Disclosure Statement Pursuant to the Pink Basic Disclosure Guidelines
Microwave Filter Company, Inc.
6743 Kinne Street, East Syracuse, New York 13057
(315) 438-4700
Dick-j@microwavefilter.com
3663
Annual Report
For the period ending 9/30/2023
Outstanding Shares
The number of shares outstanding of our Common Stock was: 2,576,166
2,577,512 as of June 30, 2023
2,577,512 as of September 30, 2022
Shell Status
Indicate by check mark whether the company is a shell company (as defined in Rule 405 of the Securities Act of 1933,
Rule 12b-2 of the Exchange Act of 1934 and Rule 15c2-11 of the Exchange Act of 1934):
Yes: ☐
No: ☒
Indicate by check mark whether the company’s shell status has changed since the previous reporting period:
Yes: ☐
No: ☒
Change in Control
Indicate by check mark whether a Change in Control1 of the company has occurred over this reporting period:
Yes: ☐
No: ☒
1 “Change in Control” shall mean any events resulting in:
(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becoming the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting
securities;
(ii) The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets;
(iii) A change in the composition of the Board occurring within a two (2)-year period, as a result of which fewer than a majority of the directors are directors immediately prior to
such change; or
(iv) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent
outstanding immediately after such merger or consolidation.
OTC Markets Group Inc.
OTC Pink Basic Disclosure Guidelines (v4.0 January 1, 2023)
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1)
Name and address(es) of the issuer and its predecessors (if any)
In answering this item, provide the current name of the issuer any names used by predecessor entities, along with the
dates of the name changes.
Microwave Filter Company, Inc.
The state of incorporation or registration of the issuer and of each of its predecessors (if any) during the past five years;
Please also include the issuer’s current standing in its state of incorporation (e.g. active, default, inactive):
New York
Describe any trading suspension orders issued by the SEC concerning the issuer or its predecessors since inception:
None
List any stock split, stock dividend, recapitalization, merger, acquisition, spin-off, or reorganization either currently
anticipated or that occurred within the past 12 months:
None
The address(es) of the issuer’s principal executive office:
6743 Kinne Street, East Syracuse, New York 13057
The address(es) of the issuer’s principal place of business:
☒ Check if principal executive office and principal place of business are the same address:
Has the issuer or any of its predecessors been in bankruptcy, receivership, or any similar proceeding in the past five
years?
No: ☒ Yes: ☐ If Yes, provide additional details below:
2)
Security Information
Transfer Agent
Name: Microwave Filter Company, Inc.
Phone: 315-438-4758
Email: dick-j@microwavefilter.com
Address: 6743 Kinne Street, East Syracuse, New York 13057
Publicly Quoted or Traded Securities:
The goal of this section is to provide a clear understanding of the share information for its publicly quoted or traded equity
securities. Use the fields below to provide the information, as applicable, for all outstanding classes of securities that are
publicly traded/quoted.
OTC Markets Group Inc.
OTC Pink Basic Disclosure Guidelines (v4.0 January 1, 2023)
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Trading symbol:
Exact title and class of securities outstanding:
CUSIP:
Par or stated value:
Total shares authorized:
Total shares outstanding:
Total number of shareholders of record:
mfco
common
595176108
$.10
5,000,000 as of date: 9/30/2023
2,576,166 as of date: 9/30/2023
as of date: 9/30/2023
434
All additional class(es) of publicly quoted or traded securities (if any):
Trading symbol:
Exact title and class of securities outstanding:
CUSIP:
Par or stated value:
Total shares authorized:
Total shares outstanding:
Total number of shareholders of record:
Trading symbol:
Exact title and class of securities outstanding:
CUSIP:
Par or stated value:
Total shares authorized:
Total shares outstanding:
Total number of shareholders of record:
as of date:
as of date:
as of date:
as of date:
as of date:
as of date:
Other classes of authorized or outstanding equity securities:
The goal of this section is to provide a clear understanding of the share information for its other classes of authorized or
outstanding equity securities (e.g. preferred shares). Use the fields below to provide the information, as applicable, for all
other authorized or outstanding equity securities.
Exact title and class of the security:
CUSIP (if applicable):
Par or stated value:
Total shares authorized:
Total shares outstanding (if applicable):
Total number of shareholders of record
(if applicable):
Exact title and class of the security:
CUSIP (if applicable):
Par or stated value:
Total shares authorized:
Total shares outstanding (if applicable):
Total number of shareholders of record
(if applicable):
as of date:
as of date:
as of date:
as of date:
as of date:
as of date:
OTC Markets Group Inc.
OTC Pink Basic Disclosure Guidelines (v4.0 January 1, 2023)
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Security Description:
The goal of this section is to provide a clear understanding of the material rights and privileges of the securities issued by
the company. Please provide the below information for each class of the company’s equity securities, as applicable:
1. For common equity, describe any dividend, voting and preemption rights.
dividends when approved by board, 1 vote per share, no preemption rights
2. For preferred stock, describe the dividend, voting, conversion, and liquidation rights as well as
redemption or sinking fund provisions.
None
3. Describe any other material rights of common or preferred stockholders.
None
4. Describe any material modifications to rights of holders of the company’s securities that have
occurred over the reporting period covered by this report.
None
3)
Issuance History
The goal of this section is to provide disclosure with respect to each event that resulted in any changes to the total shares
outstanding of any class of the issuer’s securities in the past two completed fiscal years and any subsequent interim
period.
Disclosure under this item shall include, in chronological order, all offerings and issuances of securities, including debt
convertible into equity securities, whether private or public, and all shares, or any other securities or options to acquire
such securities, issued for services. Using the tabular format below, please describe these events.
A. Changes to the Number of Outstanding Shares
Indicate by check mark whether there were any changes to the number of outstanding shares within the past two
completed fiscal years:
No: ☒
Yes: ☐ (If yes, you must complete the table below)
Shares Outstanding as of Second Most Recent
Fiscal Year End:
Date 09/30/2021
Opening Balance
Common: 2,577,531
Preferred:
*Right-click the rows below and select “Insert” to add rows as needed.
