RSCF 10-K & 10-Q changes, risk factors and insider trading
Reflect Scientific, Inc. · OTC · Laboratory Apparatus & Furniture · CIK 1103090 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Not applicable for Registrant.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Accounts Receivable”
New heading “Impairment of Long-Lived Assets”
New heading “Stock-Based Compensation”
Largest changes
“Goodwill represents the excess of purchase price over the fair value of the net assets acquired. We evaluate goodwill for impairment annually on December 31, or more frequently if an event occurs or circumstances that indicate the goodwill is not recoverable. When impairment indicators are identified, we may elect to perform an optional qualitative assessment to determine whether it is more likely than not that the fair value of our reporting units has fallen below their carrying value. …”see in full comparison
“The extent to which the COVID-19 pandemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this report. Nevertheless, the pandemic and the current financial, economic and capital markets environment, and future developments in the global supply chain and other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows.”see in full comparison
“There is a continued risk of supply chain interruption, availability of raw materials or other unforeseen issues that can be caused by the ever-changing progression of the COVID-19 pandemic. In addition, demand for the Company’s products may decrease or fluctuate in the future and current demand for our products may not, therefore, be indicative of sales and revenue going forward.”see in full comparison
“The Company reviews its right-of-use (“ROU”) assets and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. The test for impairment is required to be performed by management upon triggering events. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flow expected to be generated by the asset. …”see in full comparison
“The Company’s inventory consists of parts for scientific vial kits, refrigerant gases, components for the imaging and inspection systems which it builds, and other scientific items. The Company values inventory at each balance sheet date to ensure that it is carried at the lower of cost or net realizable value with cost determined based on the average cost basis. The Company periodically evaluates the value of items in inventory and provides write-downs to inventory based on its estimate of market conditions.”see in full comparison
Full comparison: every changed paragraph (30)
We consider the following estimates to be critical as they involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations.
Accounts Receivable
Accounts receivable consist of trade receivables arising from credit sales to customers in the normal course of business. These receivables are recorded at the time of sale, net of an allowance for current expected credit losses. In accordance with ASC Topic 326, “Financial Instruments – Credit Losses,” the Company estimates expected credit losses based on historical bad debt experience, the aging of accounts receivable, the current creditworthiness of our customers, prevailing economic conditions, and reasonable and supportable forward-looking information. Accounts receivable balances are written off when they are determined to be uncollectible.
Inventories
The Company’s inventory consists of parts for scientific vial kits, refrigerant gases, components for the imaging and inspection systems which it builds, and other scientific items. The Company values inventory at each balance sheet date to ensure that it is carried at the lower of cost or net realizable value with cost determined based on the average cost basis. The Company periodically evaluates the value of items in inventory and provides write-downs to inventory based on its estimate of market conditions.
Goodwill
Goodwill represents the excess of purchase price over the fair value of the net assets acquired. We evaluate goodwill for impairment annually on December 31, or more frequently if an event occurs or circumstances that indicate the goodwill is not recoverable. When impairment indicators are identified, we may elect to perform an optional qualitative assessment to determine whether it is more likely than not that the fair value of our reporting units has fallen below their carrying value. This assessment is based on several factors, including industry and market conditions, overall financial performance, including an assessment of cash flows in comparison to actual and projected results of prior periods. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value based on our qualitative analysis, or if we elect to skip this step, we perform a Step 1 quantitative analysis to determine the fair value of the reporting unit.
Impairment of Long-Lived Assets
The Company reviews its right-of-use (“ROU”) assets and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. The test for impairment is required to be performed by management upon triggering events. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
Stock-Based Compensation
We recognize the fair value compensation cost relating to stock-based payment transactions in accordance with ASC Topic 718, “Share-Based Payments.”Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized on a straight-line basis over the employee’s requisite service period, which is generally the vesting period. Restricted stock awards are valued based on the closing stock price on the date of grant (intrinsic value method). The Company has elected to recognize forfeitures as they occur.
During the year ended December 31, 20222023, revenue
decreased decreased
by 27.5%47.1% compared to the year ended December 31, 2021.2022. The revenue decline resultedwas fromprimarily due to a decreasereduced demand for
freezer and chiller sales, influenced by a decline in salescustomer ofcapital ourexpenditures chillersamid andthe freezers,
asprevailing welleconomic as supply chain delays with manufactures.conditions.
