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
Date of Report
(Date of earliest event reported)
UTAH 000-31377 87-0642556
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
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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:
2.1 Agreement of Merger filed with the State of California
99 Press Release
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*
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* 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
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Reflect Scientific, Inc. Announces the Closing of an Agreement and Plan of Merger with Cryomastor, Inc.
Mountain View, California - (BUSINESS WIRE) - Friday, June 30, 2006 - Reflect Scientific, Inc. (the "Company") (OTCBB: RSCF), an industry leader whose business is the manufacture, supply, and distribution of laboratory equipment and related supplies to the biotechnology, pharmaceutical and medical industries, announces the closing of an Agreement and Plan of Merger under which it has acquired Cryomastor, Inc., a California corporation. Principal terms of the Merger required the Company to: (i) pay an aggregate of $700,000 to the Cryomastor shareholders, pro rata; (ii) advance $300,000 for the operations of Cryomastor; assume and pay a $300,000 debt of Cryomastor owed for a U.S. Patent that comprises its intellectual property within 90 days of the closing; and execute three year employment agreements with Cryomastor's current directors and executive officers. The Company raised in excess of $1,000,000 in a private offering of "restricted" common stock through a registered broker/dealer to "accredited investors" at $1.00 per share that was a condition of the closing of the Merger. The Company anticipates an extension of the offering to complete the maximum offering of $1,500,000 to July 31, 2006.
Reflect Scientific receives as part of the completed Merger, all rights to Cryomastor intellectual property, product and customer testing programs that Cryomastor has underway. The Cryomastor Ultra Low Temperature freezer system has been certified for use through the customer testing program where the Company is now poised for unit sales.
About Cryomastor:
Cryomastor is a privately-held company that was formed to engage in the business of providing low and ultra low temperature storage systems to the biotech, life science, hospitals, military, research and disease control centers industries.
About Reflect Scientific:
Reflect Scientific provides products for the biotechnology, pharmaceutical and medical industries and has had consistent year-over-year growth for more than 13 years. Building upon this successful business model, Reflect Scientific has targeted strategic acquisitions that will increase revenue and profits in their primary market and that will fulfill Reflect's strategic imperative of significant, sustained revenue growth through innovative market need based products.
Forward-looking statements in this release are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including without limitation, continued acceptance of the Company's products, increased levels of competition for the Company, new products and technological changes, the Company's dependence on third-party suppliers, and other risks detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission.
For more information related to the Reflect Scientific, contact Investor
Relations: Michael Dancy, 801-746-3570, email: medancy@allwest.net, or visit:
www.reflectscientific.com.
AGREEMENT OF MERGER
This Agreement of Merger (the "Agreement") is dated as of June 27, 2006, by and among Cryomastor Acquisition Corp., a California corporation and wholly-owned subsidiary of Parent ("Merger Subsidiary") and CRYOMASTOR INC., a California corporation (the "Surviving Corporation"). Merger Subsidiary and Surviving Corporation are collectively referred to herein as the "Constituent Corporations").
A. Merger Subsidiary and Surviving Corporation, along with Reflect Scientific, Inc. a Utah corporation ("Parent"), have entered into that certain Agreement and Plan of Merger dated as of April 19, 2006 (the "Plan of Merger"), providing, among other things, for the execution and filing of this Agreement of Merger and the merger of the Merger Subsidiary with and into the Surviving Corporation (the "Merger") upon the terms and subject to the conditions set forth in the Plan of Merger and this Agreement of Merger; and
B. The respective Boards of Directors of each of the Constituent Corporations deem it advisable and in the best interests of each of such corporations, and their respective shareholders, that the Merger Subsidiary be merged with and into Surviving Corporation; and
C. The shareholders of Merger Subsidiary and Surviving Corporation have unanimously adopted and approved of the Plan of Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants, and agreements contained herein, the
parties hereto agree
as follows:
ARTICLE I
THE MERGER
1.1 Surviving Corporation. Surviving Corporation is a California corporation organized on October 27, 2005, and has ten million (10,000,000) shares of common stock outstanding.
1.2 Merger Subsidiary. Merger Subsidiary is a California corporation organized on April 7, 2006, and has one thousand (1,000) shares of common stock outstanding.