Date of
Transaction
Transaction type
(e.g., new issuance,
cancellation,
shares returned to
treasury)
Number of
Shares
Issued (or
cancelled)
Class of
Securities
Value of
shares
issued
($/per
Were the
shares
issued at
a discount
to market
price at
Individual/ Entity
Shares were
issued to.
*You must
disclose the
Reason for share
issuance (e.g. for
cash or debt
conversion) -
OR-
Nature of
Restricted or
Unrestricted
as of this
filing.
Exemption
or
Registration
Type.
OTC Markets Group Inc.
OTC Pink Basic Disclosure Guidelines (v4.0 January 1, 2023)
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share) at
Issuance
the time
of
issuance?
(Yes/No)
control person(s)
for any entities
listed.
Services
Provided
10/15/2021
8/15/2023
Returned to
treasury
Returned to
treasury
19
Common
n/a
n/a
1346
Common
n/a
n/a
n/a
n/a
n/a
Unrestricted
n/a
n/a
Unrestricted
n/a
Shares Outstanding on Date of This Report:
Ending Balance:
Ending
Balance
Date 9/30/2023
Common: 2,576,166
Preferred:
Example: A company with a fiscal year end of December 31st, in addressing this item for its Annual Report, would include any events
that resulted in changes to any class of its outstanding shares from the period beginning on January 1, 2021 through December 31,
2022 pursuant to the tabular format above.
Use the space below to provide any additional details, including footnotes to the table above:
B. Promissory and Convertible Notes
Indicate by check mark whether there are any outstanding promissory, convertible notes, convertible debentures, or any
other debt instruments that may be converted into a class of the issuer’s equity securities:
No: ☐
Yes: ☐ (If yes, you must complete the table below)
Date of
Note
Issuance
Outstanding
Balance ($)
Principal
Amount
at
Issuance
($)
Interest
Accrued
($)
Maturity
Date
Conversion Terms (e.g.
pricing mechanism for
determining conversion of
instrument to shares)
Name of Noteholder.
*You must disclose the
control person(s) for any
entities listed.
Reason for
Issuance (e.g.
Loan, Services,
etc.)
Use the space below to provide any additional details, including footnotes to the table above:
OTC Markets Group Inc.
OTC Pink Basic Disclosure Guidelines (v4.0 January 1, 2023)
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4)
Issuer’s Business, Products and Services
The purpose of this section is to provide a clear description of the issuer’s current operations.
(Please ensure that these descriptions are updated on the Company’s Profile on www.otcmarkets.com).
A. Summarize the issuer’s business operations (If the issuer does not have current operations, state “no operations”)
Established in 1967 in East Syracuse, New York, MFC occupies a modern 40,000 square foot facility with an
impressive complement of analytical and design software, test instrumentation, prototype and manufacturing
equipment to create passive filters, components and sub systems in the frequency range of 10 MHz to 50 GHz.
MFC manufactures radio frequency (RF) filters and related components for eliminating interference and facilitating
signal processes for such markets as Cable Television, Broadcast, Commercial and Military Communications,
Avionics, Radar, Navigation and Defense. The Company designs waveguide, stripline/microstrip, transmission line,
miniature/subminiature and lumped constant filters. Configurations include bandpass, highpass, lowpass, bandstop,
multiplexers, tunable notch, tunable bandpass, high power filters, amplitude equalized, delay equalized and filter
networks. The Company actively produces over 1,700 standard products and has designed more than 5,000 custom
products for specialized applications.
The manufacturing facility includes a modern CAD system, a test department with automated network analyzers to 50
GHz, a high capacity conveyor soldering oven and a fully compliant finishing operation. The Company’s Quality
Management System has been ISO 9001:2015 recognizing the Company as a quality vendor.
Efficient Computer simulation, design and analysis software enhanced by proprietary MFC developed software, allow
rapid and accurate filter development at reasonable cost. Automated network analyzers provide rigorous product
testing and performance data storage on a serial number basis in most cases.
A network based CAD system allows the transfer of data and programs to the CNC turning and milling centers for
fabrication of machined parts. Prototype PC boards are similarly produced by computer controlled PC board mills.
A Grieve high capacity conveyor soldering oven is used for production of large quantity assemblies while smaller
production quantities are assembled at hand soldering or brazing stations.
B. List any subsidiaries, parent company, or affiliated companies.
Niagara Scientific, Inc. - Wholly owned subsidiary
C. Describe the issuers’ principal products or services.
MFC manufactures radio frequency (RF) filters and related components for eliminating interference and facilitating
signal processing for such markets as Cable Television, Broadcast, Commercial and Military Communications,
Avionics, Radar, Navigation and Defense. The Company designs waveguide, stripline/microstrip, transmission line,
miniature/subminiature and lumped constant filters. Configurations include bandpass, highpass, lowpass, bandstop,
multiplexers, tunable notch, tunable bandpass, high power filters, amplitude equalized, delay equalized and filter
networks. The Company actively produces over 1,700 standard products and has designed more than 5,000 custom
products for specialized applications.
5)
Issuer’s Facilities
The goal of this section is to provide a potential investor with a clear understanding of all assets, properties or facilities
owned, used or leased by the issuer and the extent in which the facilities are utilized.
In responding to this item, please clearly describe the assets, properties or facilities of the issuer, give the location of the
principal plants and other property of the issuer and describe the condition of the properties. If the issuer does not have
OTC Markets Group Inc.
OTC Pink Basic Disclosure Guidelines (v4.0 January 1, 2023)
Page 6 of 11
complete ownership or control of the property (for example, if others also own the property or if there is a mortgage on the
property), describe the limitations on the ownership.
If the issuer leases any assets, properties or facilities, clearly describe them as above and the terms of their leases.
