells scientific equipment for the Life Science and Manufacturing industries. The Company’s business activities include the manufacture and distribution of unique laboratory consumables and disposables such as filtration and purification products, customized sample handling vials, electronic wiring assemblies, high temperature silicone, graphite and vespel/graphite sealing components for use by original equipment manufacturers (“OEM”) in the chemical analysis industries, primarily in the field of gas/liquid chromatography.  

SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements include the accounts of Reflect Scientific, Inc. and its wholly owned subsidiary, Cryometrix. Intercompany transactions and accounts have been eliminated in consolidation.

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REFLECT SCIENTIFIC, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2019

(Unaudited)

USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.

REVENUE RECOGNITION.

We have applied the new revenue standard to all contracts from the date of initial application.  We recognize revenue when or as we satisfy a performance obligation.  We generally satisfy performance obligations at a point in time upon shipment of goods or, with our freezers, upon final acceptance of the unit by the customer, in accordance with the terms of each contract with the customer.  

A part of our customer base is made up of international customers.  The table below allocates revenue between domestic and international customers.  

			June 30, 2019								June 30, 2018
			Consumer		Long-term						Consumer		Long-term
Segments			Products		Contract			Total			Products		Contract			Total
Domestic	$		464,642		-			464,642	$		594,057					594,057
International			146,239					146,239			186,283					186,283
	$		610,881					610,881	$		760,340					760,340
Components				453,112		-	453,112					538,152		-	538,152
Engineering         Services				157,769			157,769					222,188			222,188
		$		610,881			610,881			$		760,340			760,340

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REFLECT SCIENTIFIC, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2019

(Unaudited)

ACCOUNTS RECEIVABLE:  Accounts receivables are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. At June 30, 2019 and December 31, 2018, the Company had accounts receivable, net of the allowance, of $120,605 and $155,543, respectively.  At June 30, 2019 and December 31, 2018, the allowance for doubtful accounts was $4,000 and $4,000, respectively.

INVENTORY:

Inventories are presented net of an allowance for obsolescence and are stated at the lower of cost or market value based upon the average cost inventory method.  The Company’s inventory consists of parts for scientific vial kits, refrigerant gases, components for detectors and ultra-low temperature freezers which it builds and other scientific items. At June 30, 2019 and December 31, 2018, the Company had inventory consisting of finished goods, net of allowance, of $162,593 and $142,325, respectively. At June 30, 2019 and December 31, 2018, the allowance for obsolescence was $86,339 and 86,339, respectively.

INTANGIBLE ASSETS:  Costs to obtain or develop patents are capitalized and amortized over the life of the patents. Patents are amortized from the date the Company acquires or is awarded the patent over their estimated useful lives, which range from 5 to 15 years.  An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. We perform an impairment analysis on an annual basis.  The Company’s analysis did not indicate any impairment of intangible assets as of the impairment analysis conducted December 31, 2018.

GOODWILL: Goodwill represents the excess of the Company’s acquisition cost over the fair value of net assets of the acquisition. Goodwill is not amortized, but is tested for impairment annually, or when a triggering event occurs. As described in ACS 360, the Company has adopted the goodwill impairment analysis that includes quantitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. A fair-value-based test is applied at the overall Company level. The test compares the estimated fair value of the Company at the date of the analysis to the carrying value of its net assets. The analysis also requires various judgments and estimates, including general and macroeconomic conditions, industry and the Company’s targeted market conditions, as well as relevant entity-specific events, such as a change in the market for the Company’s products and services. After considering the qualitative factors that would indicate a need for interim impairment of goodwill and applying the two-step process described in ASC 360, management has determined that the value of Company’s assets is not more likely than not less than the carrying value of the Company including goodwill, and that no impairment charge needs be recognized during the reporting periods.

12

REFLECT SCIENTIFIC, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2019

(Unaudited)

LEASES: In February of 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2016-02 - Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted this update as of January 1, 2019 using the modified retrospective transition method. Prior periods have not been restated. Upon implementation, the Company recognized an initial right-of-use asset of $95,087 and lease liability of $95,087. Due to the simplistic nature of the Company's leases, no change to retained earnings was required. See Note 4 for further details.

RESEARCH AND DEVELOPMENT EXPENSE - The Company accounts for research and development costs in accordance with the Financial Accounting Standards Board's Accounting Standard Codification Topic 730 “Research and Development".  Under ASC 730, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred.  Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved.  Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. 

NET LOSS PER SHARE: The computation of basic loss per share of common stock is based on the weighted average number of shares outstanding during the period.  Diluted EPS is computed by dividing net earnings by the weighted-average number of common shares and dilutive common stock equivalents during the period.  Common stock equivalents are not used in calculating dilutive EPS when their inclusion would be anti-dilutive.  At June 30, 2019 and 2018, the Company had no common stock equivalents.

RECENT ACCOUNTING PRONOUNCEMENTS: In March 2019 the Financial Accounting Standards Board issued ASU No. 2019-01 “Leases”, a clarification of the guidance issued in February 2016, ASU No. 2016-02, “Leases” Topic 842.  The Company adopted this standard effective January 2019. The adoption of this standard resulted in recording right-of-use assets and lease liabilities on its balance sheet.  The adoption was made on a prospective basis and, as a result, prior period amounts were not adjusted to reflect the impact of the updated guidance.  The adoption of this new accounting guidance did not have a significant impact on our financial statements.

June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for nonemployee share-based payment transactions by expanding the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Under the new standard, most of the guidance on stock compensation payments to nonemployees would be aligned with the requirements for share-based

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REFLECT SCIENTIFIC, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2019

(Unaudited)

payments granted to employees. This standard became effective for us on January 1, 2019. The adoption of this standard did not have a material impact on our consolidated financial statements.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations.

