OTC Markets Group Inc.
Disclosure Guidelines for the Pink Market (v5 December 18, 2023)
Page 1 of 11
Disclosure Statement Pursuant to the Pink Basic Disclosure Guidelines
Microwave Filter Company, Inc.
6743 Kinne Street, East Syracuse, New York 13057
_______________________________
(315) 438-4700
www.microwavefilter.com
dick-j@microwavefilter.com
3663
Annual Report
For the period ending September 30, 2024
Outstanding Shares
The number of shares outstanding of our Common Stock was: 2,575,824
2,575,824 as of June 30, 2024
2,576,166 as of September 30, 2023
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 Control4 of the company has occurred during this reporting period:
Yes: ☐
No: ☒
4 “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.
Disclosure Guidelines for the Pink Market (v5 December 18, 2023)
Page 2 of 11
1)
Name and address(es) of the issuer and its predecessors (if any)
In answering this item, provide the current name of the issuer and names used by predecessor entities, along with the
dates of the name changes.
Microwave Filter Company, Inc.
Current State and Date of Incorporation or Registration: New York, 1967
Standing in this jurisdiction: (e.g. active, default, inactive): Active
Prior Incorporation Information for the issuer and any predecessors during the past five years:
None
Describe any trading suspension or halt orders issued by the SEC or FINRA concerning the issuer or its predecessors
since inception:
None
List any stock split, dividend, recapitalization, merger, acquisition, spin-off, or reorganization either currently anticipated or
that occurred within the past 12 months:
None
Address of the issuer’s principal executive office:
6743 Kinne Street, East Syracuse, NY 13057
Address 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
OTC Markets Group Inc.
Disclosure Guidelines for the Pink Market (v5 December 18, 2023)
Page 3 of 11
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.
Trading symbol:
mfco
Exact title and class of securities outstanding:
common
CUSIP:
Par or stated value:
Total shares authorized:
Total shares outstanding:
Total number of shareholders of record:
595176108
$.10
5,000,000 as of date: 9/30/2024
2,575,824 as of date: 9/30/2024
431 as of date: 9/30/2024
Please provide the above-referenced information for all other publicly quoted or traded securities of the issuer.
Other classes of authorized or outstanding equity securities that do not have a trading symbol:
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 that do not have a trading symbol). 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:
Par or stated value:
Total shares authorized:
as of date:
Total shares outstanding:
as of date:
Total number of shareholders of record:
as of date:
Please provide the above-referenced information for all other classes of authorized or outstanding equity securities.
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.
OTC Markets Group Inc.
Disclosure Guidelines for the Pink Market (v5 December 18, 2023)
Page 4 of 11
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 for the two most recently completed fiscal years and any
subsequent period.
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 Opening Balance:
Date 9/30/2022
Common: 2,577,512
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
share) at
Issuance
Were the
shares
issued at
a discount
to market
price at
the time
of
issuance?
(Yes/No)
Individual/
Entity Shares
were issued to.
***You must
disclose the
control
person(s) for
any entities
listed.
Reason for
share issuance
(e.g. for cash or
debt conversion)
-OR-
Nature of
Services
Provided
Restricted or
Unrestricted as
of this filing.
Exemption
or
Registratio
n Type.
8/15/2023
Returned to
treasury
1346
common
n/a
n/a
n/a
n/a
unrestricted
n/a
Shares Outstanding on Date of This Report:
Ending Balance:
Date 9/30/2024
Common: 2,575,824
2/22/2024
Returned to
treasury
171
common
n/a
n/a
n/a
n/a
unrestricted
n/a
4/26/2024
Returned to
treasury
171
common
n/a
n/a
n/a
n/a
unrestricted
n/a
OTC Markets Group Inc.
Disclosure Guidelines for the Pink Market (v5 December 18, 2023)
Page 5 of 11
Example: A company with a fiscal year end of December 31st 2023, 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, 2022 through December
31, 2023 pursuant to the tabular format above.
***Control persons for any entities in the table above must be disclosed in the table or in a footnote here.
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.)
***Control persons for any entities in the table above must be disclosed in the table or in a footnote here.
Use the space below to provide any additional details, including footnotes to the table above:
4)
Issuer’s Business, Products and Services
The purpose of this section is to provide a clear description of the issuer’s current operations.
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
Preferred:
OTC Markets Group Inc.
Disclosure Guidelines for the Pink Market (v5 December 18, 2023)
Page 6 of 11
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 investors 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. Describe the location of
office space, data centers, principal plants, and other property of the issuer and describe the condition of the properties.
Specify if the assets, properties, or facilities are owned or leased and the terms of their leases. If the issuer does not have
complete ownership or control of the property, describe the limitations on the ownership.