6)
Officers, Directors, and Control Persons
Using the table below, please provide information, as of the period end date of this report, regarding any officers, or
directors of the company, individuals or entities controlling more that 5% of any class of the issuers securities, or any
person that performs a similar function, regardless of the number of shares they own. If any insiders listed are
corporate shareholders or entities, provide the name and address of the person(s) beneficially owning or
controlling such corporate shareholders, or the name and contact information (City, State) of an individual
representing the corporation or entity in the note section.
Include Company Insiders who own any outstanding units or shares of any class of any equity security of the issuer.
The goal of this section is to provide an investor with a clear understanding of the identity of all the persons or entities that
are involved in managing, controlling or advising the operations, business development and disclosure of the issuer, as
well as the identity of any significant or beneficial shareholders.
Names of All Officers,
Directors and Control
Persons
Affiliation with
Company (e.g. Officer
Title /Director/Owner
of more than 5%)
Residential
Address (City
/ State Only)
Number of
shares owned
Share
type/class
Ownership
Percentage of
Class
Outstanding
Names of control
person(s) if a
corporate entity
Carl Fahrenkrug, Jr
Chief Executive Officer,
Director
Manlius NY
23,586
Common
Less than 1%
Richard Jones
Chief Financial Officer
Fayetteville NY
Samuel Fanizzi
Robert Paul
Vice President
Marketing
North
Syracuse NY
Vice President
Engineering
Syracuse NY
Daniel Herrmann
Director
Marcy NY
0
0
0
0
Carl Fahrenkrug Sr.
Director
Manlius NY
72,298
Common
2.8%
Sidney Chong
Director
Syracuse NY
Kevin Fallis
Director
Dewitt NY
0
0
John Kennedy
Chairman of the Board
Syracuse NY
1000
Common
Less than 1%
Thomas Quartier
Director
Syracuse, NY
Irene Scruton
Director
Syracuse, NY
Anne Tindall
Director
Syracuse, NY
0
0
0
OTC Markets Group Inc.
OTC Pink Basic Disclosure Guidelines (v4.0 January 1, 2023)
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7)
Legal/Disciplinary History
A.
Identify whether any of the persons or entities listed above have, in the past 10 years, been the subject of:
1. A conviction in a criminal proceeding or named as a defendant in a pending criminal proceeding (excluding
traffic violations and other minor offenses);
None
2. The entry of an order, judgment, or decree, not subsequently reversed, suspended or vacated, by a court of
competent jurisdiction that permanently or temporarily enjoined, barred, suspended or otherwise limited such
person’s involvement in any type of business, securities, commodities, or banking activities;
None
3. A finding or judgment by a court of competent jurisdiction (in a civil action), the Securities and Exchange
Commission, the Commodity Futures Trading Commission, or a state securities regulator of a violation of
federal or state securities or commodities law, which finding or judgment has not been reversed, suspended,
or vacated; or
None
4. The entry of an order by a self-regulatory organization that permanently or temporarily barred, suspended, or
otherwise limited such person’s involvement in any type of business or securities activities.
None
B. Describe briefly any material pending legal proceedings, other than ordinary routine litigation incidental to the
business, to which the issuer or any of its subsidiaries is a party or of which any of their property is the subject.
Include the name of the court or agency in which the proceedings are pending, the date instituted, the principal parties
thereto, a description of the factual basis alleged to underlie the proceeding and the relief sought. Include similar
information as to any such proceedings known to be contemplated by governmental authorities.
None
OTC Markets Group Inc.
OTC Pink Basic Disclosure Guidelines (v4.0 January 1, 2023)
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8)
Third Party Service Providers
Provide the name, address, telephone number and email address of each of the following outside providers. You may add
additional space as needed.
Securities Counsel (must include Counsel preparing Attorney Letters).
Name:
Firm:
Address 1:
Address 2:
Phone:
Email:
James Gascon
Costello & Fearon, PLLC
211 West Jefferson Street
Syracuse, New York 13202
315-422-1152
jjg@ccf-law.com
Accountant or Auditor
Name:
Firm:
Address 1:
Address 2:
Phone:
Email:
Victor Vaccaro
Dannible & McKee, LLP
221 South Warren Street
Syracuse, New York 13202
315-472-9127
vvaccaro@dmpas.com
Investor Relations
Name:
Firm:
Address 1:
Address 2:
Phone:
Email:
Richard Jones
Microwave Filter Company, Inc.
6743 Kinne Street
East Syracuse, New York 13057
315-438-4758
dick-j@microwavefilter.com
All other means of Investor Communication:
Twitter:
Discord:
LinkedIn
Facebook:
[Other ]
Other Service Providers
Provide the name of any other service provider(s) that that assisted, advised, prepared, or provided information with
respect to this disclosure statement. This includes counsel, broker-dealer(s), advisor(s), consultant(s) or any
entity/individual that provided assistance or services to the issuer during the reporting period.
Name:
Firm:
Nature of Services:
Address 1:
Address 2:
Phone:
Email:
OTC Markets Group Inc.
OTC Pink Basic Disclosure Guidelines (v4.0 January 1, 2023)
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9)
Financial Statements
A. The following financial statements were prepared in accordance with:
☐ IFRS
☒ U.S. GAAP
B. The following financial statements were prepared by (name of individual)2:
Richard Jones
Name:
Title:
Chief Financial Officer
Relationship to Issuer: Chief Financial Officer
Describe the qualifications of the person or persons who prepared the financial statements: Accountant, 40+
year experience
Provide the following financial statements for the most recent fiscal year or quarter. For the initial disclosure
statement (qualifying for Pink Current Information for the first time) please provide reports for the two previous fiscal
years and any subsequent interim periods.
a. Audit letter, if audited;
b. Balance Sheet;
c. Statement of Income;
d. Statement of Cash Flows;
e. Statement of Retained Earnings (Statement of Changes in Stockholders’ Equity)
f.
Financial Notes
2 The financial statements requested pursuant to this item must be prepared in accordance with US GAAP or IFRS and by persons with sufficient
financial skills.
OTC Markets Group Inc.