NOTE 3 -   GOING CONCERN

The Company continues to accumulate significant operating losses and has an accumulated deficit of $20,324,472 at June 30, 2019.  These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Management has taken a number of actions to reduce expenses. Management is seeking additional funding through the capital markets to facilitate the settlement of the remaining debentures, as well as to provide operating capital for its operations.  However, there is no assurance that additional funding will be available on acceptable terms, if at all.

NOTE 4 -   LEASES

We adopted ASC 842 using the modified retrospective approach, which allows us not to restate our comparative periods prior to the adoption of the standard on January 1, 2019.  As a result, prior period presented before this adoption are not adjusted to reflect the effect of this new standard.

We have operating leases for our office and warehouse facility as well as for an automobile.  We used the lease termination dates of November 30, 2020 for the building and July 7, 2021 for the automobile to calculate right of use (“ROU”) assets and lease liabilities.  

The following was included in our consolidated condensed balance sheet as of June 30, 2019:

Leases

As of June 30, 2019

Assets

ROU operating lease assets

$  70,590

Liabilities

Operating lease liabilities – current portion

$  46,318

Operating lease liabilities

    25,190

     Total operating lease liabilities

$  71,508

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REFLECT SCIENTIFIC, INC.

Notes to the Condensed Consolidated Financial Statements

June 30, 2019

(Unaudited)

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

Six Months Ended

Lease Cost

June 30, 2019

Operating lease cost

Administrative expenses

$       3,860

Rent expense

       19,196

Total operating lease cost

$     23,056

Our building lease does not specify an implicit rate of interest.  Therefore, we estimate our incremental borrowing rate, which is defined as the interest rate we would pay to borrow on a collateralized basis, considering such factors as length of lease term and the risks of the economic environment in which the leased asset operates.  As of June 30, 2019, the following disclosures for remaining lease term and incremental borrowing rates were applicable:

Six Months Ended

Supplemental Disclosures

June 30, 2019

Weighted average remaining lease term

1.53 years

Weighted average discount rate

  7% years

As of June 30, 2019, maturities of operating lease liabilities were the following:

Amounts under

Years ended December 31,

operating leases

Remaining 2019

$  25,388

2020

    48,160

2021

      3,774

Total lease payments

    77,322

Less imputed interest

    (5,814)

Total

$  71,508

NOTE 5 -   SUBSEQUENT EVENTS

In accordance with ASC 855-10 management reviewed all material events through the date of this report.  There are no material subsequent events to report.

15

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

Special Note Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 (the “Act”) provides a safe harbor for forward-looking statements made by or on behalf of our Company. Our Company and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements

contained in this Annual Report and other filings with the Securities and Exchange Commission and in reports to our Company’s stockholders. Management believes that all statements that express expectations and projections with respect to future matters, as well as from developments beyond our Company’s control including changes in global economic conditions are forward-looking statements within the meaning of the Act. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance however, that management’s expectations will necessarily come to pass. Factors that may affect forward- looking statements include a wide range of factors that could materially affect future developments and performance, including the following:

·

Changes in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or chooses to invest;

·

Changes in U.S., global or regional economic conditions;

·

Changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external financing for our operations and investments;

·

Increased competitive pressures, both domestically and internationally;

·

Legal and regulatory developments, such as regulatory actions affecting environmental activities;

·

The imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls;

·

Adverse weather conditions or natural disasters, such as hurricanes and earthquakes, labor disputes, which may lead to increased costs or disruption of operations.

This list of factors that may affect future performance and the accuracy of forward-looking statements are illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the unaudited Financial Statements and accompanying notes.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.  The Company has adopted the new revenue recognition and lease accounting standards. The Company believes there have been no other significant changes during the six-month period ended June 30, 2019, to the items disclosed as significant accounting policies in management's Notes to the Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

16

Plan of Operation and Business Growth

Our revenues during the six-month reporting periods decreased 20% during 2019 compared to 2018 revenues, as freezer sales for the 2019 period were $64,419 lower than 2018 and our specialty lab product sales slowed. The major decreases were in sales of vials, purification products, and detectors.  We discontinued our detector product at the end of 2018, so there were no 2019 sales compared to sales of $14,724 in 2018.

Our efforts continue to be focused on increasing the sales of our life science consumables while, at the same time, working to enhance the design of our liquid nitrogen refrigeration products.  Of those liquid nitrogen refrigeration products, the ultra-low temperature freezer is receiving highest priority.  We have received positive feedback of the improvements and enhancements made to the design of the ultra-low temperature freezer.  We also continue work on the refrigerated trailer, or “reefer.”  We have our first manufactured unit operational, have conducted a number of road tests and are working to develop alliances with contract manufacturers for those products.

We are receiving considerable interest in our latest product introduction, which is an ultra-cold chiller used in the manufacture of CBD oil.  This unit improves the efficiency of the manufacturing process and enables the production of a higher purity in the CBD oil produced.

Concurrent with the development and commercialization of the above products, we have completed our on-line catalog and are making progress in enrolling new distributors for our consumable products.  

An analysis of operating results for the three months ended June 30, 2019 and 2018 follows.

Results of Operations

Three Months Ended June 30, 2019 and 2018

		For the three months ended June 30,
		2019		2018		Change
Revenues	$	284,567	$	334,659	$	(50,092)
Cost of goods sold		105,629		120,527		(14,898)
Gross profit		178,938		214,132		(35,194)
Operating expenses		198,500		431,879		(233,379)
Other expense		1,332		-		1,332
Net profit (loss)	$	(18,230)	$	(217,747)	$	199,517

Revenues decreased during the three-month period ended June 30, 2019, to $284,567 from $334,659 for the three-month period ended June 30, 2018, a decrease of $50,092.  The decrease results primarily from decreased sale of specialty lab supplies.  We are continuing work to increase our market penetration in the ultra-low temperature freezer market.