6)
All Officers, Directors, and Control Persons of the Company
Using the table below, please provide information, as of the period end date of this report, regarding all officers and
directors of the company, or any person that performs a similar function, regardless of the number of shares they own.
In addition, list all individuals or entities controlling 5% or more of any class of the issuer’s securities.
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
OTC Markets Group Inc.
Disclosure Guidelines for the Pink Market (v5 December 18, 2023)
Page 7 of 11
representing the corporation or entity. 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 investors 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 owners.
Confirm that the information in this table matches your public company profile on www.OTCMarkets.com. If any updates
are needed to your public company profile, log in to www.OTCIQ.com to update your company profile.
Names of All
Officers, Directors,
and Control
Persons
Affiliation with
Company (e.g.
Officer Title
/Director/Owner of
5% or more)
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
0
Sam Fanizzi
Vice President
Marketing
North Syracuse, NY
0
Robert Paul
Vice President
Engineering
Syracuse, NY
0
Daniel Herrmann
Director
Marcy, NY
0
Carl Fahrenkrug Sr
Director
Manlius, NY
72,298
Common
2.8%
Sidney Chong
Director
Syracuse, NY
0
Kevin Fallis
Director
Dewitt, NY
0
John Kennedy
Chairman of the
Board
Syracuse, NY
2000
Common
Less than
1%
Thomas Quartier
Director
Syracuse, NY
0
Irene Scruton
Director
Syracuse, NY
0
Anne Tindall
Director
Syracuse, NY
0
OTC Markets Group Inc.
Disclosure Guidelines for the Pink Market (v5 December 18, 2023)
Page 8 of 11
7)
Legal/Disciplinary History
A.
Identify and provide a brief explanation as to whether any of the persons or entities listed above in Section 6 have, in
the past 10 years:
1.
Been the subject of an indictment or conviction in a criminal proceeding or plea agreement or named as a
defendant in a pending criminal proceeding (excluding minor traffic violations);
None
2.
Been the subject of 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, financial- or
investment-related, insurance or banking activities;
None
3.
Been the subject of a finding, disciplinary order or judgment by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission, the Commodity Futures Trading Commission, a state
securities regulator of a violation of federal or state securities or commodities law, or a foreign regulatory body
or court, which finding or judgment has not been reversed, suspended, or vacated;
None
4.
Named as a defendant or a respondent in a regulatory complaint or proceeding that could result in a “yes”
answer to part 3 above; or
None
5.
Been the subject 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
6.
Been the subject of a U.S Postal Service false representation order, or a temporary restraining order, or
preliminary injunction with respect to conduct alleged to have violated the false representation statute that
applies to U.S mail.
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 to 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.
Disclosure Guidelines for the Pink Market (v5 December 18, 2023)
Page 9 of 11
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.
Confirm that the information in this table matches your public company profile on www.OTCMarkets.com. If any updates
are needed to your public company profile, update your company profile.
Securities Counsel (must include Counsel preparing Attorney Letters).
Name:
James Gascon
Firm:
Costello & Fearon, PLLC
Address 1:
211 West Jefferson Street
Address 2:
Syracuse, New York 13202
Phone:
315-422-1152
Email:
jjg@ccf-law.com
Accountant or Auditor
Name:
Victor Vaccaro
Firm:
Dannible & McKee, LLP
Address 1:
221 South Warren Street
Address 2:
Syracuse, New York 13202
Phone:
315-472-9127
Email:
vvaccaro@dmpas.com
Investor Relations
Name:
Richard Jones
Firm:
Microwave Filter Company, Inc.
Address 1:
6743 Kinne Street
Address 2:
East Syracuse, New York 13057
Phone:
315-438-4758
Email:
dick-j@microwavefilter.com
All other means of Investor Communication:
X (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.
Disclosure Guidelines for the Pink Market (v5 December 18, 2023)
Page 10 of 11
9)
Disclosure & Financial Information
A.
This Disclosure Statement was prepared by (name of individual):
Name:
Carl Fahrenkrug
Title:
Chief Executive Officer
Relationship to Issuer:
Chief Executive Officer
B.
The following financial statements were prepared in accordance with:
☐
IFRS
☒
U.S. GAAP
C.
The following financial statements were prepared by (name of individual):
Name:
Richard Jones
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 qualifying financial statements:
o
Audit letter, if audited;
o
Balance Sheet;
o
Statement of Income;
o
Statement of Cash Flows;
o
Statement of Retained Earnings (Statement of Changes in Stockholders’ Equity)
o
Financial Notes
Financial Statement Requirements:
•
Financial statements must be published together with this disclosure statement as one document.
