UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 OR 15(d) of
the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 2019
Commission file number 0-10976
MICROWAVE FILTER COMPANY, INC.
(Exact name of registrant as specified in its
charter.)
New York |
|
16-0928443 |
(State of Incorporation) |
|
(I.R.S. Employer Identification Number) |
|
|
|
6743 Kinne
Street, East Syracuse, N.Y. |
|
13057 |
(Address
of Principal Executive Offices) |
|
(Zip Code) |
(315) 438-4700
Registrant’s telephone number, including area
code
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports, and (2) has been subject
to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (Section 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files).
YES [X] NO [ ]
Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if
smaller reporting company)
Smaller reporting company [X].
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).
YES [ ] NO[X]
Indicate the number of shares outstanding of each of
the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, $.10 Par Value - 2,579,238 shares as of
August 1, 2019.
|
|
|
|
MICROWAVE FILTER COMPANY, INC.
Form 10-Q
Index
Item |
|
Page |
|
|
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Part I Financial
Information |
|
|
|
|
|
Item 1. Financial
Statements |
|
3 |
|
|
|
|
3 |
|
|
|
|
|
4 |
|
|
|
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Condensed
Consolidated Statements of Changes in Stockholders’ Equity (unaudited) |
|
5 |
|
|
|
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6 |
|
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Notes
to Condensed Consolidated Financial Statements (unaudited) |
|
7-11 |
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|
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Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations |
|
12-17 |
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Item
3. Quantitative and Qualitative Disclosures About Market Risk |
|
18 |
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18 |
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19 |
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20 |
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2 |
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Microwave Filter Company and
Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
|
|
June 30,
2019 |
|
|
September
30, 2018 |
|
||
Assets |
|
|
|
|
|
|
||
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
537,967 |
|
|
$ |
674,045 |
|
|
|
|
|
|
|
|
|
|
Accounts
receivable-trade, net of allowance for doubtful accounts of $4,000 and $4,000 |
|
|
391,186 |
|
|
|
402,760 |
|
Inventories, net |
|
|
496,027 |
|
|
|
377,603 |
|
Prepaid expenses and
other current assets |
|
|
33,876 |
|
|
|
54,416 |
|
Total current assets |
|
|
1,459,056 |
|
|
|
1,508,824 |
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
|
283,561 |
|
|
|
261,474 |
|
Total assets |
|
$ |
1,742,617 |
|
|
$ |
1,770,298 |
|
|
|
|
|
|
|
|
|
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Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
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Current liabilities: |
|
|
|
|
|
|
|
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Accounts payable |
|
$ |
107,448 |
|
|
$ |
116,938 |
|
Customer deposits |
|
|
52,373 |
|
|
|
35,278 |
|
Accrued payroll and
related expenses |
|
|
43,960 |
|
|
|
38,711 |
|
Accrued compensated
absences |
|
|
87,075 |
|
|
|
90,449 |
|
Notes payable - short
term |
|
|
52,846 |
|
|
|
51,101 |
|
Other current
liabilities |
|
|
17,498 |
|
|
|
28,838 |
|
Total current
liabilities |
|
|
361,200 |
|
|
|
361,315 |
|
|
|
|
|
|
|
|
|
|
Notes payable - long
term |
|
|
179,198 |
|
|
|
219,071 |
|
Total other
liabilities |
|
|
179,198 |
|
|
|
219,071 |
|
Total liabilities |
|
|
540,398 |
|
|
|
580,386 |
|
|
|
|
|
|
|
|
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Stockholders’
Equity: |
|
|
|
|
|
|
|
|
Common stock, $.10
par value Authorized 5,000,000 shares, Issued 4,324,140 shares in 2019 and
2018, Outstanding 2,579,238 shares in 2019 and 2,579,680 in 2018 |
|
|
432,414 |
|
|
|
432,414 |
|
Additional paid-in
capital |
|
|
3,248,706 |
|
|
|
3,248,706 |
|
Accumulated deficit |
|
|
(783,911 |
) |
|
|
(796,444 |
) |
Common stock in
treasury, at cost 1,744,902 shares in 2019 and 1,744,460 shares in 2018 |
|
|
(1,694,990 |
) |
|
|
(1,694,764 |
) |
Total
stockholders’ equity |
|
|
1,202,219 |
|
|
|
1,189,912 |
|
Total liabilities and
stockholders’ equity |
|
$ |
1,742,617 |
|
|
$ |
1,770,298 |
|
See Accompanying Notes to Condensed Consolidated
Financial Statements
|
3 |
|
|
Microwave Filter Company and
Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
Three
months ended |
|
|
Nine
months ended |
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||||||||||
|