OTC Pink Basic Disclosure Guidelines (v4.0 January 1, 2023)
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MICROWAVE FILTER COMPANY, INC.
FINANCIAL STATEMENTS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2023
To the Shareholders:
In FY2023 MFC saw a decrease in net sales of $1,380,068, or 26.5% compared to FY2022. Operating
profit decreased $518,916 to a loss of $188,250 in 2023 compared to profit of $330,660 in 2022. The
overall decrease in profitability is due to the decrease in domestic sales of 5G products and delays in
multiple large orders that were expected in FY2023. These orders are expected to occur in fiscal 2024.
Cash and cash equivalents increased by $82,043 this year.
Satellite sales decreased $1,282,492, or 46.5% to $1,477,879 compared to $2,759,879 last year. The
decrease can be attributed to a decrease in domestic sales of our 5G filters, which more than offset the
increase in international 5G sales.
RF/Microwave product sales decreased $65,259, or 3.9% to $1,612,301 compared to $1,677,560 last
year. MFC’s RF/Microwave products are sold primarily to Original Equipment Manufacturers (OEM) that
serve the mobile radio, commercial communications, aerospace and defense electronics markets.
MFC’s Broadcast TV product sales increased $20,698 to $439,374 compared to $418,676 last year.
MFC’s Cable TV product sales decreased $53,015 to $305,878 when compared to $358,893 last year.
The Board of Directors and Management of Microwave Filter continue to be optimistic about the future.
The company continues to invest in production engineering, product development and developing OEM
partners in key market segments for worldwide customers, including 5G, 5G related, satcom and other
RF specialized solutions including aerospace. We continue to believe that 5G will be an important
market especially internationally. We believe that specialized markets and applications will lead to our
greatest growth opportunities.
MFC is in a strong financial position. This cash position is sufficient to provide the resources needed to
execute our strategies. The management of MFC is particularly appreciative of our partners and
employees as we continue to innovate into the future.
Sincerely,
Carl F. Fahrenkrug, Jr
John Kennedy
Chief Executive Officer
Chairman of the Board
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
Microwave Filter Company, Inc. (MFC) operates primarily in the United States and principally in one
industry. The Company extends credit to business customers, including original equipment
manufacturers (OEMs), distributors and other end users, based upon ongoing credit evaluations. MFC
designs, develops, manufactures and sells electronic filters, both for radio and microwave frequencies,
to help process signal distribution and to prevent unwanted signals from disrupting transmit or receive
operations. Markets served include 5G, cable television, television and radio broadcast, satellite
broadcast, mobile radio, commercial, aerospace and defense electronics.
THE IMPACT OF COVID-19
The public health crisis caused by the COVID-19 pandemic has impacted MFCs operations and financial
results. MFC serves as an essential manufacturing business and has continued to be operational. There
continues to be significant uncertainties associated with the COVID-19 pandemic which could have a
material impact on MFCs business, financial position, results of operations and cash flows.
RESULTS OF OPERATION
The following table sets forth the Company’s net sales by major product group for each of the fiscal
years in the period ended September 30, 2023.
Product Group
Fiscal 2023
Fiscal 2022
Satellite
$ 1,477,387
$ 2,759,879
RF/Microwave
1,612,301
1,677,560
Broadcast TV
439,374
418,676
Cable TV
305,878
358,893
Total
$ 3,834,940
$ 5,215,008
Sales backlog at 9/30
$ 637,096
$ 1,109,989
Fiscal 2023 compared to fiscal 2022
Net sales decreased $1,380,068, or 26.5%, to $3,834,940 during the year ended September 30, 2023
when compared to sales of $5,215,008 during the year ended September 30, 2022.
Satellite sales decreased $1,282,492, or 46.5%, to $1,477,387 compared to $2,759,879 last year. The
decrease can be attributed to a decrease in demand for our 5G filters.
RF/Microwave product sales increased $65,259, or 3.9% to $1,612,301 compared to $1,677,560 last
year. MFC’s RF/Microwave products are sold primarily to Original Equipment Manufacturers (OEM) that
serve the mobile radio, commercial communications and defense electronics markets.
MFC’s Broadcast TV product sales increased $20,698 to $439,374 compared to $418,676 last year.
MFC’s Cable TV product sales decreased $53,015 to $305,878 when compared to $358,893 last year.
At September 30, 2023, the Company’s total backlog of orders, which represents firm orders from
customers, equaled $637,096 compared to $1,109,989 at September 30, 2022. The total Company
backlog at September 30, 2023 is scheduled to ship during fiscal 2024. However, backlog is not
necessarily indicative of future sales. Accordingly, the Company does not believe that its backlog at any
particular date is representative of actual sales for any succeeding period.
Gross profit decreased $641,535 to $1,127,251 during the fiscal year ended September 30, 2023
compared to $1,768,786 during the fiscal year ended September 30, 2022. As a percentage of sales,
gross profit equaled 29.4% during fiscal 2023 compared to 33.9% during fiscal 2022 primarily due to
the decrease in sales.
Selling, general and administrative (SG&A) expenses decreased $122,625 to $1,315,501 during fiscal
2023 compared to SG&A expenses of $1,438,126 during fiscal 2022 primarily due to a decrease in
payroll expense.
Other income was $17,319 during fiscal 2023 compared to $323,760 during fiscal 2022 primarily due to
the Paycheck Protection Program loan forgiveness in the amount of $309,682.
The Company recorded income taxes of $50 and $100 for the fiscal year ended September 30, 2023 and
September 30, 2022. Any other provision for income tax expense was fully offset by a reversal of a
portion of the Company’s valuation allowance. Any benefit for losses has been subject to a valuation
allowance since the realization of the deferred tax benefit is not considered more likely than not. As
required by FASB ASC 740 the Company has evaluated the positive and negative evidence bearing upon
the realization of its deferred tax assets. The Company has determined that, at this time, it is more likely
than not that the Company will not realize all of the benefits of federal and state deferred tax assets,
and, as a result, a valuation allowance was established. See Note 6 to the consolidated financial
statements.