Cost of goods decreased in the quarter ending June 30, 2019, as compared to June 30, 2018, to $105,629 from $120,527, a decrease of $14,898. We realized a gross profit percentage of 63% for the three months

17

ended June 30, 2019, compared to 64% for the three months ended June 30, 2018.  The gross profit percentage is dependent on the mix of product sales, which varies from quarter to quarter.  We continue to actively work to obtain more favorable pricing from our vendors in order to increase the margins realized on all product lines.  

Operating expenses decreased to $198,500 in the three months ended June 30, 2019, a decrease of $233,379 over the expenses of $431,879 incurred in the three-month period ended June 30, 2018.  The decrease results primarily from the $208,000 charge recorded in 2018 for the issuance of stock for the payment of consulting services and stock-based compensation to an employee.  There were no stock issuances for services in 2019. While we continue to monitor and minimize operating costs, we also realize that certain levels of expenditures are required in order to commercialize the products and achieve market penetration.  

The net loss for the three-month period ended June 30, 2019 was $18,230, which compares to a net loss of $217,747 for the three-month period ended June 30, 2018.  Management continues to look for opportunities to increase sales, improve gross margins and control ongoing operating expenses.

The net loss of $18,230 for the three-month period ended June 30, 2019 represents a loss of $0.00 per share.  This compares to the net loss of $217,747, or loss of $0.00 per share, for the three months ended June 30, 2018.

Six Months Ended June 30, 2019 and 2018

		For the six months ended June 30,
		2019		2018		Change
Revenues	$	610,881	$	760,340	$	(149,459)
Cost of goods sold		199,535		229,837		(30,302)
Gross profit		411,346		530,503		(119,157)
Operating expenses		436,244		649,529		(213,285)
Other expense		1,133		-		1,133
Net profit (loss)	$	(23,765)	$	(119,026)	$	95,261

Revenues decreased during the quarter ended June 30, 2019, to $610,881 from $760,340 for the quarter ended June 30, 2018, a decrease of $149,459.  The decrease results primarily from the sale of ultra-low temperature freezers which generated revenue of $157,769 in 2019 compared to revenue of $222,188 in 2018. We are continuing work to increase our market penetration in the ultra-low temperature freezer market.

Cost of goods decreased in the quarter ending June 30, 2019, as compared to June 30, 2018, to $199,535 from $229,837, a decrease of $30,302. We realized a gross profit percentage of 67% for the six months ended June 30, 2019, compared to 70% for the six months ended June 30, 2018.  The gross profit percentage is dependent on the mix of product sales, which varies from quarter to quarter.  We continue to actively work to obtain more favorable pricing from our vendors in order to increase the margins realized on all product lines.  

Operating expenses decreased to $436,244 in the six months ended June 30, 2019, a decrease of $213,285

18

over the expenses of $649,529 incurred in the six-month period ended June 30, 2018.  The increase results primarily from stock-based consulting fees and stock-based compensation paid in 2018. While we continue to monitor and minimize operating costs, we also realize that certain levels of expenditures are required in order to commercialize the products and achieve market penetration.  

The net loss for the six-month period ended June 30, 2019 was $23,765, which compares to a net loss of $119,026 for the six-month period ended June 30, 2018.  Management continues to look for opportunities to increase sales, improve gross margins and control ongoing operating expenses.

The net loss of $23,765 for the six-month period ended June 30, 2019 represents a loss of $0.00 per share. This compares to the net loss of $119,026, or loss of $0.00 per share, for the six months ended June 30, 2018.

Seasonality and Cyclicality

We do not believe our business is cyclical.

Liquidity and Capital Resources

Our cash resources at June 30, 2019, were $205,456, with accounts receivable of $120,605, net of allowance, and inventory of $162,593, net of allowance. Our working capital on June 30, 2019, was $379,702.  Working capital on December 31, 2018 was $446,877.

For the six-month period ended June 30, 2019, net cash used in operating activities was $14,383 which compares to $92,177 net cash used in operating activities for the six-month period ended June 30, 2018.  

Off-Balance Sheet Arrangements

None.

Item 3.  Quantitative and Qualitative Disclosure about Market Risk

Not required.

Item 4.  Controls and Procedures

(a)

Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this Quarterly Report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based upon this evaluation, our Chief Executive Officer and Principal Financial Officer concluded that information required to be disclosed is recorded, processed, summarized and reported within the specified periods, and is accumulated and communicated to management, including our Chief Executive Officer and Principal Financial Officer, to allow for timely decisions regarding required disclosure of material information required to be included in our periodic Securities and Exchange Commission reports.  Our

19

disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures are not effective at that reasonable assurance level as of the end of the period covered by this report based upon our current level of transactions and staff.  However, it should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote

(b)

Changes in Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act.  Management reviewed our internal controls over financial reporting, and there have been no changes in our internal controls over financial reporting for the six-month period ended June 30, 2019 that have materially affected, or are like to affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

None; not applicable.

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

Recent Sales of Unregistered Securities

None; not applicable.

Use of Proceeds of Registered Securities

None; not applicable.

Purchases of Equity Securities by Us and Affiliated Purchasers

During the six months ended June 30, 2019, we have not purchased any equity securities nor have any officers or directors of the Company.

ITEM 3.  Defaults Upon Senior Securities

None

ITEM 4.  Mine Safety Disclosure

Not applicable.

20

ITEM 5.  Other Information.

None

ITEM 6.  Exhibits

(a)

Exhibits.

