SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act
June 27, 2006
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Date of Report
(Date of earliest event reported)
Reflect Scientific, Inc.
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(Exact name of registrant as specified in its charter)
UTAH 000-31377 87-0642556
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
970 Terra Bella Avenue
Mountain View, California 94043
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(Address of Principal Executive Offices)
(650) 960-0300
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(Registrant's Telephone Number)
N/A
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(Former Name or Former Address if changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Registrant under any of
the following provisions (see general instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14-a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
(a) Effective as of June 27, 2006, the Registrant ("Reflect," the
"Company," "we," "our," "us" and words of similar import) closed the
Agreement and Plan of Merger (the "Merger Agreement" and the "Merger") among
the Company; Cryomastor Acquisition Corporation, a California corporation and
wholly-owned subsidiary of the Company ("Merger Subsidiary"); Cryomastor Inc.,
a California corporation ("Cryomastor"); J F Dain & E L Dain CO - T Tee Dain
Family Revocable Trust U/A Dated 12/17/2001 (the "Dain Trust") and Nicholas J.
Henneman ("Henneman")(collectively, the "Cryomastor Shareholders"); and John
F. Dain, individually ("Dain"). Pursuant to the Merger Agreement, the Merger
Subsidiary has merged with and into Cryomastor with Cryomastor being the
surviving corporation and becoming a wholly-owned subsidiary of the Company.
Under the Merger Agreement, the Company has
1. Issued 3,000,000 shares of its common stock that are "restricted
securities" as defined in Rule 144, with no registration rights to have these
securities included in a registration statement filed with the United States
Securities and Exchange Commission (51% or 1,530,000 shares to the Dain Trust
and 49% or 1,470,000 shares to Henneman);
2. Paid $700,000 to the Cryomastor Shareholders, pro rata, in
accordance with their respective interests in Cryomastor (51% or $357,000 to
the Dain Trust and 49% or $343,000 to Henneman);
3. Agreed to advance $300,000 to be utilized for the operations of
Cryomastor and to support the design, development and continued marketing and
production of Cryomastor Systems units on completion of the Maximum Offering
as described below;
4. Agreed to pay the $300,000 debt of Cryomastor to Dain for the
assignment of U. S. Patent No. 6,804,976 B1, covering certain technology
referred to herein as the "Cryomastor Systems," within ninety (90) days of the
closing or on completion of the Maximum Offering as described below;
5. Executed and delivered Employment Agreements pursuant to which Dain,
Henneman and Elizabeth L. Dain ("Ms. Dain") will become employees of
Cryomastor; and
6. Agreed to pay to the Cryomastor Shareholders 2.5% of the of the
gross annual revenue earned by the Company or Cryomastor or any affiliated
entity, in connection with the license, sale or other distribution of the
Cryomastor Systems technology (the "Cryomastor Revenue"). The foregoing
payment shall not be due or payable or accrue unless and until the aggregate
Cryomastor Revenue for a fiscal year is projected to exceed, or actually
exceeds, three million dollars ($3,000,000). The foregoing payment shall be
paid in "restricted" shares of the Company's common stock, without
registration rights, valued at the greater of (i) "Market Value" at the time
of the accrual of the payment; or (ii) $1.80 per share. "Market Value" shall
mean the average of the bid and asked prices of the Company's common stock on
the OTC Bulletin Board or any other nationally recognized medium on which it
is publicly traded on the date or dates when such percentage payments are due
and payable. The maximum aggregate amount of shares issuable hereunder shall
be two million (2,000,000) shares. Payments shall be paid on a quarterly basis
(within thirty [30] days of the end of each quarter) based on projected
Cryomastor Revenue (payments based on actual Cryomastor Revenue shall be paid
in one lump sum within thirty [30] days of the end of the fiscal period in
which they were earned). Portions of the payments so paid shall be adjusted to
reconcile the actual Cryomastor Revenue within thirty (30) days of the end of
the fiscal year in which they were paid.
Further, Cryomastor's name has been changed to "Cryometrix, Inc."; and
the directors and executive officers of Cryomastor have resigned, and the
directors and executive officers of the Company have been designated as the
directors and executive officers of Cryomastor.
As a part of the execution and delivery of the Merger Agreement, the
Company commenced the offer and sale of a minimum of $1,000,000 from the sale
of 1,000,000 shares (the "Minimum Offering"), or a maximum of $1,500,000 from
the sale of 1,500,000 shares (the "Maximum Offering") of its "restricted"
common stock at a price of $1.00 per share to "accredited investors" as
outlined in its Confidential Private Placement Offering Memorandum (the "PPM")
dated April 18, 2006, through the "best efforts" of a registered broker/dealer
engaged for such offering.
The Minimum Offering was achieved and the Merger Agreement was closed on
June 27, 2006. On June 28, 2006, the Board of Directors of the Company
extended the time to achieve the Maximum Offering to July 31, 2006.