•
Financial statements must be “machine readable”. Do not publish images/scans of financial statements.
•
Financial statements must be presented with comparative financials against the prior FYE or period, as
applicable.
•
Financial statements must be prepared in accordance with U.S. GAAP or International Financial Reporting
Standards (IFRS) but are not required to be audited.
Microwave Filter Company, Inc.
and Subsidiaries
Consolidated Financial Statements
September 30, 2024 and 2023
Independent Accountant’s Review Report
December 4, 2024
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, 2024 and 2023, 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.
- 2 -
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.
Dannible & McKee, LLP
Syracuse, New York
See accompanying notes and independent accountant’s review report.
- 3 -
2024
2023
Current assets:
Cash and cash equivalents (Note 1)
707,036
$
920,921
$
Trade accounts receivable, less allowance
for credit losses (Note 1)
196,314
495,212
Inventories (Notes 1 and 2)
210,002
196,531
Prepaid expenses and other current assets
85,388
74,885
Total current assets
1,198,740
1,687,549
Property, plant and equipment, net (Notes 1 and 3)
650,723
747,828
Operating lease right-of-use asset (Notes 1 and 4)
12,879
16,326
1,862,342
$
2,451,703
$
Current liabilities:
Accounts payable
78,968
$
140,658
$
Customer deposits (Note 1)
27,979
36,746
Current portion of operating lease liability (Notes 1 and 4)
2,958
2,958
Accrued expenses
122,015
137,777
Total current liabilities
231,920
318,139
Operating lease liability (Notes 1 and 4)
9,921
13,368
Total liabilities
241,841
331,507
Stockholders' equity:
Common stock - $.10 par value; 5,000,000 shares
authorized; issued 4,324,140, outstanding 2,575,824
in 2024 and 2,576,166 in 2023
432,414
432,414
Additional paid-in capital
3,248,706
3,248,706
Retained earnings (accumulated deficit)
(363,722)
135,802
Treasury stock, at cost (Note 1) -
1,748,316 shares in 2024 and 1,747,974 shares
in 2023
(1,696,897)
(1,696,726)
1,620,501
2,120,196
1,862,342
$
2,451,703
$
Microwave Filter Company, Inc. and Subsidiaries
September 30,
Assets
Consolidated Balance Sheets
Liabilities and Stockholders' Equity
See accompanying notes and independent accountant’s review report.
- 4 -
2024
2023
Net sales
2,418,702
$
3,834,940
$
Cost of goods sold
1,791,677
2,707,689
Gross profit
627,025
1,127,251
Selling, general and administrative expenses (Note 1)
1,158,266
1,309,796
Operating lease expense (Note 4)
5,007
5,705
Loss before other income
(536,248)
(188,250)
Other income:
Interest income
30,961
13,174
Other income
5,813
4,145
36,774
17,319
Loss before provision for income taxes
(499,474)
(170,931)
Provision for income taxes (Notes 1 and 6)
(50)
(50)
Net loss
(499,524)
$
(170,981)
$
Microwave Filter Company, Inc. and Subsidiaries
Year ended September 30,
Consolidated Statements of Operations
See accompanying notes and independent accountant’s review report.
- 5 -
Retained
Additional
Earnings
Total
Paid-in
(Accumulated
Stockholders'
Shares
Amount
Capital
Deficit)
Shares
Amount
Equity
Balance at September 30, 2022
4,232,140
432,414
$
3,248,706
$
306,783
$
1,746,628
(1,696,053)
$
2,291,850
$
Net loss
-
-
-
(170,981)
-
-
(170,981)
Purchase of Treasury Stock
-
-
-
-
1,346
(673)
(673)
Balance at September 30, 2023
4,232,140
432,414
3,248,706
135,802
1,747,974
(1,696,726)
2,120,196
Net loss
-
-
-
(499,524)
-
-
(499,524)
Purchase of Treasury Stock
-
-
-
-
342
(171)
(171)
Balance at September 30, 2024
4,232,140
432,414
$
3,248,706
$
(363,722)
$
1,748,316
(1,696,897)
$
1,620,501
$
Common Stock
Treasury Stock
Microwave Filter Company, Inc. and Subsidiaries
Consolidated Statements Of Changes in Stockholders' Equity
See accompanying notes and independent accountant’s review report.