Exhibit No.	Title of Document	Location if other than attached hereto
3.1	Articles of Incorporation	10-SB Registration Statement*
3.2	Articles of Amendment to Articles of Incorporation	10-SB Registration Statement*
3.3	By-Laws	10-SB Registration Statement*
3.4	Articles of Amendment to Articles of Incorporation	8-K Current Report dated December 31, 2003*
3.5	Articles of Amendment to Articles of Incorporation	8-K Current Report dated December 31, 2003*
3.6	Articles of Amendment	September 30, 2004 10-QSB Quarterly Report*
3.7	By-Laws Amendment	September 30, 2004 10-QSB Quarterly Report*
4.1	Debenture	8-K Current Report dated June 29, 2008*
4.2	Form of Purchasers Warrant	8-K Current Report dated June 29, 2008*
4.3	Registration Rights Agreement	8-K Current Report dated June 29, 2008*
4.4	Form of Placement Agreement	8-K Current Report dated June 29, 2008*
10.1	Securities Purchase Agreement	8-K Current Report dated June 29, 2008*
10.2	Placement Agent Agreement	8-K Current Report dated June 29, 2008*

14	Code of Ethics	December 31, 2003 10-K Annual Report*
21	Subsidiaries of the Company	December 31, 2006 10-K Annual Report*

Exhibit No.	Title of Document	Location if other than attached hereto
31.1	302 Certification of Kim Boyce
31.2	302 Certification of Keith Merrell
32	906 Certification

Exhibits

Additional Exhibits Incorporated by Reference

*	Reflect California Reorganization	8-K Current Report dated December 31, 2003
*	JMST Acquisition	8-K Current Report dated April 4, 2006
*	Cryomastor Reorganization	8-K Current Report dated 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
*	Image Labs Merger Agreement Closing	8-KA Current Report dated November 15, 2006

* Previously filed and incorporated by reference.

22

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:

August 14, 2019

By:  /s/ Kim Boyce

       Kim Boyce, CEO, President and Director

Date:

August 14, 2019

By:  /s/ Tom Tait

        Tom Tait, Vice President and Director

Date:

August 14, 2019

By:  /s/ Keith Merrell

        Keith Merrell, CFO, Principal Financial Officer

23

EX-31

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

     I, Kim Boyce certify that:

     1.   I have reviewed this Quarterly Report on Form 10-Q of Reflect Scientific, Inc.;

     2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

     4.   The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;  

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

     5.   The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions);

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: 08/14/2019                          Signature:/s/Kim Boyce

                                                         Kim Boyce

                                                         Chief Executive Officer and Director

EX-31

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

     I, Keith L. Merrell certify that:

     1.   I have reviewed this Quarterly Report on Form 10-Q of Reflect Scientific, Inc.;

     2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

     4.   The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

     5.   The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions);

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: 08/14/2019                           Signature:/s/Keith Merrell

                                                          Keith Merrell

                                                          Principal Financial Officer and CFO

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Reflect Scientific, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), We, Kim Boyce, our Chief Executive Officer and director and Keith Merrell, our Chief/Principal Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: 08/14/2019                             /s/Kim Boyce

                                                           Kim Boyce

                                                           Chief Executive Officer and Director

Dated: 08/14/2019                            /s/Keith Merrell

                                                          Keith Merrell

                                                          Principal Financial Officer and CFO

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 14, 2019
Details
Registrant CIK	0001103090
Fiscal Year End	--12-31
Registrant Name	REFLECT SCIENTIFIC INC
SEC Form	10-Q
Period End date	Jun. 30, 2019
Tax Identification Number (TIN)	87-0642556
Number of common stock shares outstanding		79,108,086
Filer Category	Non-accelerated Filer
Current with reporting	Yes
Interactive Data Current	Yes
Shell Company	false
Small Business	true
Emerging Growth Company	true
Ex Transition Period	false
Entity File Number	000-31377
Entity Incorporation, State or Country Code	UT
Entity Address, Address Line One	1266 South 1380 West
Entity Address, City or Town	Orem
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84058
City Area Code	801
Local Phone Number	226-4100
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Document Quarterly Report	true
Document Transition Report	false

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2019	Dec. 31, 2018
CURRENT ASSETS
Cash	$ 205,456	$ 220,427
Accounts receivable, net	120,605	155,543
Inventory, net	162,593	142,325
Prepaid assets	3,510	3,510
Total Current Assets	492,164	521,805
FIXED ASSETS, NET	5,776	7,766
OTHER ASSETS
Goodwill	60,000	60,000
Deposits	3,100	3,100
Total Other Assets	133,690	63,100
TOTAL ASSETS	631,630	592,671
CURRENT LIABILITIES
Accounts payable and accrued expense	56,754	52,450
Short-term lines of credit	9,290	9,878
Customer deposits	0	12,500
Operating lease liabilities - current portion	46,318	0
Income taxes payable	100	100
Total Current Liabilities	112,462	74,928
Operating lease liabilities - long term	25,190	0
Total Liabilities	137,652	74,928
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, authorized 5,000,000 shares; No shares issued and outstanding	0	0
Common stock, $0.01 par value, authorized 100,000,000 shares; 79,108,086 and 79,108,086 issued and outstanding, respectively	791,081	791,081
Additional paid in capital	20,027,369	20,027,369
Accumulated deficit	(20,324,472)	(20,300,707)
Total Stockholders' Equity	493,978	517,743
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 631,630	$ 592,671

XML

Condensed Consolidated Balance Sheets - Parenthetical - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Details
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	0	0
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares, Outstanding	79,108,086	79,108,086
Common Stock, Shares, Issued	79,108,086	79,108,086