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June 30, |
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June 30, |
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||||||||||
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2019 |
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2018 |
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2019 |
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|
2018 |
|
||||
|
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|
|
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|
|
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|
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||||
Net sales |
|
$ |
841,310 |
|
|
$ |
802,140 |
|
|
$ |
2,746,029 |
|
|
$ |
2,323,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Cost of goods sold |
|
|
509,436 |
|
|
|
475,250 |
|
|
|
1,619,110 |
|
|
|
1,446,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Gross profit |
|
|
331,874 |
|
|
|
326,890 |
|
|
|
1,126,919 |
|
|
|
877,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Selling, general and
administrative expenses |
|
|
344,736 |
|
|
|
345,188 |
|
|
|
1,113,767 |
|
|
|
1,005,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
|
(12,862 |
) |
|
|
(18,298 |
) |
|
|
13,152 |
|
|
|
(128,235 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense), net |
|
|
389 |
|
|
|
(2,665 |
) |
|
|
(569 |
) |
|
|
(6,461 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
|
(12,473 |
) |
|
|
(20,963 |
) |
|
|
12,583 |
|
|
|
(134,696 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Provision for income
taxes |
|
|
- |
|
|
|
- |
|
|
|
50 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
income |
|
$ |
(12,473 |
) |
|
$ |
(20,963 |
) |
|
$ |
12,533 |
|
|
$ |
(134,746 |
) |
|
|
|
|
|
|
|
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|
|
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|
|
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Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per common share |
|
$ |
0.00 |
|
|
$ |
(0.01 |
) |
|
$ |
0.00 |
|
|
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
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|
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|
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|
|
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Shares used in
computing net income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
2,579,238 |
|
|
|
2,579,680 |
|
|
|
2,579,451 |
|
|
|
2,579,682 |
|
See Accompanying Notes to Condensed Consolidated
Financial Statements
|
4 |
|
|
Microwave Filter Company and
Subsidiaries
Condensed Consolidated Statements of Changes in
Stockholders’ Equity
For the Nine Months Ended June 30, 2019
(Unaudited)
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
Total |
|
|||||
|
|
Common |
|
|
Paid in |
|
|
Accumulated |
|
|
Treasury |
|
|
Stockholders’ |
|
|||||
|
|
Stock |
|
|
Capital |
|
|
Deficit |
|
|
Stock |
|
|
Equity |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
September 30, 2017 |
|
$ |
432,414 |
|
|
$ |
3,248,706 |
|
|
$ |
(780,385 |
) |
|
$ |
(1,694,761 |
) |
|
$ |
1,205,974 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
(40,807 |
) |
|
|
|
|
|
|
(40,807 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017 |
|
|
432,414 |
|
|
|
3,248,706 |
|
|
|
(821,192 |
) |
|
|
(1,694,761 |
) |
|
|
1,165,167 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
(72,976 |
) |
|
|
|
|
|
|
(72,976 |
) |
Purchase of treasury
stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3 |
) |
|
|
(3 |
) |
March 31, 2018 |
|
|
432,414 |
|
|
|
3,248,706 |
|
|
|
(894,168 |
) |
|
|
(1,694,764 |
) |
|
|
1,092,188 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
(20,963 |
) |
|
|
|
|
|
|
(20,963 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018 |
|
$ |
432,414 |
|
|
$ |
3,248,706 |
|
|
$ |
(915,131 |
) |
|
$ |
(1,694,764 |
) |
|
$ |
1,071,225 |
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
Total |
|
|||||
|
|
Common |
|
|
Paid in |
|
|
Accumulated |
|
|
Treasury |
|
|
Stockholders’ |
|
|||||
|
|
Stock |
|
|
Capital |
|
|
Deficit |
|
|
Stock |
|
|
Equity |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
September 30, 2018 |
|
$ |
432,414 |
|
|
$ |
3,248,706 |
|
|
$ |
(796,444 |
) |
|
$ |
(1,694,764 |
) |
|
$ |
1,189,912 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
(60,224 |
) |
|
|
|
|
|
|
(60,224 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 |
|
|
432,414 |
|
|
|
3,248,706 |
|
|
|
(856,668 |
) |
|
|
(1,694,764 |
) |
|
|
1,129,688 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
85,230 |
|
|
|
|
|
|
|
85,230 |
|
Purchase of treasury
stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(226 |
) |
|
|
(226 |
) |
March 31, 2019 |
|
|
432,414 |
|
|
|
3,248,706 |
|
|
|
(771,438 |
) |
|
|
(1,694,990 |
) |
|
|