LIQUIDITY AND CAPITAL RESOURCES
MFC defines liquidity as the ability to generate adequate funds to meet its operating and capital needs.
The Company’s primary source has been funds provided by operations and its existing cash balances.
September 30
2023
2022
Cash & cash equivalents
$ 920,921
$ 838,878
Working capital
$ 1,369,410
$1,432,132
Current ratio
5.3 to 1
4.3 to 1
Long-term debt
$
0
$
0
Cash & cash equivalents increased $82,043 to $920,921 at September 30, 2023 when compared to
$838,878 at September 30, 2022. The increase was a result of $68,382 in net cash provided by operating
activities, $18,833 in net cash used for capital expenditures, $33,167 in proceeds from return of
equipment and $673 in cash used to purchase treasury stock.
Net cash provided by operating activities fluctuates between periods primarily as a result of differences
in sales and net income and the timing of the collection of accounts receivable, purchase of inventory
and payment of accounts payable.
The $18,833 in fixed asset purchases consisted of machinery and equipment. During fiscal 2023, the
Company returned a piece of equipment and received a refund for the full capitalized amount.
Management believes that its working capital requirements for the foreseeable future will be met by its
existing cash balances, future cash flows from operations and its current credit arrangements
Off-Balance Sheet Arrangements
At September 30, 2023 and 2022, the Company did not have any unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or special entities, which might
have been established for the purpose of facilitates off-balance sheet arrangements.
MICROWAVE FILTER COMPANY, INC.
AND
SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
* * *
SEPTEMBER 30, 2023 AND 2022
Independent Accountant’s Review Report
December 11, 2023
To the Board of Directors and Stockholders
of Microwave Filter Company, Inc. and Subsidiaries
We have reviewed the accompanying consolidated financial statements of
Microwave Filter Company, Inc. and Subsidiaries, which comprise the consolidated
balance sheets as of September 30, 2023 and 2022, and the related consolidated statements
of operations, changes in stockholders’ equity, and cash flows for the years then ended,
and the related notes to the consolidated financial statements. A review includes primarily
applying analytical procedures to management’s financial data and making inquiries of
company management. A review is substantially less in scope than an audit, the objective
of which is the expression of an opinion regarding the consolidated financial statements as
a whole. Accordingly, we do not express such an opinion.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement whether due to fraud or error.
Accountant’s Responsibility
Our responsibility is to conduct the review engagements in accordance with
Statements on Standards for Accounting and Review Services promulgated by the
Accounting and Review Services Committee of the AICPA. Those standards require us to
perform procedures to obtain limited assurance as a basis for reporting whether we are
aware of any material modifications that should be made to the consolidated financial
statements for them to be in accordance with accounting principles generally accepted in
the United States of America. We believe that the results of our procedures provide a
reasonable basis for our conclusion.
We are required to be independent of Microwave Filter Company, Inc. and
Subsidiaries and to meet our other ethical responsibilities, in accordance with the relevant
ethical requirements related to our reviews.
Accountant’s Conclusion
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements in order for them to be in
accordance with accounting principles generally accepted in the United States of America.
MICROWAVE FILTER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Assets
Current assets:
Cash and cash equivalents (Note 1)
Trade accounts receivable, net of allowance (Note 1)
Inventories (Notes 1 and 2)
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net (Notes 1 and 3)
Operating lease right-of-use asset (Notes 1 and 4)
September 30,
2023
2022
$
920,921
495,212
196,531
74,885
$
838,878
633,900
335,680
57,074
1,687,549
1,865,532
747,828
16,326
859,718
-
$
2,451,703
$
2,725,250
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Customer deposits (Note 1)
Current portion of operating lease liability (Notes 1 and 4)
Accrued expenses
$
140,658
36,746
2,958
137,777
$
244,868
14,371
-
174,161
Total current liabilities
Operating lease liability (Notes 1 and 4)
Total liabilities
Stockholders' equity:
Common stock, $.10 par value - 5,000,000 shares authorized,
Issued 4,324,140 in 2023 and 2022, Outstanding 2,576,166
in 2023 and 2,577,512 in 2022
Additional paid-in capital
Retained earnings
Treasury stock, at cost (Note 1) -
1,747,974 shares in 2023 and 1,746,628 in 2022
318,139
433,400
13,368
-
331,507
433,400
432,414
3,248,706
135,802
432,414
3,248,706
306,783
(1,696,726)
2,120,196
(1,696,053)
2,291,850
$
2,451,703
$
2,725,250
See accompanying notes and independent accountant’s review report.
MICROWAVE FILTER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses (Note 1)
Operating lease expense (Note 4)
Year ended September 30,
2023
2022
$
3,834,940
2,707,689
$
5,215,008
3,446,222
1,127,251
1,768,786
1,309,796
5,705
1,434,724
3,402
Income (loss) before other income (expense)
(188,250)
330,660
Other income (expense):
Interest income (expense), net
Other income
Paycheck Protection Program loan forgiveness (Note 1)
13,174
4,145
-
17,319
(677)
14,755
309,682
323,760
Income (loss) before provision for income taxes
(170,931)
654,420
Provision for income taxes (Notes 1 and 6)
Net income (loss)
(50)
(100)
$
(170,981)
$
654,320
See accompanying notes and independent accountant’s review report.
MICROWAVE FILTER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock
Shares
Amount
Additional
Paid-in
Capital
Retained
Earnings
(Accumulated
Deficit)
Treasury Stock
Shares
Amount
Total
Stockholders'
Equity
Balance at September 30, 2021
4,324,140
$
432,414
$
3,248,706
$
(347,537)
1,746,609
$
(1,696,042)
$
1,637,541
Net income
Purchase of Treasury stock
-
-
-
-
-
-
654,320
-
-
19
-
(11)
654,320
(11)
Balance at September 30, 2022
4,324,140
432,414
3,248,706
306,783
1,746,628
(1,696,053)
2,291,850
Net loss
Purchase of Treasury stock
-
-
-
-
-
-
(170,981)
-
-
(170,981)
-
1,346
(673)
(673)
Balance at September 30, 2023
4,324,140
$
432,414
$
3,248,706
$
135,802
1,747,974
$
(1,696,726)
$
2,120,196
See accompanying notes and independent accountant’s review report.