XML

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Details
REVENUES	$ 284,567	$ 334,659	$ 610,881	$ 760,340
COST OF GOODS SOLD	105,629	120,527	199,535	229,837
GROSS PROFIT	178,938	214,132	411,346	530,503
OPERATING EXPENSES
Salaries and wages	112,190	159,773	230,313	272,534
Rent expense	9,179	12,468	19,196	21,451
Research and development expense	4,462	0	29,623	14,905
General and administrative expense	72,669	259,638	157,112	340,639
Total Operating Expenses	198,500	431,879	436,244	649,529
OPERATING INCOME (LOSS)	(19,562)	(217,747)	(24,898)	(119,026)
OTHER EXPENSE
Total Other Income (Expenses)	1,332	0	1,133	0
NET INCOME (LOSS) BEFORE TAXES	(18,230)	(217,747)	(23,765)	(119,026)
Provision for income taxes	0	0	0	0
NET INCOME (LOSS)	$ (18,230)	$ (217,747)	$ (23,765)	$ (119,026)
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED	$ (0.00)	$ 0.00	$ (0.00)	$ 0.00
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED	79,108,086	73,997,800	79,108,086	72,662,362

XML

Consolidated Statements of Stockholders' Equity - USD ($)	Total	Common Stock	Additional Paid-in Capital	Retained Earnings
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	$ 455,426	$ 713,121	$ 19,793,489	$ (20,051,184)
Balance, December 31, 2017 at Dec. 31, 2017	455,426	$ 713,121	19,793,489	(20,051,184)
Balance, December 31, 2017 at Dec. 31, 2017		71,312,086
Net income (loss)	98,721	$ 0	0	98,721
Stock issued for consulting services	168,000	$ 42,000	126,000	0
Stock issued for consulting services		4,200,000
Stock issued for compensation	40,000	$ 10,000	30,000	0
Stock issued for compensation		1,000,000
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	455,426	$ 713,121	19,793,489	(20,051,184)
Common Stock, Shares, Outstanding, Ending Balance at Mar. 31, 2018		71,312,086
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Mar. 31, 2018	554,147	$ 713,121	19,793,489	(19,952,463)
Balance, December 31, 2017 at Dec. 31, 2017	455,426	$ 713,121	19,793,489	(20,051,184)
Balance, December 31, 2017 at Dec. 31, 2017		71,312,086
Net income (loss)	(119,026)
Stock issued for compensation	40,000
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	455,426	$ 713,121	19,793,489	(20,051,184)
Common Stock, Shares, Outstanding, Ending Balance at Jun. 30, 2018		76,512,086
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Jun. 30, 2018	544,400	$ 765,121	19,949,489	(20,170,210)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	554,147	713,121	19,793,489	(19,952,463)
Balance, December 31, 2017 at Mar. 31, 2018	554,147	$ 713,121	19,793,489	(19,952,463)
Balance, December 31, 2017 at Mar. 31, 2018		71,312,086
Net income (loss)	(217,747)			(217,747)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	554,147	$ 713,121	19,793,489	(19,952,463)
Common Stock, Shares, Outstanding, Ending Balance at Jun. 30, 2018		76,512,086
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Jun. 30, 2018	544,400	$ 765,121	19,949,489	(20,170,210)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	544,400	765,121	19,949,489	(20,170,210)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	517,743	791,080	20,027,369	(20,300,707)
Balance, December 31, 2017 at Dec. 31, 2018	$ 517,743	$ 791,080	20,027,369	(20,300,707)
Balance, December 31, 2017 at Dec. 31, 2018	79,108,086	79,108,086
Net income (loss)	$ (5,535)	$ 0	0	(5,535)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	517,743	$ 791,080	20,027,369	(20,300,707)
Common Stock, Shares, Outstanding, Ending Balance at Mar. 31, 2019		79,108,086
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Mar. 31, 2019	512,208	$ 791,080	20,027,369	(20,306,242)
Balance, December 31, 2017 at Dec. 31, 2018	$ 517,743	$ 791,080	20,027,369	(20,300,707)
Balance, December 31, 2017 at Dec. 31, 2018	79,108,086	79,108,086
Net income (loss)	$ (23,765)
Stock issued for compensation	0
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	$ 517,743	$ 791,080	20,027,369	(20,300,707)
Common Stock, Shares, Outstanding, Ending Balance at Jun. 30, 2019	79,108,086	79,108,086
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Jun. 30, 2019	$ 493,978	$ 791,081	20,027,369	(20,324,472)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	512,208	791,080	20,027,369	(20,306,242)
Balance, December 31, 2017 at Mar. 31, 2019	512,208	$ 791,080	20,027,369	(20,306,242)
Balance, December 31, 2017 at Mar. 31, 2019		79,108,086
Net income (loss)	(18,230)	$ 0	0	(18,230)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	$ 512,208	$ 791,080	20,027,369	(20,306,242)
Common Stock, Shares, Outstanding, Ending Balance at Jun. 30, 2019	79,108,086	79,108,086
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Jun. 30, 2019	$ 493,978	$ 791,081	20,027,369	(20,324,472)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	$ 493,978	$ 791,081	$ 20,027,369	$ (20,324,472)

XML

Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (23,765)	$ (119,026)
Adjustments to reconcile net income to net cash used in operating activities:
Common stock issued for services	0	148,645
Stock issued for compensation	0	40,000
Depreciation	1,990	0
Accounts receivable	34,938	(40,292)
Inventory	(20,268)	(9,952)
Common stock issued for services	0	(10,750)
Accounts payable and accrued expenses	4,304	(33,800)
Operating lease right-of-use asset	24,497	0
Operating lease liabilities	(23,579)	0
Customer deposits	(12,500)	(67,002)
Net Cash (used in) provided by Operating Activities	(14,383)	(92,177)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments on short-term line of credit	(588)	0
Net Cash used in investing Activities	(588)	0
CASH FLOWS FROM FINANCING ACTIVITIES
Net funds received from line of credit	0	10,750
Net Cash provided by Financing Activities	0	10,750
NET CHANGE IN CASH	(14,971)	(81,427)
CASH AT BEGINNING OF PERIOD	220,427	235,858
CASH AT END OF PERIOD	205,456	154,431
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest	588	0
Income taxes	0	0
Common stock issued for services	$ 0	$ 19,356

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Organization, Consolidation and Presentation of Financial Statements

6 Months Ended

Jun. 30, 2019

Notes

Organization, Consolidation and Presentation of Financial Statements

NOTE 1 -   BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with rules and regulations of the Securities and Exchange Commission.  The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements.  Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company’s most recent audited consolidated financial statements and notes thereto included in its December 31, 2018 financial statements.  Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

NOTE 2 -   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND LINE OF BUSINESS:

Cole, Inc. (the Company) was incorporated under the laws of the State of Utah on November 3, 1999. The Company was organized to engage in any lawful activity for which corporations may be organized under the Utah Revised Business Corporation Act.  On December 30, 2003 the Company changed its name to Reflect Scientific, Inc.