1,214,692 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
(12,473 |
) |
|
|
|
|
|
|
(12,473 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 |
|
$ |
432,414 |
|
|
$ |
3,248,706 |
|
|
$ |
(783,911 |
) |
|
$ |
(1,694,990 |
) |
|
$ |
1,202,219 |
|
See Accompanying Notes to Condensed Consolidated
Financial Statements
|
5 |
|
|
Microwave Filter Company and
Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
Nine
months ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
12,533 |
|
|
$ |
(134,746 |
) |
Adjustments to
reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
39,233 |
|
|
|
54,375 |
|
Change in operating
assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable-trade |
|
|
11,574 |
|
|
|
40,826 |
|
Inventories |
|
|
(118,424 |
) |
|
|
35,134 |
|
Prepaid expenses and
other assets |
|
|
20,540 |
|
|
|
(4,918 |
) |
Accounts payable and
customer deposits |
|
|
7,605 |
|
|
|
(59,037 |
) |
Accrued payroll and
related expenses and compensated absences |
|
|
1,875 |
|
|
|
(2,843 |
) |
Other current
liabilities |
|
|
(11,340 |
) |
|
|
(2,890 |
) |
Net cash used in
operating activities |
|
|
(36,404 |
) |
|
|
(74,099 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Property, plant and
equipment purchased |
|
|
(61,320 |
) |
|
|
(7,348 |
) |
Net cash used in
investing activities |
|
|
(61,320 |
) |
|
|
(7,348 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Repayment of note
payable |
|
|
(38,128 |
) |
|
|
(36,436 |
) |
Purchase of treasury
stock |
|
|
(226 |
) |
|
|
(3 |
) |
Net cash used in
financing activities |
|
|
(38,354 |
) |
|
|
(36,439 |
) |
|
|
|
|
|
|
|
|
|
Decrease in cash and
cash equivalents |
|
|
(136,078 |
) |
|
|
(117,886 |
) |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period |
|
|
674,045 |
|
|
|
667,940 |
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at end of period |
|
$ |
537,967 |
|
|
$ |
550,054 |
|
|
|
|
|
|
|
|
|
|
Supplemental Schedule
of Cash Flow Information: |
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
8,645 |
|
|
$ |
10,337 |
|
Income taxes paid |
|
$ |
50 |
|
|
$ |
50 |
|
See Accompanying Notes to Condensed Consolidated
Financial Statements
|
6 |
|
|
MICROWAVE FILTER COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2019
Note 1. Summary of Significant Accounting Policies
In these notes, the terms “MFC” and
“Company” mean Microwave Filter Company, Inc. and its subsidiary
companies.
The following condensed balance sheet as of September
30, 2018, which has been derived from audited financial statements, and the
unaudited interim condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to those rules
and regulations, although the company believes that the disclosures made are
adequate to make the information not misleading. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. The operating results for the nine
month period ended June 30, 2019 are not necessarily indicative of the results
that may be expected for the year ended September 30, 2019. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in the Company’s
latest shareholders’ annual report (Form 10-K).
Note 2. Industry Segment Data
The Company’s primary business segment involves
the operations of Microwave Filter Company, Inc. which 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
cable television, television and radio broadcast, satellite broadcast, mobile
radio, commercial communications and defense electronics.
Note 3. Inventories
Inventories are stated at the lower of cost determined
on the first-in, first-out 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.
Inventories net of the reserve for obsolescence
consisted of the following:
|
|
June 30,
2019 |
|
|
September
30, 2018 |
|
||
|
|
|
|
|
|
|
||
Raw materials and
stock parts |
|
$ |
403,659 |
|
|
$ |
306,658 |
|
Work-in-process |
|
|
10,696 |
|
|
|
37,062 |
|
Finished goods |
|
|
81,672 |
|
|
|
33,883 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
496,027 |
|
|
$ |
377,603 |
|
|
7 |
|
|
The Company’s reserve for obsolescence equaled
$463,286 at June 30, 2019 and September 30, 2018. The Company provides for a
valuation reserve for certain inventory that is deemed to be obsolete, of
excess quantity or otherwise impaired.
Note 4. Income Taxes
The Company accounts for income taxes under FASB ASC
740-10. Deferred tax assets and liabilities are based on the difference between
the financial statement and tax basis of assets and liabilities as measured by
the enacted tax rates which are anticipated to be in effect when these
differences reverse. The deferred tax provision is the result of the net change
in the deferred tax assets and liabilities. A valuation allowance is
established when it is necessary to reduce deferred tax assets to amounts expected
to be realized. The Company has provided a full valuation allowance against its
net deferred tax assets.
