This periodic report contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to
the Plan of Operations provided below, including information regarding the
Company's financial condition, results of operations, business strategies,
operating efficiencies or synergies, competitive positions, growth
opportunities, and the plans and objectives of management. The statements made
as part of the Plan of Operations that are not historical facts are hereby
identified as "forward-looking statements."

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The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of our results of
operations and financial condition. The discussion should be read in conjunction
with the financial statements and notes included in this report as Part II,

Item
8.

Critical Accounting Policies

Reflect Scientific's accounting policies are more fully described in Note 2 of
the consolidated financial statements.  As discussed in Note 2, 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 about the future events that affect
the amounts reported in the consolidated financial statements and the
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.



Overview



Reflect Scientific is engaged in the manufacture and distribution of innovative
products targeted at the life science market. Our customers include hospitals,
diagnostic laboratories, pharmaceutical and biotech companies, cold chain
management, universities, government and private sector research facilities,
chemical and industrial companies.



Our goal is to provide our customers with the best solution for their needs.
This philosophy extends into our business strategies and acquisition plans.
Through a series of strategic acquisitions, we acquired technology that has
enabled us to expand our line of products to align with, and capitalize on,
market needs. Our growing product portfolio includes ultra-low temperature
freezers, blast freezers, solvent chillers and refrigerated transportation in
addition to supplying OEM products to the life sciences industry.



Our Cryometrix brand ultra-low temperature and blast freezers innovative design
enables our customers to save substantially on energy costs related to cryogenic
storage. Ultra-low temperature freezers are used worldwide for the storage of
vaccines, DNA, RNA, proteins and many other biological and chemical substances.
There is a growing need for energy efficient, reliable ultra-low temperature
storage units. Our Cryometrix freezers are targeted to this growing market and
we have had tremendous success in blood storage and pharmaceutical manufacturing
applications. The application of this technology for use in refrigerated
trailers (commonly called "reefers") used to transport goods which need to be
maintained in a cold environment significantly broadens the market for this
technology. The utilization of this technology in reefers eliminates the current
method of cooling, which uses engines run on hydrocarbon fuels. The Cryometrix
technology is pollutant free and is more efficient and cost effective than the
technologies currently used. Reflect Scientific has added a new product line of
solvent chillers. Solvent chillers are used in natural products extraction for
optimizing product yield and purity.



During the year ended December 31, 2022 revenue decreased by 27.5% compared to
the year ended December 31, 2021. The revenue decline resulted from a decrease
in sales of our chillers and freezers, as well as supply chain delays with
manufactures.

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

                                      12

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.



Contractual Obligations

The Company leases office/warehouse space in Utah. The following summarizes
future minimum lease payments under the operating lease at December 31, 2022:

        Minimum Lease Payments
Year Ending December 31,     Building
2023                         $  58,920




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Results of Operations



The following table sets forth key components of our results of operations
during the years ended December 31, 2022 and 2021, both in dollars and as a
percentage of our revenues.



                                                                 Years Ended December 31,
                                                         2022                                2021
                                                                   % of                             % of
                                               Amount            Revenues         Amount          Revenues
Revenues                                    $ 2,041,297              100.0 %    $ 2,814,670             100.0 %
Cost of goods sold                              822,147               40.3 %        884,066              31.4 %
Gross profit                                  1,219,150               59.7 %      1,930,604              68.6 %

Operating expenses
Salaries and wages                              636,038               31.2 %        608,065              21.6 %
General and administrative                      419,589               20.6 %        436,399              15.5 %
Research and development                         73,425                3.6 %         58,340               2.1 %
Total operating expenses                      1,129,052               55.3 %      1,102,804              39.2 %

Income from operations                           90,098                4.4 %        827,800              29.4 %

Other income
Gain on forgiveness of debt                           -                  - %        111,265               4.0 %

Net income before income taxes                   90,098                4.4

%        939,065              33.4 %

Income tax expense                                 (702 )             (0.0 )%             -                 - %

Net income                                  $    89,396                4.4 %    $   939,065              33.4 %





Revenues. Revenues decreased by $773,373, or 27.5%, to $2,041,297 for the year
ended December 31, 2022, as compared to $2,814,670 for the year ended December
31, 2021. Such decrease was primarily due to a significant decrease in freezer
and chiller sales during the third quarter and ongoing supply chain delays

with
manufactures.

Cost of goods sold. Cost of goods sold decreased by $61,919, or 7.0%, to
$822,147 for the year ended December 31, 2022, as compared to $884,066 for the
year ended December 31, 2021. Such decrease was primarily due to decreased
freezer and chillers sales, offset by increased product and shipping costs.

Gross profit. Our gross profit as a percentage of sales decreased to 59.7% for
the year ended December 31, 2022, as compared to 68.6% for the year ended
December 31, 2021. The decrease in gross profit percentage was primarily due to
the decrease in freezer and chiller sales, and increased product and shipping
costs.

Salaries and wages. Salaries and wages increased by $27,973, or 4.6%, to
$636,038 for the year ended December 31, 2022, as compared to $608,065 for the
year ended December 31, 2021. Such increase was primarily due to increased
headcount as well as stock-based compensation relating to legal fees.

General and administrative. General and administrative expenses decreased by
$16,810, or 3.9%, to $419,589 for the year ended December 31, 2022, as compared
to $436,399 for the year ended December 31, 2021. Such decrease is a result of
decreased revenues and operations, the cumulative result of small savings in
numerous expenses, offset by increased advertising and marketing costs.



                                      14



Research and development. Research and development expenses increased by
$15,085, or 25.9%, to $73,425 for the year ended December 31, 2022, as compared
to $58,340 for the year ended December 31, 2021. Such increase is a result of
continued enhancements to the ultra-cold CBD oil chiller during the period.

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. As a result of the cumulative effect of the factors described above,
our net income was $89,396 for the year ended December 31, 2022, as compared to
$939,065 for the year ended December 31, 2021. Management continues to look for
opportunities to increase sales, improve gross margins and control ongoing
operating expenses.

Liquidity and Capital Resources

As of December 31, 2022 and 2021, our current assets exceeded current
liabilities by $2,179,237 and $2,063,516, respectively, and we had cash and cash
equivalents of $1,381,927 and $1,473,924, respectively. To date, we have
financed our operations primarily through revenue generated from operations,
cash proceeds from financing activities, borrowings, and equity contributions by
our shareholders.



Summary of Cash Flow



The following table provides detailed information about our net cash flow for
the period indicated:



                                                              Years Ended
                                                             December 31,
                                                         2022            2021

Net cash (used in) provided by operating activities $ (91,997 ) $ 831,382
Net cash provided by investing activities

                       -           

–

Net cash provided by financing activities                       -          

–

Net change in cash and cash equivalents                   (91,997 )       

831,382

Cash and cash equivalents at beginning of period 1,473,924 642,542
Cash and cash equivalents at end of period

            $ 1,381,927     $ 1,473,924




Net cash used in operating activities was $91,997 for the year ended December
31, 2022, as compared to net cash provided by operating activities of $831,382
for the year ended December 31, 2021. Significant factors affecting operating
cash flows was primarily a result of decreased customer deposits and decreased
net income during the year ended December 31, 2022.



We continue working to enhance our on-line ordering system to increase sales,
develop the market for our ultra-low temperature freezers, work with current
vendors to obtain more favorable pricing, and locate new vendors to provide
opportunities to further reduce our cost of goods.

We will continue to focus our efforts on our core business activities while
pursuing capital resources and evaluating potential future acquisitions which
fit within and enhance our core business.

Off-Balance Sheet Arrangements

None noted.

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