Reflect Scientific designs, develops and sells scientific equipment for the Life Science and Manufacturing industries. The Company’s business activities include the manufacture and distribution of unique laboratory consumables and disposables such as filtration and purification products, customized sample handling vials, electronic wiring assemblies, high temperature silicone, graphite and vespel/graphite sealing components for use by original equipment manufacturers (“OEM”) in the chemical analysis industries, primarily in the field of gas/liquid chromatography. 

SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements include the accounts of Reflect Scientific, Inc. and its wholly owned subsidiary, Cryometrix. Intercompany transactions and accounts have been eliminated in consolidation.

USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.

REVENUE RECOGNITION.

We have applied the new revenue standard to all contracts from the date of initial application.  We recognize revenue when or as we satisfy a performance obligation.  We generally satisfy performance obligations at a point in time upon shipment of goods or, with our freezers, upon final acceptance of the unit by the customer, in accordance with the terms of each contract with the customer. 

A part of our customer base is made up of international customers.  The table below allocates revenue between domestic and international customers. 

		June 30, 2019				June 30, 2018
Segments		Consumer Products	Long-term Contracts	Total		Consumer Products	Long-term Contracts	Total
Domestic	$	464,642	--	464,642	$	594,057	--	594,057
International		146,239	--	146,239		186,283	--	186,283
	$	610,881	--	610,881	$	760,340	--	760,340
Components		453,112	--	453,112	$	538,152	--	538,152
Engineering services		157,769	--	157,769		222,188	--	222,188
	$	610,881	--	610,881	$	760,340	--	760,340

ACCOUNTS RECEIVABLE:  Accounts receivables are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. At June 30, 2019 and December 31, 2018, the Company had accounts receivable, net of the allowance, of $120,605 and $155,543, respectively.  At June 30, 2019 and December 31, 2018, the allowance for doubtful accounts was $4,000 and $4,000, respectively.

INVENTORY: Inventories are presented net of an allowance for obsolescence and are stated at the lower of cost or market value based upon the average cost inventory method.  The Company’s inventory consists of parts for scientific vial kits, refrigerant gases, components for detectors and ultra-low temperature freezers which it builds and other scientific items.  At June 30, 2019 and December 31, 2018, the Company had inventory consisting of finished goods, net of allowance, of $162,593 and $142,325, respectively.  At June 30, 2019 and December 31, 2018, the allowance for obsolescence was $86,339 and $86,339, respectively.

INTANGIBLE ASSETS:  Costs to obtain or develop patents are capitalized and amortized over the life of the patents. Patents are amortized from the date the Company acquires or is awarded the patent over their estimated useful lives, which range from 5 to 15 years.  An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. We perform an impairment analysis on an annual basis.  The Company’s analysis did not indicate any impairment of intangible assets as of the impairment analysis conducted December 31, 2018.

GOODWILL: Goodwill represents the excess of the Company’s acquisition cost over the fair value of net assets of the acquisition. Goodwill is not amortized, but is tested for impairment annually, or when a triggering event occurs. As described in ACS 360, the Company has adopted the goodwill impairment analysis that includes quantitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. A fair-value-based test is applied at the overall Company level. The test compares the estimated fair value of the Company at the date of the analysis to the carrying value of its net assets. The analysis also requires various judgments and estimates, including general and macroeconomic conditions, industry and the Company’s targeted market conditions, as well as relevant entity-specific events, such as a change in the market for the Company’s products and services. After considering the qualitative factors that would indicate a need for interim impairment of goodwill and applying the two-step process described in ASC 360, management has determined that the value of Company’s assets is not more likely than not less than the carrying value of the Company including goodwill, and that no impairment charge needs be recognized during the reporting periods.

LEASES: In February of 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2016-02 - Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted this update as of January 1, 2019 using the modified retrospective transition method. Prior periods have not been restated. Upon implementation, the Company recognized an initial right-of-use asset of $95,087 and lease liability of $95,087. Due to the simplistic nature of the Company's leases, no change to retained earnings was required. See Note 4 for further details.

RESEARCH AND DEVELOPMENT EXPENSE - The Company accounts for research and development costs in accordance with the Financial Accounting Standards Board's Accounting Standard Codification Topic 730 “Research and Development".  Under ASC 730, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred.  Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved.  Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. 

NET LOSS PER SHARE: The computation of basic loss per share of common stock is based on the weighted average number of shares outstanding during the period.  Diluted EPS is computed by dividing net earnings by the weighted-average number of common shares and dilutive common stock equivalents during the period.  Common stock equivalents are not used in calculating dilutive EPS when their inclusion would be anti-dilutive.  At June 30, 2019 and 2018, the Company had no common stock equivalents.

RECENT ACCOUNTING PRONOUNCEMENTS:   In March 2019 the Financial Accounting Standards Board issued ASU No. 2019-01 “Leases”, a clarification of the guidance issued in February 2016, ASU No. 2016-02, “Leases” Topic 842.  The Company adopted this standard effective January 2019. The adoption of this standard resulted in recording right-of-use assets and lease liabilities on its balance sheet.  The adoption was made on a prospective basis and, as a result, prior period amounts were not adjusted to reflect the impact of the updated guidance.  The adoption of this new accounting guidance did not have a significant impact on our financial statements.