The Company follows FASB ASC 740-10, which clarifies
the accounting for uncertainty in income taxes recognized in an entity’s
financial statements and prescribes a recognition threshold and measurement
attributes for financial statement disclosure of tax position taken or expected
to be taken on a tax return. Additionally, it provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. The Company will include interest on income
tax liabilities in interest expense and penalties in operations if such amounts
arise. The Company determined it has no uncertain tax positions and therefore
no amounts are recorded. There is no provision for Federal income taxes for the
three and nine months ended June 30, 2019 and 2018 as net operating loss
carryforwards were used to reduce taxable income tax to zero.
Note 5. Legal Matters
None.
Note 6. Fair Value of Financial Instruments
The carrying value of the Company’s cash and
cash equivalents, accounts receivable and accounts payable approximate fair
value because of the short maturity of those instruments. The carrying value of
the Company’s note payable approximates is fair value.
The Company currently does not trade in or utilize
derivative financial instruments.
Note 7. Significant Customers
Net sales to two significant customers represented
54.0% of the Company’s total sales for the nine months ended June 30,
2019 and net sales to two significant customer represented 42.1% of the
Company’s total sales for the nine months ended June 30, 2018. A loss of
one of these customers or programs related to these customers could significantly
impact the Company.
|
8 |
|
|
Note 8. Notes Payable
On July 2, 2013, Microwave Filter Company, Inc. (the
“Company”) entered into a Ten Year Term Loan with KeyBank National
Association in the amount of Five Hundred Thousand and No/100 Dollars
($500,000.00). The amount of all advances outstanding together with accrued
interest thereon shall be due and payable on July 2, 2023
(“Maturity”). The Company shall pay interest on the outstanding
principal balance of this Note at the rate per annum equal to 4.5%. The net
proceeds from the Term Loan will be available to provide working capital as
needed. The total amount outstanding as of June 30, 2019 and September 30, 2018
was $232,044 and $270,172, respectively. Interest accrued as of June 30, 2019
and September 30, 2018 was $812 and $946, respectively.
The Company has secured this Note by: (a) a Mortgage,
Assignment of Rents, Security Agreement and Fixture Filing which creates a 1st
lien on real property situated in the Town of Dewitt, County of Onondaga, and
State of New York and known as 6743 Kinne Street, East Syracuse, New York; (b)
a General Assignment of Rents and Leases; (c) an Environmental Compliance and
Indemnification; and (d) such other security as may now or hereafter be given
to Lender as collateral for the loan.
Note 9. Earnings Per Share
The Company presents basic earnings per share
(“EPS”), computed based on the weighted average number of common
shares outstanding for the period, and when applicable diluted EPS, which gives
the effect to all dilutive potential shares outstanding (i.e. options) during
the period after restatement for any stock dividends. There were no dividends
declared during the quarters ended June 30, 2019 and 2018. Income (loss) used
in the EPS calculation is net income (loss) for each period. There were no
dilutive potential shares outstanding for the periods ended June 30, 2019 and
2018.
Note 10. Recent Accounting Pronouncements
In February 2016, the FASB issued FASB ASU No.
2016-02, Leases (Topic 842). The core principle of Topic 842 is that a
lessee should recognize the assets and liabilities that arise from leases. For
operating leases, a lessee is required to recognize a right-of-use asset and a
lease liability, initially measured at the present value of the lease payments,
in the statement of financial position. For leases with a term of 12 months or
less, a lessee is permitted to make an accounting policy election by class of
underlying asset not to recognize lease assets and lease liabilities. The
accounting applied by a lessor is largely unchanged from that applied under
previous GAAP. This ASU is effective for fiscal years beginning after December
15, 2018, including interim periods within those fiscal years. Earlier
application is permitted. In transition, lessees and lessors are required to
recognize and measure leases at the beginning of the earliest period presented
using a modified retrospective approach. The Company is currently evaluating
the effect that the adoption of this ASU will have on its financial statements.
|
9 |
|
|
Note 11. Revenue Recognition
Revenue Recognition
Effective October 1, 2018, the Company adopted
Accounting Standards Update (“ASU”) No. 2014-09, Revenue from
Contracts with Customers (Topic 606), using the modified retrospective
method. This update outlined a comprehensive new revenue recognition model designed
to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. The new standard also requires additional
quantitative and qualitative disclosures, as explained below. The adoption
allows companies to apply the new revenue standard to reporting periods
beginning in the year the standard is first implemented, while prior periods
continue to be reported in accordance with previous accounting guidance. Since
the adoption of Accounting Standards Codification (“ASC”) 606 did
not have a significant impact on the recognition of revenue, the Company did
not have an opening retained earnings adjustment or an effect on prior reported
periods.