Following the closing of the Merger, including the Company's currently
outstanding shares, the issuance of 3,000,000 shares pursuant to the Merger
Agreement and 1,000,000 shares to the investors in the Minimum Offering, there
are or will be on issuance, approximately 30,180,002 post-Merger Agreement
outstanding shares of the Company common stock.
A copy of the Merger Agreement, including all material exhibits and
related instruments, was filed as an Exhibit to the 8-K Current Report of the
Company filed April 25, 2006, which, by this reference, is incorporated
herein; the foregoing summary is modified in its entirety by such reference.
See Item 9.01, Exhibit 2.1.
As a part of the closing of the Merger, the Company and Dain, Henneman
and Ms. Dain have executed Employment Agreements (the "Employment
Agreements"). The Employment Agreements will cover Dain, Henneman and Ms.
Dain, in the following positions: John F. Dain Technical Director; Nicholas
J. Henneman Director of Manufacturing; and Elizabeth L. Dain Manager, Sales
and Marketing. The term of employment of each will be thirty-six months (36),
with Dain and Henneman each to be paid $175,000 annually, in bi-weekly
installments, and Ms. Dain to be paid $125,000, in bi-weekly installments.
Each will devote their respective work efforts to the performance of the
Employment Agreements; each will receive four (4) weeks vacation per year; and
medical benefits for a period of twelve (12) months, after which, if the
operations prove profitable, a co-pay plan will be adopted that will partially
offset the employer's costs. There are non-competition provisions, provided,
however, the All Temp Engineering business currently operated by the parties
is not considered a competing business, so long as All Temp Engineering does
not provide any products that compete with the products encompassed by U. S.
Patent No. 6,804,974. the Company may terminate the Employment Agreements at
any time without notice if an employee commits any material act of dishonesty,
wrongfully discloses confidential information, is guilty of gross
carelessness or misconduct, or unjustifiably neglects his or her duties under
the Employment Agreements, or acts in any way that has a direct, substantial,
and adverse effect on the Company's or Cryomastor's reputation. Further, the
Company may terminate the Employment Agreements without cause after the first
year of the term, if the business fails to attain its specific business goals,
objectives or milestones as specified in it Business Plan and the Company's
Board of Directors has determined that it should discontinue operations;
otherwise, the Company may terminate any employee without cause after the
first year of the term if the Company or Cryomastor pays severance in the
amount of six (6) months salary. Copies of the Employment Agreements were
filed as Exhibits to the initial 8-K Current Report filed April 25, 2006,
which, by this reference, are incorporated herein; the foregoing summary is
modified in its entirety by such reference. See Item 9.01, Exhibit 6.10 to
Exhibit 2.1.
Item 2.01 Completion of Acquisition or Disposition of Assets.
See Item 1.01 that is incorporated herein by reference.
Item 3.01 Unregistered Sales of Equity Securities.
See Item 1.01 that is incorporated herein by reference.
On the closing of the Merger Agreement, we issued 3,000,000 shares of our
common stock to the two (2) sole stockholders of Cryomastor in exchange for
their common stock of Cryomastor. As a result of the Merger, Cryomastor
became a wholly-owned subsidiary of the Company.
Pursuant to the Company's PPM dated April 18, 2006, the Company has
achieved the Minimum Offering by the sale of 1,018,500 shares of the Company's
common stock, and will issue these shares to the respective investors. The
time to achieve the Maximum Offering of 1,500,000 shares has been extended to
July 31, 2006, and any additional shares sold pursuant to the PPM up to and
including that date, will be issued to the respective investors.
Item 7.01 Regulation FD Disclosure
See Exhibit 99, Press Release dated June 30, 2006, a copy of which is
attached hereto and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(a) The required financial statements of Cryomastor will be provided
within seventy-five (75) days of the date of this Current Report, or by
September 11, 2006.
(b) The required pro forma financial statements of the Company and
Cryomastor, taking into account the Merger, will be provided within
seventy-five (75) days of the date of this Current Report, or by September 11,
2006.
(c)(i) Registrant's Exhibits:
Attached hereto:
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2.1 Agreement of Merger filed with the State of California
99 Press Release
Incorporated by Reference:
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2.1 Agreement and Plan of Merger*
Exhibit 5.4(b) Written Consent of Cryomastor and
the Cryomastor Shareholders*
Exhibit 5.4(c) Investment Letters*
Exhibit 6.4(b) Consent of Directors of the Company and
Consent of Directors and Sole
Stockholder of Merger Subsidiary*
Exhibit 6.10 Employment Agreements*
Exhibit 6.11 Interim Financing Documents*
* Previously filed with the 8-K Current Report dated
April 19, 2006, and filed with the Securities and Exchange
Commission on April 25, 2006.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Current Report to be signed on its
behalf by the undersigned hereunto duly authorized.
REFLECT SCIENTIFIC, INC.
Date: 6/30/06 /s/ Kim Boyce
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Kim Boyce
President and Director