1.3 Filing. This Merger Agreement, together with the officers' certificates of each of the Constituent Corporations required by the General Corporation Law of the State of California (the "California Law"), shall be filed with the Secretary of State of the State of California at the time specified in the Plan of Merger.
1.4 Effectiveness. The Merger shall become effective at the time this Merger Agreement is filed with and accepted by the Secretary of State of the State of California (the "Effective Time").
1.4 Merger. At the Effective Time, Merger Sub shall be merged into Surviving Corporation and the separate corporate existence of Merger Sub shall thereupon cease. Surviving Corporation shall be the surviving corporation in the Merger and the separate corporate existence of Surviving Corporation, with all of its purposes, objects, rights, privileges, powers, immunities and franchises, shall continue unaffected and unimpaired by the Merger.
1.5 Further Action. If at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement of Merger or to vest the Surviving Corporation with the full right, title and possession to all assets, property, rights, privileges, immunities, powers and franchises of either or both of the Constituent Corporations, the officers and directors of the Surviving Corporation are fully authorized in the name of either or both of the Constituent Corporations or otherwise to take all such action.
ARTICLE II
CORPORATE GOVERNANCE MATTERS
2.1 Articles. From and after the Effective Time and until thereafter amended as provided by law, the Articles of Incorporation of the Surviving Corporation shall hereby be amended as follows:
Article I of the Articles of Incorporation is hereby amended to read as follows:
ARTICLE ONE: The name of this corporation shall be Cryometrix, Inc.
ARTICLE III
MERGER CONSIDERATION
3.1 Conversion. At the Effective Time, by virtue of the Merger and without any action on the part of the Surviving Corporation and/or the Merger Subsidiary:
(a) Each outstanding share of common stock of the Surviving Corporation ("Surviving Corporation Common Stock") issued and outstanding immediately prior to the Effective Time (except for Company Common Stock referred to in Section 3.1(c) hereof) will be converted into 0.30 shares of the common stock of Parent such that all outstanding shares of Surviving Corporation Common Stock issued and outstanding immediately prior to the Effective Time (except for Company Common Stock referred to in Section 3.1(c) hereof) will be converted into three million (3,000,000) shares of the common stock of Parent. No fractional share shall be issued. Additionally, each outstanding share of Surviving Corporation Common Stock issued and outstanding immediately prior to the Effective Time (except for Company Common Stock referred to in Section 3.1(c) hereof) will be exchanged for $0.70 in cash such that an aggregate amount of $700,000 is payable to the shareholders of Surviving Corporation immediately prior to the Effective time. Additionally, the shareholders of Surviving Corporation shall have the right to receive up to two million (2,000,000) shares of common stock of Parent based upon the earnings of Surviving Corporation following the Effective Time as further described in the Plan of Merger.
(b) All stock options, warrants, convertible debt, other convertible securities or other rights to acquire shares of the Surviving Corporation outstanding at the Effective Time, whether or not exercisable and whether or not vested (all of which are listed on Schedule1.4(b) hereto), shall be cancelled.
(c) Each share of Surviving Corporation Common Stock issued and outstanding immediately prior to the Effective Time that is then owned beneficially or of record by Parent, Merger Subsidiary or any direct or indirect subsidiary of Parent or Merger Subsidiary will be canceled without payment of any consideration therefor and without any conversion thereof. Furthermore, at the Effective Time, one (1) share of Surviving Corporation Common Stock shall be issued to Parent.
(d) Except as expressly set forth herein, each share of any other equity interest of the Surviving Corporation (other than Surviving Corporation Common Stock) will be canceled without payment of any consideration therefor and without any conversion thereof.
(e) Each share of common stock of Merger Subsidiary, par value $0.001 per share ("Merger Subsidiary Common Stock"), issued and outstanding immediately prior to the Effective Time, will be canceled as of the Effective Time.
(f) Each holder of shares of Surviving Corporation Common Stock shall surrender their share certificate or certificates to the secretary of Surviving Corporation and shall be entitled to receive in exchange therefor a certificate or certificates representing the number of shares into which their shares theretofore represented by a certificate or certificates so surrendered shall have been converted as aforesaid.
