Reflect Scientific defaults on 12% convertible debentures due 2009

By Devika Patel

Knoxville, Tenn., July 1 - Reflect Scientific, Inc. lacks the funds needed to pay off its 12% senior convertible debentures, which were due on June 29, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The company said in the filing that the debentures are now in default.

Additionally, the registration statement covering interest shares and warrants related to the debentures is no longer effective, which would also trigger an event of default. The law firm that filed the statement is in the process of updating it.

The Orem, Utah-based manufacturer of scientific supplies and materials said it is working to renegotiate the debentures' terms or obtain capital to pay off its obligations in full.

As a result of the default, the mandatory default provisions will go into effect, which will increase overall debt. As a result of the mandatory default amount provisions, the company would owe a minimum of approximately $2.99 million at this time.

Without the investors' consent to restructure these debentures, extend their term or raise capital to repay the securities, company operations would be materially impacted, and the investors could force the company into involuntary bankruptcy.

If this occurs, it is likely that shareholders would suffer a substantial loss.

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