Impact of Coronavirus Pandemic
In December 2019, a novel coronavirus disease, or
COVID-19, was initially reported and on March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. COVID-19 has
had a widespread and detrimental effect on the global economy as a result of the continued increase in the number of cases and affected
countries and actions by public health and governmental authorities, businesses, other organizations, and individuals to address the outbreak,
including travel bans and restrictions, quarantines, shelter in place, stay at home or total lock-down orders and business limitations
and shutdowns.
Despite recent developments of vaccines, the duration
and severity of COVID-19, mutations and possible additional mutations and the degree of their impact on our business is uncertain and
difficult to predict. The continued spread of the outbreak could result in one or more of the following conditions that could have a material
adverse impact on our business operations and financial condition: delays
or difficulty sourcing certain products and raw materials; increased costs for such products and raw materials; and loss of productivity
due to employee absences.
Our efforts to help mitigate the negative impact of
the outbreak on our business may not be effective, and we may be affected by a protracted economic downturn. Furthermore, while many governmental
authorities around the world have and continue to enact legislation to address the impact of COVID-19, including measures intended to
mitigate some of the more severe anticipated economic effects of the virus, we may not benefit from such legislation, or such legislation
may prove to be ineffective in addressing COVID-19’s impact on our and our customer’s businesses and operations. Even after
the COVID-19 outbreak has subsided, we may continue to experience impacts to our business as a result of COVID-19’s global economic
impact and any recession that has occurred or may occur in the future. Further, as the COVID-19 situation is unprecedented and continuously
evolving, COVID-19 may also affect our operating and financial results in a manner that is not presently known to us or in a manner that
we currently do not consider that may present significant risks to our operations.
The extent to which the COVID-19 pandemic may impact
our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this report. Nevertheless,
the pandemic and the current financial, economic and capital markets environment, and future developments in the global supply chain and
other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash
flows.
There is a continued risk of supply chain interruption,
availability of raw materials or other unforeseen issues that can be caused by the ever-changing progression of the COVID-19 pandemic.
In addition, demand for the Company’s products may decrease or fluctuate in the future and current demand for our products
may not, therefore, be indicative of sales and revenue going forward.
We recognize these risks and are taking every effort
to prevent or mitigate them as they arise. The Company has been proactive in making those business decisions which it believes will enable
it to carry out its business plan. Significant cost reduction measures have been implemented, unprofitable subsidiaries divested,
facilities consolidated and personnel reductions made.
The Company leases office/warehouse space in Orem,
Utah.
The following summarizes future minimum lease payments under the operating lease at December 31, 20222023:
Revenues. Revenues decreased by $773,373,$961,143, or
27.5%,47.1%, to $1,080,154 for the year ended December 31, 2023, as compared to $2,041,297 for the year ended December 31, 2022, as compared to $2,814,670 for the year ended December 31, 2021.2022. Such decrease
was primarily due to a significantreduced decreasedemand infor freezer and chiller salessales, duringinfluenced by a decline in customer capital expenditures amid the
prevailing thirdeconomic quarter and ongoing supply chain delays with
manufactures.conditions.
Cost of goods sold. Cost of goods sold decreased
decreased by $61,919,$338,414, or 7.0%,41.2%, to $483,733 for the year ended December 31, 2023, as compared to $822,147 for the year ended December 31, 2022, as compared to $884,066 for the year ended December2022.
31, 2021. Such decrease was primarily due to decreased freezer and chillers sales, offset by increased product and shipping
costs.sales.
Gross profit. Our gross profit as a percentage
of sales decreased to 55.2% for the year ended December 31, 2023, as compared to 59.7% for the year ended December 31, 2022, as compared to 68.6% for the year ended December 31, 2021.2022. The decrease
in gross profit percentage was primarily due to the decrease in freezer and chiller sales, which have better margins than other products,
and increased product and shipping costs.
Salaries and wages. Salaries and wages increased
increased by $27,973,$9,479, or 4.6%,1.5%, to $645,517 for the year ended December 31, 2023, as compared to $636,038 for the year ended December 31, 2022, as compared to $608,065 for the year ended December
31, 2021.2022. Such
increase was primarily due to increased headcount as well as stock-based compensationcompensation, relatingoffset toby legaldecreased fees.employee headcount.