ARTICLE IV
TERMINATION AND AMENDMENT
4.1 Termination. Notwithstanding the approval of this Merger Agreement by the shareholders of Merger Subsidiary and Surviving Corporation, this Merger Agreement shall terminate forthwith in the event that the Reorganization Agreement shall be terminated as therein provided.
4.2 Amendment. This Merger Agreement may be amended by the parties hereto at any time before or after approval hereof by the shareholders of either Merger Subsidiary or Surviving Corporation, but, after any such approval, no amendment shall be made which without the further approval of such shareholders would (i) have a material adverse effect on the shareholders of either Merger Subsidiary or Surviving Corporation; (ii) change any of the principal terms of the Merger Agreement; or (iii) change any term of the Articles of Incorporation of the Surviving Corporation. This Merger Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.
ARTICLE V
MISCELLANEOUS
5.1 Headings. The underlined headings contained in this Merger Agreement are for convenience of reference only, shall not be deemed to be a part of this Merger Agreement and shall not be referred to in connection with the construction or interpretation of this Merger Agreement.
5.2 Counterparts. This Merger Agreement may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement.
5.3 Governing Law. This Merger Agreement shall be construed in accordance with, and governed in all respects by, the internal laws of the State of California (without giving effect to principles of conflicts of laws).
5.4 Effectiveness. The effect of the Merger is as prescribed by law.
IN WITNESS WHEREOF, the parties have executed this Agreement of Merger.
SURVIVING CORPORATION:
CRYOMASTOR, INC., a California corporation
By /s/ John F. Dain
JOHN F. DAIN, President
By /s/ Nicholas J. Henneman
NICHOLAS J. HENNEMAN, Secretary
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MERGER SUBSIDIARY:
CRYOMASTOR ACQUISITION CORP.,
a California corporation
By /s/ Kim Boyce
Kim Boyce, President
By /s/ Pamela Boyce
Pamela Boyce, Secretary
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OFFICERS' CERTIFICATE
JOHN F. DAIN and NICHOLAS J. HENNEMAN hereby certify that:
1. They are the President and Secretary, respectively, of CRYOMASTOR, INC., a California corporation (the "Corporation").
2. The Agreement of Merger to which this Certificate is attached (the "Agreement of Merger") has been duly approved by the Board of Directors of the Corporation.
3. The Corporation one class of stock outstanding, designated "Common Stock," of which ten million (10,000,000) shares were outstanding and entitled to vote on the merger.
4. The principal terms of the Merger Agreement were approved by the unanimous vote of the shares of common stock outstanding which equaled or exceeded the vote required. The vote required was a majority of the outstanding shares of the Common Stock entitled to vote.
Each of the undersigned declares under penalty of perjury that the matters set out in the foregoing Certificate are true of his own knowledge. Executed at Los Gatos, California on June 27, 2006.
/s/ John F. Dain JOHN F. DAIN, President /s/ Nicholas J. Henneman NICHOLAS J. HENNEMAN, Secretary |
OFFICERS' CERTIFICATE
Kim Boyce and Pamela Boyce hereby certify that:
1. They are the President and Secretary, respectively, of CRYOMASTOR ACQUISITION CORP., a California corporation (the "Corporation").
2. The Agreement of Merger to which this Certificate is attached (the "Agreement of Merger") has been duly approved by the Board of Directors of the Corporation.
3. The Corporation one class of stock outstanding, designated "Common Stock," of which 1,000 shares were outstanding and entitled to vote on the merger.
4. The principal terms of the Merger Agreement were approved by the unanimous vote of the shares of common stock outstanding which equaled or exceeded the vote required. The vote required was a majority of the outstanding shares of the Common Stock entitled to vote.
5. The vote of the shareholders of REFLECT SCIENTIFIC, INC., the parent of the Corporation which parent corporation is issuing equity securities to the shareholders of CRYOMASTOR, INC. pursuant to the Agreement of Merger, was not required.
Each of the undersigned declares under penalty of perjury that the matters set out in the foregoing Certificate are true of his or her own knowledge. Executed at Salt Lake City, Utah on June 27, 2006.
/s/ Kim Boyce Kim Boyce, President /s/ Pamela Boyce Pamela Boyce, Secretary |