June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for nonemployee share-based payment transactions by expanding the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Under the new standard, most of the guidance on stock compensation payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. This standard became effective for us on January 1, 2019. The adoption of this standard did not have a material impact on our consolidated financial statements.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows.  Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations.

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Going Concern

6 Months Ended

Jun. 30, 2019

Notes

Going Concern

NOTE 3 – GOING CONCERN

The Company continues to accumulate significant operating losses and has an accumulated deficit of $20,324,472 at June 30, 2019.  These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Management has taken a number of actions to reduce expenses. Management is seeking additional funding through the capital markets to facilitate the settlement of the remaining debentures, as well as to provide operating capital for its operations.  However, there is no assurance that additional funding will be available on acceptable terms, if at all.

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Leases

6 Months Ended

Jun. 30, 2019

Notes

Leases

NOTE 4 -      LEASES

We adopted ASC 842 using the modified retrospective approach, which allows us not to restate our comparative periods prior to the adoption of the standard on January 1, 2019.  As a result, prior period presented before this adoption are not adjusted to reflect the effect of this new standard.

We have operating leases for our office and warehouse facility as well as for an automobile.  We used the lease termination dates of November 30, 2020 for the building and July 7, 2021 for the automobile to calculate right of use (“ROU”) assets and lease liabilities. 

The following was included in our consolidated condensed balance sheet as of June 30, 2019:

Leases	As of June 30, 2019
Assets
ROU operating lease assets	$	70,590
Liabilities
Operating lease liabilities – current portion	$	46,318
Operating lease liabilities		25,190
Total operating lease liabilities	$	71,508

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

Lease Cost	Six Months Ended June 30, 2019
Operating lease cost Administrative expenses	$	3,860
Rent expense		19,196
Total operating lease cost	$	23,056

Our building lease does not specify an implicit rate of interest.  Therefore, we estimate our incremental borrowing rate, which is defined as the interest rate we would pay to borrow on a collateralized basis, considering such factors as length of lease term and the risks of the economic environment in which the leased asset operates.  As of June 30, 2019, the following disclosures for remaining lease term and incremental borrowing rates were applicable:

Supplemental Disclosures	Six Months Ended June 30, 2019
Weighted average remaining lease term	1.53 years
Weighted average discount rate	7% years

As of June 30, 2019, maturities of operating lease liabilities were the following:

Years ended December 31,	Amounts under operating leases
Remaining 2019	$	25,388
2020		48,160
2021		3,774
Total lease payments		77,322
Less imputed interest		(5,814)
Total	$	71,508

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Subsequent Events

6 Months Ended

Jun. 30, 2019

Notes

Subsequent Events

NOTE 5 – SUBSEQUENT EVENTS

In accordance with ASC 855-10 management reviewed all material events through the date of this report.  There are no material subsequent events to report.

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Organization, Consolidation and Presentation of Financial Statements (Policies)

6 Months Ended

Jun. 30, 2019

Policies

PRINCIPLES OF CONSOLIDATION

PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements include the accounts of Reflect Scientific, Inc. and its wholly owned subsidiary, Cryometrix. Intercompany transactions and accounts have been eliminated in consolidation.

Estimates

USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.

Revenue Recognition Accounting

REVENUE RECOGNITION.

We have applied the new revenue standard to all contracts from the date of initial application.  We recognize revenue when or as we satisfy a performance obligation.  We generally satisfy performance obligations at a point in time upon shipment of goods or, with our freezers, upon final acceptance of the unit by the customer, in accordance with the terms of each contract with the customer. 

A part of our customer base is made up of international customers.  The table below allocates revenue between domestic and international customers. 

		June 30, 2019				June 30, 2018
Segments		Consumer Products	Long-term Contracts	Total		Consumer Products	Long-term Contracts	Total
Domestic	$	464,642	--	464,642	$	594,057	--	594,057
International		146,239	--	146,239		186,283	--	186,283
	$	610,881	--	610,881	$	760,340	--	760,340
Components		453,112	--	453,112	$	538,152	--	538,152
Engineering services		157,769	--	157,769		222,188	--	222,188
	$	610,881	--	610,881	$	760,340	--	760,340

Accounts Receivable

ACCOUNTS RECEIVABLE:  Accounts receivables are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. At June 30, 2019 and December 31, 2018, the Company had accounts receivable, net of the allowance, of $120,605 and $155,543, respectively.  At June 30, 2019 and December 31, 2018, the allowance for doubtful accounts was $4,000 and $4,000, respectively.

Inventory

INVENTORY: Inventories are presented net of an allowance for obsolescence and are stated at the lower of cost or market value based upon the average cost inventory method.  The Company’s inventory consists of parts for scientific vial kits, refrigerant gases, components for detectors and ultra-low temperature freezers which it builds and other scientific items.  At June 30, 2019 and December 31, 2018, the Company had inventory consisting of finished goods, net of allowance, of $162,593 and $142,325, respectively.  At June 30, 2019 and December 31, 2018, the allowance for obsolescence was $86,339 and $86,339, respectively.

Intangible Assets

INTANGIBLE ASSETS:  Costs to obtain or develop patents are capitalized and amortized over the life of the patents. Patents are amortized from the date the Company acquires or is awarded the patent over their estimated useful lives, which range from 5 to 15 years.  An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. We perform an impairment analysis on an annual basis.  The Company’s analysis did not indicate any impairment of intangible assets as of the impairment analysis conducted December 31, 2018.