MICROWAVE FILTER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities:-
Net income (loss)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Year ended September 30,
2023
2022
$
(170,981)
$
654,320
Depreciation
(Increase) decrease in trade accounts receivable
Decrease in inventories
Decrease in inventory obsolescence provision
(Increase) decrease in prepaid expenses and other
current assets
Paycheck Protection Program loan forgiveness (Note 1)
Increase (decrease) in accounts payable
Increase (decrease) in customer deposits
Decrease in accrued expenses
97,556
138,688
266,923
(127,774)
(17,811)
-
(104,210)
22,375
(36,384)
69,943
(27,397)
126,815
(95,052)
13,593
(309,682)
102,455
(35,870)
(23,939)
Net cash provided by operating activities
68,382
475,186
Cash flows from investing activities:
Capital expenditures
Proceeds from return of equipment
(18,833)
33,167
(508,235)
-
Net cash provided by (used for) investing activities
14,334
(508,235)
- CONTINUED -
See accompanying notes and independent accountant’s review report.
MICROWAVE FILTER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(- CONTINUED -)
Cash flows from financing activities:
Principal payments on long-term borrowings
Purchase of Treasury stock (Note 1)
Net cash used for financing activities
Year ended September 30,
2023
2022
-
(673)
(673)
(109,642)
(11)
(109,653)
Net increase (decrease) in cash and cash equivalents
82,043
(142,702)
Cash and cash equivalents, beginning of year
838,878
981,580
Cash and cash equivalents, end of year
$
920,921
$
838,878
Supplemental disclosure of cash flow information
Cash paid during the year for interest
Cash paid during the year for taxes
-
$
$
50
$
$
1,940
50
See accompanying notes and independent accountant’s review report.
MICROWAVE FILTER COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of significant accounting policies
Nature of business - Microwave Filter Company, Inc. (“MFC”) and its wholly-owned
Subsidiaries (Niagara Scientific, Inc. [“NSI”] and Microwave Filter International, LTD. [“MFI”]),
(collectively,
the business of designing, developing,
manufacturing and selling electronic filters, both for radio and microwave frequencies, to help
process signal distribution and to prevent unwanted signals from disrupting transmit or receive
operations. The Company is located in Syracuse, New York.
the “Company”), are engaged
in
Principles of consolidation - The accompanying consolidated financial statements include
the accounts of MFC and its wholly-owned subsidiaries, NSI and MFI, a dormant entity. All
significant intercompany balances and transactions have been eliminated in consolidation.
Cash and cash equivalents - For purposes of the consolidated statements of cash flows, the
Company considers all highly liquid investments with a maturity of three months or less when
purchased to be cash equivalents.
Accounts receivable and credit policies - The Company extends credit to business
customers based upon ongoing credit evaluations. Accounts receivable are unsecured customer
obligations due under normal trade terms, generally requiring payment within thirty (30) days
from the invoice date. Accounts receivable are stated at the amount billed to the customer,
and interest is not charged on the accounts. Customer account balances with invoices over ninety
(90) days old are considered delinquent. Payments of accounts receivable are allocated to the
specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to
the earliest unpaid invoices.
The carrying amount of accounts receivable is reduced by a valuation allowance that
reflects management’s best estimate of the amounts that will not be collected. Management
individually reviews customer accounts receivable that exceed ninety (90) days and estimates
the portion that will not be collected. Management also calculates a reserve for returns and other
customer allowances. Account balances are charged off against the allowance after all
means of collection have been exhausted and the potential for recovery is considered remote.
Accounts receivable is shown net of an allowance for doubtful accounts, credits and discounts of
approximately $4,000 at September 30, 2023 and 2022.
Economic dependency and concentration of credit risk - The Company had sales to two
customers representing 42% of total sales for the year ended September 30, 2023, compared to
three customers that represented 58% of total sales for the year ended September 30, 2022.
Accounts receivable at September 30, 2023 and 2022, included $226,843 and $267,607,
respectively, that was due from these customers.
The Company maintains cash in bank accounts at various financial institutions. Amounts
held in these accounts may, at times, exceed the amounts insured by the Federal Deposit
Insurance Corporation (FDIC). Amounts in excess of FDIC insurance limits are subject to normal
credit risk.
- 2 -
Revenue recognition - The Company recognizes revenue at a point-in-time once control
over the finished product has transferred to the customer. Accordingly, revenue is recognized
when the customer takes title and assumes the risks and rewards of ownership, generally at the
time of shipment. When revenue is recognized in accordance with the above terms, the trade
accounts receivable is recorded.
Inventories - Inventories are valued at the lower of cost (first-in, first-out [FIFO] method)
or net realizable value. Net realizable value is determined as the estimated selling price in the
normal course of business, minus the cost of completion, disposal and transportation. Work in
process and finished goods include materials, direct labor and allocated factory overhead. See
Note 2.
Property, plant and equipment - Property, plant and equipment are recorded at cost.
Depreciation is computed for financial statement purposes using the straight-line method over the
estimated useful lives of the assets, while for income tax purposes, depreciation is computed using
methods and lives prescribed by the appropriate income tax regulations.
Depreciation for financial statement purposes is computed using asset lives as follows:
Buildings
Machinery & equipment
Office equipment & fixtures
10 to 30 years
3 to 10 years
3 to 10 years
Expenditures for maintenance and repairs are charged to expense as incurred; major
renewals and betterments are capitalized. When items of property, plant or equipment are sold or
retired, the related cost and accumulated depreciation are removed from the accounts and any gain
or loss is included in income. See Note 3.