- 6 -
Increase (decrease) in cash and cash equivalents
2024
2023
Cash flows from operating activities:
Net loss
(499,524)
$
(170,981)
$
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation
97,105
97,556
Decrease in trade accounts receivable
298,898
138,688
Decrease in inventories
30,873
266,923
Decrease in inventory obsolescence provision
(44,344)
(127,774)
Increase in prepaid expenses and other
current assets
(10,503)
(17,811)
Decrease in accounts payable
(61,690)
(104,210)
Increase (decrease) in customer deposits
(8,767)
22,375
Decrease in accrued expenses
(15,762)
(36,384)
Net cash provided by (used for) operating activities
(213,714)
68,382
Cash flows from investing activities:
Capital expenditures
-
(18,833)
Proceeds from return of equipment
-
33,167
Net cash provided by investing activities
-
14,334
Cash flows from financing activities:
Purchase of treasury stock (Note 1)
(171)
(673)
Net increase (decrease) in cash and
cash equivalents
(213,885)
82,043
Cash and cash equivalents, beginning of year
920,921
838,878
Cash and cash equivalents, end of year
707,036
$
920,921
$
Supplemental disclosure of cash flow information
Cash paid during the year for taxes
(50)
$
(50)
$
Microwave Filter Company, Inc. and Subsidiaries
Year ended September 30,
Consolidated Statements of Cash Flows
- 7 -
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 “Company”), are engaged in 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.
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.
Change in accounting principle - As of October 1, 2023, the Company was required to
adopt Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on
Financial Instruments, and all subsequently issued related amendments, which changed the
methodology used to recognize impairment of the Company’s financial assets. Financial assets
held by the Company that are subject to the ASU include accounts receivables. Under this ASU,
financial assets are presented at the net amount expected to be collected, requiring immediate
recognition of estimated credit losses expected to occur over the asset’s remaining life. This is in
contrast to previous U.S. GAAP, under which credit losses were not recognized until it was
probable that a loss had been incurred. The Company performed its expected credit loss
calculation based on historical data and analysis, including consideration of then existing
economic conditions, and expected future conditions. The adoption of this ASU did not have a
significant impact on the consolidated financial statements.
Cash and cash equivalents - For purposes of the consolidated statements of cash flows,
the Company considers all highly liquid investments purchased with a maturity of three months
or less 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 amounts of accounts receivable are reduced by valuation allowances that
reflect management’s best estimate of the amounts that will not be collected. Management
believes that the historical loss information that it has compiled is a reasonable base on which to
- 8 -
determine estimated credit losses for accounts receivable held at September 30, 2024 and 2023,
because the composition of the accounts receivable at that date is consistent with that used in
developing the historical credit-loss percentages (i.e., the similar risk characteristics of its
customers and its lending practices have not changed significantly over time). Additionally,
management has evaluated the current and reasonable and supportable forecasted economic
conditions in order to determine the expected credit loss rates by aging category for its accounts
receivable. As a result, management applied the applicable updated credit loss rates to
determine the expected credit loss estimated for each aging category. Further, management
individually reviews all accounts receivable balances that exceed ninety days from the invoice
date. Those receivables identified by management as uncollectable are written oƯ against this
allowance.
The allowance for credit losses consisted of the following:
2024
2023
Allowance for credit losses, beginning of year
4,213
$
4,213
$
Provisions for credit losses
-
-
Write offs, net of recoveries
-
-
Allowance for credit losses, end of year
4,213
$
4,213
$
Year ended September 30,
Economic dependency and concentration of credit risk - The Company had sales to two
customers representing 43% and 42% of total sales for the years ended September 30, 2024 and
2023, respectively. Accounts receivable included $49,610 and $226,843 due from these
customers at September 30, 2024 and 2023, respectively.
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.
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
- 9 -
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 consolidated financial statement purposes is computed using asset lives
as follows:
Buildings
10 to 30 years
Machinery & equipment
3 to 10 years
OƯice equipment & fixtures
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 right-of-use (“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 aƯected. 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 accrues 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 oƯice equipment is recognized in the
accompanying consolidated statements of operations on a straight-line basis over the lease term.
See Note 4.
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
- 10 -
circumstances. No revenues are recognized in connection with the performance of the warranty
repair or fulfillment function. The warranty obligation is aƯected 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, 2024 and 2023.
Research
and
development - Research
and
development
expenditures
were
approximately $213,000 and $265,400 for the years ended September 30, 2024 and 2023,
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 $29,700 and $21,900 for the years ended September 30, 2024 and 2023,
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
eƯects of transactions reported in the consolidated financial statements and consist of taxes
currently due plus deferred taxes related primarily to diƯerences 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 oƯset future taxable income. The deferred tax assets and
liabilities represent the future tax consequences of those diƯerences, 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, 2024 and 2023. The
Company is no longer subject to Federal or New York State examinations by tax authorities for the
closed tax years before 2021.