General and administrative. General and administrative
administrative expenses decreased by $16,810,$30,949, or 3.9%,7.4%, to $388,640 for the year ended December 31, 2023, as compared to $419,589 for the year ended December
31, 2022, as compared to $436,399 for
the year ended December 31, 2021.2022. Such decrease iswas aprimarily resultdue ofto decreased revenuesadvertising, marketing, and operations,travel theexpenditures, cumulative result of small
savings in numerous expenses,partially offset by increased
public advertisingfiling costs and marketingrent costs.expense.
Research and development. Research and development
development expenses increaseddecreased by $15,085,$43,883, or 25.9%,59.8%, to $29,542 for the year ended December 31, 2023, as compared to $73,425 for the year ended December
31, 2022, as compared to $58,340 for the
year ended December 31, 2021.2022. Such increasedecrease iswas primarily a result of continueddecreased enhancements to the ultra-cold CBD oil chiller duringas a result of the decline
period.in operations.
Other income. Other income was $8,562 for the year ended December 31, 2023, as compared to $0 for the year ended December 31, 2022. Such increase was from interest income earned on our business savings accounts as a result of improved interest rates.
Other income. Other income was $0 for the year
ended December 31, 2022, as compared to $111,265 for the year ended December 31, 2021, a result of forgiveness of our PPP loans.
Net income.income (loss). As a result of the
cumulative cumulative
effect of the factors described above, our net loss was $459,028 for the year ended December 31, 2023, as compared to net
income wasof $89,396 for the year ended December 31, 2022, as compared to $939,065 for
the year ended December 31, 2021.2022. Management continues to look for opportunities to increase sales, improve
gross margins and
control ongoing operating expenses.
Net cash used in operating activities was
$103,976 and $91,997
for the yearyears ended December 31, 2023 and 2022, as compared to net cash provided by operating activities of $831,382 for the year ended December
31, 2021.respectively. Significant factors affecting operating cash
flows was primarily a result of decreased customeraccounts depositsreceivable and decreasedthe net income
loss during the year ended December 31, 2022.2023, partially
offset by increased customer deposits.
What changed in the latest 10-Q
Risk Factors
We could not find a separate Risk Factors item in the latest 10-Q. Some companies leave it out of quarterly reports; see the annual 10-K risk factors and the original filing. Open the filing on SEC.gov.
Management's Discussion & Analysis (MD&A)
Largest changes
see in full comparisonNetOtherincomeincome.(loss). As a result of the cumulative effect of the factors described above, our netOther income was$77,016$29,968 for thesixnine months endedJuneSeptember 30, 2024, as compared tonet loss of $328,927$5,368 for thesixnine months endedJuneSeptember 30, 2023.Management has looked for opportunities toThe increase issales,fromimproveinterestgrossincomemargins andearnedcontrolonongoingbusinessoperatingmoneyexpenses.market savings accounts. These were opened during the third quarter of 2023.
Gross profit. Our gross profit as a percentage of sales increased tosee in full comparison58.9%60.6% for thesixnine months endedJuneSeptember 30, 2024, compared to51.4%58.1% for thesixnine months ended June 30, 2023. The increase in gross profit percentage was primarily due to the increase in freezer and chiller sales, which havebetterhigher margins thanthanotherproducts Salaries and wages. Salaries and wages decreased by $26,176, or 8.3%, to $290,668 for the six months ended June 30, 2024, from $316,844 for the six months ended June 30, 2023. Such decrease was primarily due to decreased headcount.products.
“Net income (loss). As a result of the cumulative effect of the factors described above, our net income was $186,946 for the nine months ended September 30, 2024, as compared to net loss of $242,663 for the nine months ended September 30, 2023. Management has looked for opportunities to increase sales, improve gross margins and control ongoing operating expenses.”see in full comparison
Gross profit. Our gross profit as a percentagesee in full comparisonpercentageof sales increased to60.8%63.8%for the three months ended September 30, 2024, as compared to 62.8% for the three months endedJune 30, 2024, as compared to 48.7% for the three months ended JuneSeptember 30, 2023. The increase in gross profit percentage was primarily due to theincreasemargins in freezer and chiller sales during the currentperiod, which have better margins than other products. This was partially offset by increased product costs during the currentperiod.
see in full comparisonGeneralSalaries andadministrative.wages.GeneralSalaries andadministrative expenses increasedwages decreased by$51,506,$43,910, or27.3%,-9.3%, to$239,859$428,611 for thesixnine months endedJuneSeptember 30, 2024, from$188,353$472,521 for thesixnine months endedJuneSeptember 30, 2023. Suchincreasedecrease was primarily due tothedecreasedincreasedheadcount and reduction inpublic filing and insurance costs.hours.