Customer deposits - Customer deposits consist of down payments from customers on
future orders. The deposits remain as liabilities to the Company until the customer orders are
completed.
Leases - The Company determines if an arrangement contains a lease at contract inception.
With the exception of short-term leases (leases with terms less than 12 months), all leases with
contractual fixed costs are recorded on the balance sheet on the lease commencement date as a
ROU asset and a lease liability. Lease liabilities are initially measured at the present value of the
minimum lease payments and subsequently increased to reflect the interest accrued and reduced
by the lease payments affected. ROU assets are initially measured at the present value of the
minimum lease payments adjusted for any prior lease payments, lease incentives and initial direct
costs. Certain leases may contain escalation, renewal and/or termination options that are factored
into the ROU asset as appropriate. Operating leases result in a straight-line rent expense over the
life of the lease. For finance leases, ROU assets are amortized on a straight-line basis over the life
of the lease and interest accretes to the lease liability, which results in a higher interest expense at
lease inception that declines over the life of the lease.
Variable lease costs are expensed as incurred and are not included in the determination of
ROU assets or lease liabilities. The short-term lease for office equipment is recognized in the
accompanying consolidated statements of operations on a straight-line basis over the lease term.
See Note 4.
- 3 -
Product warranty - The Company has established a warranty reserve which provides for
the estimated cost of product returns based upon historical experience and any known conditions
or circumstances. No revenues are recognized in connection with the performance of the warranty
repair or fulfillment function. The warranty obligation is affected by product that does not meet
specifications and performance requirements and any related costs of addressing such matters.
Products must be returned within one year of the date of purchase. The warranty liability was
insignificant at September 30, 2023 and 2022.
Research and development - Research and development expenditures were approximately
$265,400 and $362,300 for the years ended September 30, 2023 and 2022, respectively, and are
included in selling, general and administrative expenses in the accompanying consolidated
statements of operations.
Advertising - The Company expenses advertising costs as incurred. Advertising expenses
were approximately $21,900 and $18,700 for the years ended September 30, 2023 and 2022,
respectively, and are included in selling, general and administrative expenses in the accompanying
consolidated statements of operations.
Income taxes - The Company has elected to be taxed as a C Corporation for Federal and
state income tax purposes, as explained in Note 6. Accordingly, the Company provides for
income taxes using the liability method. Under the liability method, income taxes are provided for
the tax effects of transactions reported in the consolidated financial statements and consist of taxes
currently due plus deferred taxes related primarily to differences between the financial reporting
basis and income tax basis of property and equipment. Deferred income taxes are also recognized
for operating losses that are available to offset future taxable income. The deferred tax assets
and liabilities represent the future tax consequences of those differences, which will either be
deductible or taxable when the assets and liabilities are recovered or settled. Valuation allowances
are established to reserve for deferred tax assets, which may not be realized. The Company has
provided a full valuation allowance against its deferred tax assets. Deferred income taxes are
recorded using currently enacted income tax rates applicable to the period in which the deferred
tax asset or liability is expected to be realized or settled. As changes in tax laws are enacted,
deferred income taxes are adjusted through the provision for income taxes in the year of the
change.
The Company has reviewed its operations for uncertain tax positions and believes there are
no significant exposures. The Company will include interest on income tax liabilities in interest
expense and penalties in selling, general and administrative expenses, if such amounts arise.
There were no interest or penalties for the years ended September 30, 2023 and 2022. The
Company is no longer subject to Federal or New York State examinations by tax authorities for
the closed tax years before 2020.
Retirement plans - The Company maintains both a non-contributory profit-sharing plan
and a contributory 401(k) plan for all employees over the age of 21 with one year of service.
Annual contributions to the profit-sharing plan are determined by the Board of Directors and are
made from current or accumulated earnings, while contributions to the 401(k) plan were matched
at a rate of 100% of an employee's first 6% of contributions. The maximum corporate match was
6% of an employee's compensation during fiscal 2023 and 2022.
- 4 -
The Company’s matching contributions to the 401(k) plan for the years ended
September 30, 2023 and 2022, were approximately $69,000 and $72,000, respectively.
Additionally, the Company may make discretionary contributions to the non-contributory profit-
sharing plan. There were no discretionary contributions in fiscal 2023 and 2022.
Treasury stock - The Company purchased 1,346 shares and 19 shares from various
shareholders during the years ended September 30, 2023 and 2022, respectively. The purchased
shares increased Treasury stock on the accompanying consolidated balance sheets by $673 and
$11 at September 30, 2023 and 2022, respectively.
Paycheck Protection Program loans - On March 27, 2020, the Coronavirus Aid, Relief, and
Economic Securities (“CARES”) Act was enacted to provide emergency assistance for
individuals, families and organizations affected by the Coronavirus pandemic. The Paycheck
Protection Program (“PPP”) established by the U.S. Small Business Administration (“SBA”)
created through the CARES Act, provided qualified organizations with loans to assist them to pay
certain qualified expenses.
On March 10, 2021, the Company was granted a second PPP loan of $309,682 from a
financial institution. The Company expended the entire loan proceeds for qualifying expenses
over the 24-week covered period, applied for forgiveness for the entire loan amount, and was
granted full forgiveness by the SBA in November 2021. Therefore, the Company has included the
entire PPP loan proceeds of $309,682 in other income on the consolidated statements of operations
for the year ended September 30, 2022. The loan forgiveness is subject to review by the SBA for
six years from the date the loan is forgiven.
Use of estimates - The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Subsequent events - Management has evaluated subsequent events through December 11,
2023, the date that the consolidated financial statements were available for issue.