GOODWILL: Goodwill represents the excess of the Company’s acquisition cost over the fair value of net assets of the acquisition. Goodwill is not amortized, but is tested for impairment annually, or when a triggering event occurs. As described in ACS 360, the Company has adopted the goodwill impairment analysis that includes quantitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. A fair-value-based test is applied at the overall Company level. The test compares the estimated fair value of the Company at the date of the analysis to the carrying value of its net assets. The analysis also requires various judgments and estimates, including general and macroeconomic conditions, industry and the Company’s targeted market conditions, as well as relevant entity-specific events, such as a change in the market for the Company’s products and services. After considering the qualitative factors that would indicate a need for interim impairment of goodwill and applying the two-step process described in ASC 360, management has determined that the value of Company’s assets is not more likely than not less than the carrying value of the Company including goodwill, and that no impairment charge needs be recognized during the reporting periods.

Leases

LEASES: In February of 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2016-02 - Leases (Topic 842), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted this update as of January 1, 2019 using the modified retrospective transition method. Prior periods have not been restated. Upon implementation, the Company recognized an initial right-of-use asset of $95,087 and lease liability of $95,087. Due to the simplistic nature of the Company's leases, no change to retained earnings was required. See Note 4 for further details.

Research and Development Expense

RESEARCH AND DEVELOPMENT EXPENSE - The Company accounts for research and development costs in accordance with the Financial Accounting Standards Board's Accounting Standard Codification Topic 730 “Research and Development".  Under ASC 730, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred.  Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved.  Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. 

Earnings Per Share

NET LOSS PER SHARE: The computation of basic loss per share of common stock is based on the weighted average number of shares outstanding during the period.  Diluted EPS is computed by dividing net earnings by the weighted-average number of common shares and dilutive common stock equivalents during the period.  Common stock equivalents are not used in calculating dilutive EPS when their inclusion would be anti-dilutive.  At June 30, 2019 and 2018, the Company had no common stock equivalents.

Recent Accounting Pronouncements

RECENT ACCOUNTING PRONOUNCEMENTS:   In March 2019 the Financial Accounting Standards Board issued ASU No. 2019-01 “Leases”, a clarification of the guidance issued in February 2016, ASU No. 2016-02, “Leases” Topic 842.  The Company adopted this standard effective January 2019. The adoption of this standard resulted in recording right-of-use assets and lease liabilities on its balance sheet.  The adoption was made on a prospective basis and, as a result, prior period amounts were not adjusted to reflect the impact of the updated guidance.  The adoption of this new accounting guidance did not have a significant impact on our financial statements.

June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for nonemployee share-based payment transactions by expanding the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. Under the new standard, most of the guidance on stock compensation payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. This standard became effective for us on January 1, 2019. The adoption of this standard did not have a material impact on our consolidated financial statements.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows.  Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations.

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Organization, Consolidation and Presentation of Financial Statements (Tables)

6 Months Ended

Jun. 30, 2019

Tables/Schedules

Disaggregation of Revenue

		June 30, 2019				June 30, 2018
Segments		Consumer Products	Long-term Contracts	Total		Consumer Products	Long-term Contracts	Total
Domestic	$	464,642	--	464,642	$	594,057	--	594,057
International		146,239	--	146,239		186,283	--	186,283
	$	610,881	--	610,881	$	760,340	--	760,340
Components		453,112	--	453,112	$	538,152	--	538,152
Engineering services		157,769	--	157,769		222,188	--	222,188
	$	610,881	--	610,881	$	760,340	--	760,340

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Leases (Tables)

6 Months Ended

Jun. 30, 2019

Tables/Schedules

Lessee, Operating Lease, Disclosure

Leases	As of June 30, 2019
Assets
ROU operating lease assets	$	70,590
Liabilities
Operating lease liabilities – current portion	$	46,318
Operating lease liabilities		25,190
Total operating lease liabilities	$	71,508

Lease, Cost

Lease Cost	Six Months Ended June 30, 2019
Operating lease cost Administrative expenses	$	3,860
Rent expense		19,196
Total operating lease cost	$	23,056

Lessee, Operating Lease, Liability, Maturity

Years ended December 31,	Amounts under operating leases
Remaining 2019	$	25,388
2020		48,160
2021		3,774
Total lease payments		77,322
Less imputed interest		(5,814)
Total	$	71,508

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Organization, Consolidation and Presentation of Financial Statements (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Domestic revenues			$ 464,642	$ 594,057
International revenues			146,239	186,283
REVENUES	$ 284,567	$ 334,659	610,881	760,340
Components revenues			453,112	538,152
Engineering services revenues			157,769	$ 222,188
Accounts receivable, net	120,605		120,605		$ 155,543
Accounts Receivable, Allowance for Credit Loss	4,000		4,000		4,000
Inventory, net	162,593		162,593		142,325
Inventory Adjustments	86,339		86,339		$ 86,339
Initial operating lease liability	$ 95,087		$ 95,087

XML

Going Concern (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Details
Accumulated deficit	$ 20,324,472	$ 20,300,707

XML

Leases (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Details
Operating Lease, Right-of-Use Asset	$ 70,590		$ 70,590
Operating lease liabilities - current portion	46,318		46,318		$ 0
Operating lease liabilities - long term	25,190		25,190		$ 0
Operating Lease, Liability	71,508		71,508
Operating Lease, Expense			3,860
Rent expense	$ 9,179	$ 12,468	19,196	$ 21,451
Operating Lease, Cost			$ 23,056
Operating Lease, Weighted Average Remaining Lease Term	1 year 6 months 11 days		1 year 6 months 11 days
Operating Lease, Weighted Average Discount Rate, Percent	7.00%		7.00%
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year	$ 25,388		$ 25,388
Lessee, Operating Lease, Liability, Payments, Due Year Two	48,160		48,160
Lessee, Operating Lease, Liability, Payments, Due Year Three	3,774		3,774
Lessee, Operating Lease, Liability, Payments, Due	$ 77,322		77,322
Finance Lease, Interest Payment on Liability			$ (5,814)