Pursuant to Topic 606, revenues are recognized upon
the application of the following steps:
● |
Identification of the contract, or
contracts, with a customer; |
|
|
● |
Identification of the performance
obligations in the contract; |
|
|
● |
Determination of the transaction
price; |
|
|
● |
Allocation of the transaction
price to the performance obligations in the contract; and |
|
|
● |
Recognition of revenues when, or
as, the contractual performance obligations are satisfied. |
The Company accounts for a contract with a client when
it has written approval, the contract (or customer sales order) is committed,
the rights of the parties, including payment terms, are identified, the
contract has commercial substance and consideration is probable of collection.
The Company allocates the transaction price to each
performance obligation on a standalone selling price basis, as agreed-upon
between the customer and the Company in the related customer sales order.
Revenue is recognized when the performance obligation
has been satisfied: at the time products are shipped and title and risk of loss
have passed to the customer, and the collection of the related receivable is
probable. Billings in advance of the Company’s performance of such work are
reflected as customer deposits in the accompanying condensed consolidated
balance sheet.
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 June 30, 2019 and
September 30, 2018.
|
10 |
|
|
Disaggregation of Revenue
The following tables provide details of revenue by
major products group:
Product group |
|
Fiscal
2019 |
|
|
Fiscal
2018 |
|
||
Microwave Filter
(MFC): |
|
|
|
|
|
|
|
|
RF/Microwave |
|
$ |
1,115,731 |
|
|
$ |
950,099 |
|
Satellite |
|
|
632,505 |
|
|
|
877,520 |
|
Cable TV |
|
|
361,551 |
|
|
|
246,854 |
|
Broadcast TV |
|
|
636,158 |
|
|
|
244,261 |
|
Niagara Scientific
(NSI): |
|
|
84 |
|
|
|
4,837 |
|
Total |
|
$ |
2,746,029 |
|
|
$ |
2,323,571 |
|
|
|
|
|
|
|
|
|
|
Sales backlog at June
30 |
|
$ |
741,835 |
|
|
$ |
1,193,829 |
|
|
11 |
|
|
MICROWAVE FILTER COMPANY, INC.
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Business Overview
Microwave Filter Company, Inc. operates primarily in
the United States and principally in one industry. The Company extends credit
to business customers based upon ongoing credit evaluations. Microwave Filter
Company, Inc. 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 cable television, television and radio broadcast,
satellite broadcast, mobile radio, commercial communications and defense
electronics.
Critical Accounting Policies
The Company’s condensed consolidated financial
statements are based on the application of United States generally accepted
accounting principles (GAAP). GAAP requires the use of estimates, assumptions,
judgments and subjective interpretations of accounting principles that have an
impact on the assets, liabilities, revenue and expense amounts reported. The
Company believes its use of estimates and underlying accounting assumptions
adhere to GAAP and are consistently applied. Valuations based on estimates are
reviewed for reasonableness and adequacy on a consistent basis throughout the
Company. Primary areas where financial information of the Company is subject to
the use of estimates, assumptions and the application of judgment include
revenues, receivables, inventories, warranty reserves and taxes. Note 1 to the
consolidated financial statements in our Annual Report on Form 10-K for the
fiscal year ended September 30, 2018 describes the significant accounting
policies used in preparation of the condensed consolidated financial
statements. The most significant areas involving management judgments and
estimates are described below and are considered by management to be critical
to understanding the financial condition and results of operations of the
Company.
Effective October 1, 2018, the Company adopted
Accounting Standards Update (“ASU”) No. 2014-09, Revenue from
Contracts with Customers (Topic 606), using the modified retrospective method.
This update outlined a comprehensive new revenue recognition model designed to
depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. In general, revenues from product sales
are recorded as the products are shipped and title and risk of loss have passed
to the customer, provided that no significant vendor or post-contract support
obligations remain and the collection of the related receivable is probable.
Billings in advance of the Company’s performance of such work are
reflected as customer deposits in the accompanying condensed consolidated
balance sheet. See Note 11 to the condensed consolidated financial statements.
Allowances for doubtful accounts are based on
estimates of losses related to customer receivable balances. The establishment
of reserves requires the use of judgment and assumptions regarding the
potential for losses on receivable balances.