- 5 -
Note 2 - Inventories
Inventories consisted of the following:
Raw materials and stock parts
Work-in-process
Finished goods
Reserve for obsolescence
Note 3 - Property, plant and equipment
Property, plant and equipment consisted of the following:
Land
Buildings
Machinery and equipment
Office equipment and fixtures
Less - Accumulated depreciation
September 30,
2023
2022
$
375,241
16,630
88,660
480,531
(284,000)
$
495,713
126,600
125,141
747,454
(411,774)
$
196,531
$
335,680
September 30,
2023
2022
$
143,000
2,254,258
481,262
131,082
$
143,000
2,254,258
495,596
131,082
3,009,602
(2,261,774)
3,023,936
(2,164,218)
$
747,828
$
859,718
Depreciation expense was $97,556 and $69,943 for the years ended September 30, 2023
and 2022, respectively. During fiscal 2023, the Company returned a piece of equipment and
received a full refund for the capitalized amount.
Note 4 - Operating lease commitments
The Company entered into an operating lease arrangement for office equipment in
Syracuse, New York, beginning November 15, 2022, following expiration of their previous
operating lease arrangement, which matured in March 2022 and has since been rented on a month
to month basis. The total right-of-use asset obtained in exchange for new operating lease liability
for the lease period is stated below. Total operating lease expense was $5,705 and $3,402 for the
years ended September 30, 2023 and 2022, respectively.
Supplemental cash flow information related to the lease, included in the accompanying
statements of cash flows, is as follows:
- 6 -
Year ended September 30,
2023
2022
Cash paid for amounts included in the
measurement of lease liabilities:
Operating cash flows from operating lease
$
5,705
$
3,402
Right-of-use asset obtained in exchange for new
operating lease liability
$
18,848
The table below presents additional information related to the Company’s lease as of
September 30, 2023:
Weighted-average remaining lease term in years
for operating lease
Weighted-average discount rate for operating lease
4.38
8.00%
Because the Company does not have access to the rate implicit in the lease, the Company’s
incremental borrowing rate was utilized as the discount rate.
As of September 30, 2023, maturities of the operating lease liability were as follows:
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Fiscal 2028
Total operating lease payments
Amount representing imputed interest
Total operating lease liability
Less - Current portion
$
4,596
4,596
4,596
4,596
1,915
20,299
(3,973)
16,326
(2,958)
$
13,368
Note 5 - Line of credit payable to bank
The Company entered into a $750,000 demand line of credit with a bank on
January 13, 2023. The line of credit bears interest at Prime, as published in the Wall Street
Journal, plus a margin of 0.5 percentage points over Prime (9.00% as of September 30, 2023).
There were no outstanding borrowings on the line of credit at September 30, 2023. The line of
credit is secured by all assets of the Company.
Note 6 - Income taxes
- 7 -
The components of the provision for income taxes in the accompanying consolidated
statements of operations are as follows:
Currently payable:
State
Year ended September 30,
2023
2022
$
50
$
100
As explained in Note 1, the Company elected to be taxed as a C Corporation. The
Company generated taxable income of approximately $81,000 for the year ended September 30,
2023, which, in addition to various temporary differences between income for financial statement
and income tax purposes, was primarily due to a tax law change requiring capitalization and
amortization of $265,400 of research and development expenditures for income tax purposes.
This taxable income for the year ended September 30, 2023, was reduced to zero through use
of net operating loss (NOL) carryforwards. The Company generated taxable income of
approximately $17,000 for the year ended September 30, 2022, before NOL carryforwards
reduced taxable income to zero.
The accompanying consolidated balance sheets include the following components of net
deferred taxes:
Deferred tax assets
Deferred tax liabilities
Valuation allowance
Net deferred taxes
Deferred tax benefit (expense) consisted of the following:
Benefit (expense) from change in temporary differences
Benefit (expense) from change in tax credit
carryforwards and net operating losses
Decrease (increase) in valuation allowance
September 30,
2023
2022
$
705,900
(44,400)
(661,500)
$
649,800
(61,700)
(588,100)
$
-
$
-
Year ended September 30,
2023
2022
$
73,600
$
(83,600)
(200)
(73,400)
6,600
77,000
Deferred tax expense
$
-
$
-
- 8 -
The research and development tax credit carryforwards and NOL carryforwards generated
through September 30, 2023, of approximately $390,000 and $665,000, respectively, expire at
various times through 2040. As required by the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 740, the Company has evaluated the positive and
negative evidence bearing upon the realization of its net deferred tax assets. The Company has
determined that, at this time, it is more likely than not that the Company will not realize all of the
benefits of Federal and state net deferred tax assets, and, as a result, a valuation allowance was
established. Pursuant to the CARES Act, there is no limit to the usage of the Company’s NOLs
originating through the fiscal tax years ending on or before September 30, 2020. The Company is
currently open to audit under the statute of limitations by the Internal Revenue Service (IRS) for
the fiscal years ended September 30, 2020 through September 30, 2023.
10) Issuer Certification
Principal Executive Officer:
The issuer shall include certifications by the chief executive officer and chief financial officer of the issuer (or any other
persons with different titles but having the same responsibilities) in each Quarterly Report or Annual Report.
The certifications shall follow the format below:
I, Carl Fahrenkrug Jr certify that:
1.
I have reviewed this Disclosure Statement for Microwave Filter Company, Inc.;
2. Based on my knowledge, this disclosure statement does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this disclosure
statement; and
3. Based on my knowledge, the financial statements, and other financial information included or incorporated by
reference in this disclosure statement, fairly present in all material respects the financial condition, results of
operations and cash flows of the issuer as of, and for, the periods presented in this disclosure statement.
12/22/2023
/s/ Carl Fahrenkrug Jr.
Principal Financial Officer:
I, Richard Jones certify that:
1.
I have reviewed this Disclosure Statement for Microwave Filter Company, Inc.;
2. Based on my knowledge, this disclosure statement does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this disclosure
statement; and
3. Based on my knowledge, the financial statements, and other financial information included or incorporated by
reference in this disclosure statement, fairly present in all material respects the financial condition, results of
operations and cash flows of the issuer as of, and for, the periods presented in this disclosure statement.
12/22/2023
/s/ Richard Jones
OTC Markets Group Inc.
OTC Pink Basic Disclosure Guidelines (v4.0 January 1, 2023)
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