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 2024 and 2023.
- 11 -
The Company’s matching contributions to the 401(k) plan for the years ended
September 30, 2024 and 2023, were approximately $62,000 and $69,000, respectively.
Additionally, the Company may make discretionary contributions to the non-contributory profit-
sharing plan. There were no discretionary contributions in fiscal 2024 and 2023.
Treasury stock - The Company purchased 342 shares and 1,346 shares from various
shareholders during the years ended September 30, 2024 and 2023, respectively. The purchased
shares increased Treasury stock on the accompanying consolidated balance sheets by $171 and
$673 at September 30, 2024 and 2023 respectively.
Use of estimates - The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates and
assumptions that aƯect 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
diƯer from those estimates.
Subsequent events - Management
has
evaluated
subsequent
events
through
December 4, 2024, the date which the consolidated financial statements were available for issue.
There have been no subsequent events that would require disclosure or adjustment to the
consolidated financial statements.
Note 2 - Inventories
Inventories consisted of the following:
2024
2023
Raw Materials and stock parts
355,788
$
375,241
$
Work-in-process
34,042
16,630
Finished goods
59,828
88,660
449,658
480,531
Reserve for obsolescence
(239,656)
(284,000)
210,002
$
196,531
$
September 30,
- 12 -
Note 3 - Property, plant and equipment
Property, plant and equipment consisted of the following:
2024
2023
Land
143,000
$
143,000
$
Building
2,254,258
2,254,258
Machinery and equipment
481,262
481,262
Office equipment and fixtures
131,082
131,082
3,009,602
3,009,602
Less - Accumulated depreciation
(2,358,879)
(2,261,774)
650,723
$
747,828
$
September 30,
Depreciation expense was $97,105 and $97,556 for the years ended September 30, 2024
and 2023, 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 had 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 $5,007 and $5,705
for the years ended September 30, 2024 and 2023, respectively.
Supplemental cash flow information related to the lease, included in the accompanying
consolidated statements of cash flows, is as follows:
2024
2023
Cash paid for amounts included in the
measurement of lease liabilities:
Operating cash flows from operating lease
5,007
$
5,705
$
Right-of-use asset obtained in exchange for new
operating lease liability
-
$
18,848
$
Year ended September 30,
- 13 -
The table below presents additional information related to the Company’s leases as of:
2024
2023
Weighted-average remaining lease term in years
for operating lease
3.38
4.38
Weighted-average discount rate for operating lease
8%
8%
September 30,
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, 2024, maturities of the operating lease liability were as follows:
Fiscal 2025
4,596
$
Fiscal 2026
4,596
Fiscal 2027
4,596
Fiscal 2028
1,915
Total operating lease payment
15,703
Amount representing imputed interest
(2,824)
Total operating lease liability
12,879
Less - Current Portion
(2,958)
9,921
$
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 (8.50% as of September 30, 2024). There were
no outstanding borrowings on the line of credit at September 30, 2024 and 2023. The line of credit
is secured by all assets of the Company.
- 14 -
Note 6 - Income taxes
The components of the provision for income taxes in the accompanying consolidated
statements of operations are as follows:
2024
2023
Currently payable:
State
50
$
50
$
Year ended September 30,
As explained in Note 1, the Company elected to be taxed as a C Corporation. The Company
generated a net operating loss (“NOL”) of approximately $260,000 for the year ended September
30, 2024. The Company generated taxable income of approximately $81,000 for the year ended
September 30, 2023, before NOL carryforwards reduced taxable income to zero.
The accompanying consolidated balance sheets include the following components of net
deferred taxes:
2024
2023
Deferred tax assets
804,100
$
705,900
$
Deferred tax liabilities
(29,600)
(44,400)
Valuation allowance
(774,500)
(661,500)
Net deferred taxes
-
$
-
$
September 30,
Deferred tax benefit (expense) consisted of the following:
2024
2023
Benefit from change in temporary differences
50,200
$
73,600
$
Benefit (expense) from change in tax credit
carryforwards and net operating loses
62,800
(200)
Increase in valuation allowance
(113,000)
(73,400)
Deferred tax expense
-
$
-
$
Year ended September 30,
The research and development tax credit carryforwards and NOL carryforwards generated
through September 30, 2024, of approximately $399,000 and $925,000 respectively, expire at
various times through 2041. 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
- 15 -
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, 2021 through September 30, 2024.
OTC Markets Group Inc.
Disclosure Guidelines for the Pink Market (v5 December 18, 2023)
Page 11 of 11
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 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.
12/27/2024
/s/ Carl Fahrenkrug
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.
12/27/2024
/s/ Richard Jones