Revenues. Revenuessee in full comparisonincreaseddecreased by$465,687,$11,851, oror 374.4%,-2.3%, to$590,071$514,023 for the three months endedJuneSeptember 30, 2024, as compared to$124,384$525,874 for the three months endedJuneSeptember 30, 2023.SuchRevenuesincrease waswereprimarilyconsistent between years due toa heightened demand forfreezer and chillersales,sales driven byincreasedcustomercapital expenditures during the current period.needs.
Full comparison: every changed paragraph (23)
During the three months and sixnine months ended JuneSeptember
30, 2024, there were no significant changes in our accounting policies and estimates.
Comparison of the Three Months Ended JuneSeptember
30, 30,
2024 and 2023
The following table sets forth key components of our
results of operations during the three months ended JuneSeptember 30, 2024 and 2023:
Revenues. Revenues increaseddecreased by $465,687,$11,851,
or or
374.4%,-2.3%, to $590,071$514,023 for the three months ended JuneSeptember 30, 2024, as compared to $124,384$525,874 for the three months ended JuneSeptember 30,
2023. SuchRevenues increase
waswere primarilyconsistent between years due to a heightened demand for freezer and chiller sales,sales driven by increased customer capital expenditures during the current
period.needs.
Cost of goods sold. Cost of goods sold
decreased increased
by $167,664,$9,691, or 263%,-4.9%, to $231,514$186,197 for the three months ended JuneSeptember 30, 2024, as compared to $63,850$195,888 for the three months
ended JuneSeptember 30,
2023. Such increaseDecrease was primarily due to increasedslightly freezerlower andrevenues chillers sales duringfor the currentsame time period.
Gross profit. Our gross profit as a
percentage percentage
of sales increased to 60.8%63.8%for the three months ended September 30, 2024, as compared to 62.8% for the three months ended June 30, 2024, as compared to 48.7% for the three months ended June September
30, 2023. The
increase in gross profit percentage was primarily due to the increasemargins in freezer and chiller sales during the current period, which have
better margins than other products. This was partially offset by increased product costs during the current period.
Salaries and wages. Salaries and wages
decreased decreased
by $6,515,$17,334, or 4.2%,-11.4%, to $148,054$137,943 for the three months ended JuneSeptember 30, 2024, as compared to $154,569$155,677 for the three months
ended JuneSeptember 30,
2023. Such decreaseDecrease was primarily due toreduction noof stock-based compensationhours during the current period and decreased employee headcount.
General and administrative.
General and administrative
expenses increased by $26,194$3,221 or 32.2%,3.8%, to $107,555$87,552 for the three months ended JuneSeptember 30, 2024, as
compared to $81,361$84,331 for the three months
ended JuneSeptember 30, 2023. Such increaseIncrease was primarily due to increased advertising and marketing, professional fees, public filing costs, andmarketing
rent expense during the current period.
Research and development. Research and
development development
expenses decreased by $775,$5,990, or 14.4%,-66.0%, to $4,605$3,092 for the three months ended JuneSeptember 30, 2024, as compared to $5,380$9,082 for
the three months ended
June September 30, 2023. Such decrease was primarily a result of resource allocation to marketing and production.
Other income. Other income was $10,644$10,791
for for
the three months ended JuneSeptember 30, 2024, as compared to $0$5,368 for the three months ended JuneSeptember 30, 2023. The increase inis the current period wasfrom
from interest income earned on our business money market savings accounts,accounts. whichThese were opened during the fourththird quarter of 2023.
Net income. As a result of the
cumulative cumulative
effect of the factors described above, our net income was $108,987$109,930 for the three months ended JuneSeptember 30, 2024, as
compared to a net
loss income of $181,088$86,264 for the three months ended JuneSeptember 30, 2023. Management continues to look for opportunities to
increase sales, improve
gross margins and control ongoing operating expenses.