The Company’s inventories are stated at the
lower of cost determined on the first-in, first-out 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. The Company uses certain estimates and judgments and considers
several factors including product demand and changes in technology to provide
for excess and obsolescence reserves to properly value inventory.
|
12 |
|
|
The Company accounts for income taxes under FASB ASC
740-10. Deferred tax assets and liabilities are based on the difference between
the financial statement and tax basis of assets and liabilities as measured by
the enacted tax rates which are anticipated to be in effect when these
differences reverse. The deferred tax provision is the result of the net change
in the deferred tax assets and liabilities. A valuation allowance is
established when it is necessary to reduce deferred tax assets to amounts expected
to be realized. The Company has provided a full valuation allowance against its
net deferred tax assets.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2019 vs. THREE MONTHS
ENDED JUNE 30, 2018
The following table sets forth the Company’s net
sales by major product group for the three months ended June 30, 2019 and 2018.
Product group |
|
Fiscal
2019 |
|
|
Fiscal
2018 |
|
||
Microwave Filter
(MFC): |
|
|
|
|
|
|
|
|
RF/Microwave |
|
$ |
323,070 |
|
|
$ |
413,611 |
|
Satellite |
|
|
210,071 |
|
|
|
204,474 |
|
Cable TV |
|
|
134,314 |
|
|
|
101,467 |
|
Broadcast TV |
|
|
173,855 |
|
|
|
82,588 |
|
Niagara Scientific
(NSI): |
|
|
0 |
|
|
|
0 |
|
Total |
|
$ |
841,310 |
|
|
$ |
802,140 |
|
|
|
|
|
|
|
|
|
|
Sales backlog at June
30 |
|
$ |
741,835 |
|
|
$ |
1,193,829 |
|
Net sales for the three months ended June 30, 2019
equaled $841,310, an increase of $39,170 or 4.9%, when compared to net sales of
$802,140 for the three months ended June 30, 2018.
MFC’s RF/Microwave product sales decreased
$90,541 or 21.9% to $323,070 for the three months ended June 30, 2019 when
compared to RF/Microwave product sales of $413,611 during the same period last
year. The Company’s RF/Microwave products are sold primarily to Original
Equipment Manufacturers that serve the mobile radio, commercial communications
and defense electronics markets. Sales to one OEM customer decreased $51,225 to
$272,500 for the three months ended June 30, 2019, compared to sales of
$323,725 for the three months ended June 30, 2018. These sales are in
connection with a multiyear program in which the Company is a subcontractor.
The Company continues to invest in production engineering and infrastructure
development to penetrate OEM market segments as they become popular. MFC is
concentrating its technical resources and product development efforts toward
potential high volume customers as part of a concentrated effort to provide
substantial long-term growth. Over the last year, MFC, in conjunction with
various OEM’s, has developed and supplied prototypes as well as small
production runs in support of new programs being introduced to the marketplace.
It is our belief that a continuation of this effort will help increase sales as
well as reinforcing MFC’s position as a quality manufacturer of RF
filters and assemblies.
MFC’s Satellite product sales increased $5,597
or 2.7% to $210,071 for the three months ended June 30, 2019 when compared to
Satellite product sales of $204,474 during the same period last year.
|
13 |
|
|
MFC’s Cable TV product sales increased $32,847
or 32.4% to $134,314 for the three months ended June 30, 2019 when compared to
Cable TV product sales of $101,467 during the same period last year. The
increase can primarily be attributed to sales to one customer. Management
continues to project flat or a decrease in demand for standard Cable TV
products due to the shift from analog to digital television. Due to the
inherent nature of digital modulation versus analog modulation, fewer filters
are required. The Company has developed filters for digital television and
there will still be requirements for analog filters for limited applications in
commercial and private cable systems.
MFC’s Broadcast TV/Wireless Cable product sales
increased $91,267 to $173,855 for the three months ended June 30, 2019 when
compared to sales of $82,588 during the same period last year. The increase can
primarily be attributed to sales to one customer.
MFC’s sales order backlog equaled $741,835 at
June 30, 2019 compared to sales order backlog of $1,193,829 at June 30, 2018.
However, backlog is not necessarily indicative of future sales. Accordingly,
the Company does not believe that its backlog as of any particular date is
representative of actual sales for any succeeding period. 96.7% of the total
sales order backlog at June 30, 2019 is scheduled to ship by September 30,
2019.
Gross profit for the three months ended June 30, 2019
equaled $331,874, an increase of $4,984 or 1.5%, when compared to gross profit
of $326,890 for the three months ended June 30, 2019. The increase can
primarily be attributed to the increase in sales. As a percentage of sales,
gross profit equaled 39.4% for the three months ended June 30, 2019 compared to
40.8% for the three months ended June 30, 2018.
Selling, general and administrative (SGA) expenses for
the three months ended June 30, 2019 equaled $344,736, a decrease of $452 or 0.1%,
when compared to SGA expenses of $345,188 for the three months ended June 30,
2018. As a percentage of sales, SGA expenses decreased to 41.0% for the three
months ended June 30, 2019 when compared to 43.0% for the three months ended
June 30, 2018 primarily due to the higher sales volume this year providing a
higher base to absorb expenses.
The Company recorded a loss from operations of $12,682
for the three months ended June 30, 2019 compared to a loss from operations of
$18,298 for the three months ended June 30, 2018. The improvement in operating
income can primarily be attributed to the higher sales volume this year when
compared to the same period last year.
Other income (expense) was income of $389 for the
three months ended June 30, 2019 compared to expense of $2,665 for the three
months ended June 30, 2018 primarily due to interest expense of $2,722 offset
by interest income of $2,416 and miscellaneous non-operating income of $695 for
the three months ended June 30, 2019 and interest expense of $3,266 offset by
interest income of $248 and miscellaneous non-operating income of $353 for the
three months ended June 30, 2018. Other income generally consists of sales of
scrap material, the forfeiture of non-refundable deposits and other incidental items.
The provision for income taxes equaled $0 for both the
three months ended June 30, 2019 and 2018. 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 notes 1 and 4.
|
14 |
|
|
NINE MONTHS ENDED JUNE 30, 2019 vs. NINE MONTHS ENDED
JUNE 30, 2018
The following table sets forth the Company’s net
sales by major product group for the nine months ended June 30, 2019 and 2018.
Product group |
|
Fiscal
2019 |
|
|
Fiscal
2018 |
|
||
Microwave Filter
(MFC): |
|
|
|
|
|
|
|
|
RF/Microwave |
|
$ |
1,115,731 |
|
|
$ |
950,099 |
|
Satellite |
|
|
632,505 |
|
|
|
877,520 |
|
Cable TV |
|
|
361,551 |
|
|
|
246,854 |
|
Broadcast TV |
|
|
636,158 |
|
|
|
244,261 |
|
Niagara Scientific
(NSI): |
|
|
84 |
|
|
|
4,837 |
|
Total |
|
$ |
2,746,029 |
|
|
$ |
2,323,571 |
|
|
|
|
|
|
|
|
|
|
Sales backlog at June
30 |
|
$ |
741,835 |
|
|
$ |
1,193,829 |
|
Net sales for the nine months ended June 30, 2019
equaled $2,746,029, an increase of $422,458 or 18.2%, when compared to net
sales of $2,323,571 for the nine months ended June 30, 2018.
MFC’s RF/Microwave product sales increased $165,632
or 17.4% to $1,115,731 for the nine months ended June 30, 2019 when compared to
RF/Microwave product sales of $950,099 during the same period last year.
MFC’s RF/Microwave products are sold primarily to OEMs that serve the
mobile radio, commercial communications and defense electronics markets. Sales
to one OEM customer increased $221,075 to $952,525 for the nine months ended
June 30, 2019 compared to sales of $731,450 for the nine months ended June 30,
2018. These sales are in connection with a multiyear program in which the
Company is a subcontractor. The Company continues to invest in production
engineering and infrastructure development to penetrate OEM market segments as
they become popular. MFC is concentrating its technical resources and product
development efforts toward potential high volume customers as part of a
concentrated effort to provide substantial long-term growth. Over the last
year, MFC, in conjunction with various OEM’s, has developed and supplied
prototypes as well as small production runs in support of new programs being
introduced to the marketplace. It is our belief that a continuation of this
effort will help increase sales as well as reinforcing MFC’s position as
a quality manufacturer of RF filters and assemblies.
MFC’s Satellite product sales decreased $245,015
or 27.9% to $632,505 for the nine months ended June 30, 2019 when compared to
satellite product sales of $877,520 during the same period last year. The
decrease in sales can primarily be attributed to a decrease in sales to one
customer.
MFC’s Cable TV product sales increased $114,697
or 46.5% to $361,551 for the nine months ended June 30, 2019 when compared to
Cable TV product sales of $246,854 during the same period last year. The
increase can primarily be attributed to sales to one customer. Management
continues to project flat or a decrease in demand for standard Cable TV
products due to the shift from analog to digital television. Due to the
inherent nature of digital modulation versus analog modulation, fewer filters
are required. The Company has developed filters for digital television and
there will still be requirements for analog filters for limited applications in
commercial and private cable systems.