Comparison of the SixNine Months Ended JuneSeptember
30, 30,
2024 and 2023
The following table sets forth key components of our
results of operations during the sixnine months ended JuneSeptember 30, 2024 and 2023, both in dollars and as a percentage of our revenues.
Revenues. Revenues increased by $653,315,$641,464
or 178.7%,72.0%, to $1,018,826$1,532,849 for the sixnine months ended JuneSeptember 30, 2024, from $365,511$891,385 for the sixnine months ended JuneSeptember 30, 2023. Such
increase was
primarily due to a significant increase in freezer and chiller sales.sales throughout the year.
Cost of goods sold. Cost of goods
sold increased by $240,997$231,306 or 135.8%,62.0%, to $418,480$604,677 for the sixnine months ended JuneSeptember 30, 2024, from $177,483$373,371 for the sixnine months
ended ended
JuneSeptember 30, 2023. Such increase was primarily due to increased freezerrevenue and chillers sales, as well as increased production costs.production.
Gross profit. Our gross profit as a
percentage of sales increased to 58.9%60.6% for the sixnine months ended JuneSeptember 30, 2024, compared to 51.4%58.1% for the sixnine months ended June
30, 2023.
The increase in gross profit percentage was primarily due to the increase in freezer and chiller sales, which have betterhigher margins
than than
other products Salaries and wages. Salaries and wages
decreased by $26,176, or 8.3%, to $290,668 for the six months ended June 30, 2024, from $316,844 for the six months ended June 30, 2023.
Such decrease was primarily due to decreased headcount.products.
GeneralSalaries and administrative.wages. General
Salaries and administrative expenses increasedwages
decreased by $51,506,$43,910, or 27.3%,-9.3%, to $239,859$428,611 for the sixnine months ended JuneSeptember 30, 2024, from $188,353$472,521 for the
six nine months ended June September
30, 2023. Such increasedecrease was primarily due to thedecreased increasedheadcount and reduction in public filing and insurance costs.hours.
ResearchGeneral and development.administrative. ResearchGeneral
and and
developmentadministrative expenses increased by $534,$54,727, or 4.7%,20.1%, to $11,980$327,411 for the sixnine months ended JuneSeptember 30, 2024, from $11,446$272,684 for
the sixnine months ended
June September 30, 2023. Such increase was primarily adue resultto ofthe increased in public filing and insurance costs.
Research and development. Research and development expenses decreased by $5,456, or -26.6%, to $15,072 for the nine months ended September 30, 2024, from $20,528 for the nine months ended September 30, 2023. Such decrease was primarily a result of a shift in company priorities.
NetOther incomeincome. (loss). As a result of the
cumulative effect of the factors described above, our netOther income was $77,016
$29,968 for the sixnine months ended JuneSeptember 30, 2024, as compared to net
loss of $328,927$5,368 for the sixnine months ended JuneSeptember 30, 2023. Management has looked for opportunities toThe increase
is sales,from improveinterest grossincome margins
andearned controlon ongoingbusiness operatingmoney expenses.market savings accounts. These were opened during the third quarter of 2023.
Net income (loss). As a result of the cumulative effect of the factors described above, our net income was $186,946 for the nine months ended September 30, 2024, as compared to net loss of $242,663 for the nine months ended September 30, 2023. Management has looked for opportunities to increase sales, improve gross margins and control ongoing operating expenses.
As of JuneSeptember 30, 2024 and December 31, 2023,
our current
assets exceeded current liabilities by $1,847,430$1,954,096 and $1,773,784, respectively, and we had cash and cash equivalents of $1,102,696
$1,030,408 and
$1,277,951, respectively. To date, we have financed our operations primarily through revenue generated from
operations, cash proceeds
from financing activities, borrowings, and equity contributions by our shareholders.
Net cash used in operating activities was $175,255$247,543
and providedused byin operating activities $26,831$42,481 for the sixnine months ended JuneSeptember 30, 2024 and 2023, respectively. Significant factors affecting
operating cash flows were primarily a result of increased accounts receivable during the current period.
RSCF insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding RSCF (13F)
None of the 59 investors we track reported a position in their latest 13F.