MFC’s Broadcast TV/Wireless Cable product sales
increased $391,897 to $636,158 for the nine months ended June 30, 2019 when
compared to sales of $244,261 during the same period last year. The increase in
sales can primarily be attributed to sales to one customer.
|
15 |
|
|
MFC’s sales order backlog equaled $741,835 at
June 30, 2019 compared to sales order backlog of $1,193,829 at June 30, 2018.
However, backlog is not necessarily indicative of future sales. Accordingly,
the Company does not believe that its backlog as of any particular date is
representative of actual sales for any succeeding period. 96.7% of the total
sales order backlog at June 30, 2019 is scheduled to ship by September 30,
2019.
Gross profit for the nine months ended June 30, 2019
equaled $1,126,919, an increase of $249,853 or 28.5%, when compared to gross
profit of $877,066 for the nine months ended June 30, 2018. The increase can
primarily be attributed to the increase in sales. As a percentage of sales,
gross profit equaled 41.0% for the nine months ended June 30, 2019 compared to
37.7% for the nine months ended June 30, 2018. The increase in gross profit as
a percentage of sales can primarily be attributed the higher sales volume
providing a higher base to absorb overhead expenses.
SG&A expenses for the nine months ended June 30,
2019 equaled $1,113,767, an increase of $108,466, when compared to SG&A
expenses of $1,005,301 for the nine months ended June 30, 2018. The increase
can primarily be attributed to higher payroll and payroll related expenses due
primarily to the hiring of two sales professionals. As a percentage of sales,
SGA expenses decreased to 40.6% for the nine months ended June 30, 2019
compared to 43.3% for the nine months ended June 30, 2018 due primarily to the
higher sales volume this year when compared to the same period last year.
The Company recorded income from operations of $13,152
for the nine months ended June 30, 2019 compared to a loss from operations of
$128,235 for the nine months ended June 30, 2018. The improvement can primarily
be attributed to the higher sales volume this year when compared to last year.
Other expense was $569 for the nine months ended June
30, 2019 compared to $6,461 for the nine months ended June 30, 2018 primarily
due to interest expense of $8,511 offset by interest income of $5,418 and
miscellaneous non-operating income of $2,524 for the nine months ended June 30,
2019 and interest expense of $10,209 offset by interest income of $920 and
miscellaneous non-operating income of $2,828 and for the nine months ended June
30, 2018. Other income generally consists of sales of scrap material, the
forfeiture of non-refundable deposits and other incidental items.
The provision for income taxes equaled $50 for the
nine months ended June 30, 2019 and June 30, 2018. 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 notes 1 and 4.
Off-Balance Sheet Arrangements
At June 30, 2019 and 2018, the Company did not have
any unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities, which might have
been established for the purpose of facilitating off-balance sheet
arrangements.
|
16 |
|
|
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 of liquidity has been funds provided by operations.
|
|
June 30,
2019 |
|
|
September
30, 2018 |
|
||
|
|
|
|
|
|
|
||
Cash & cash
equivalents |
|
$ |
537,967 |
|
|
$ |
674,045 |
|
Working capital |
|
$ |
1,097,856 |
|
|
$ |
1,147,509 |
|
Current ratio |
|
|
4.04 to 1 |
|
|
|
4.18 to 1 |
|
Long-term debt |
|
$ |
179,198 |
|
|
$ |
219,071 |
|
Cash and cash equivalents decreased $136,078 to
$537,967 at June 30, 2019 when compared to cash and cash equivalents of
$674,045 at September 30, 2018. The decrease was a result of $36,404 in net
used in operating activities, $61,320 in net cash used for capital
expenditures, $38,128 in net cash used for repayment of a note payable and $226
used to purchase treasury stock.
Net cash used in operating activities can fluctuate
between periods as a result of differences in net income (loss), the timing of
the collection of accounts receivable, purchase of inventory and payment of
accounts payable.
The increase in inventories of $118,424 when compared
to September 30, 2018 can primarily be attributed to customer scheduled
deliveries. $717,585 of backlog is scheduled to ship during the fourth quarter.
The $61,320 in fixed asset purchases consisted of
$54,900 to replace part of the roof and $4,575 used to purchase computer
software and $1,845 to purchase computer equipment.
On July 2, 2013, the Company entered into a Ten Year
Term Loan with KeyBank National Association in the amount of Five Hundred
Thousand and No/100 Dollars ($500,000.00). The amount of all advances
outstanding together with accrued interest thereon shall be due and payable on
July 2, 2023 (“Maturity”). The Company shall pay interest on the
outstanding principal balance of this Note at the rate per annum equal to 4.5%.
The net proceeds from the Term Loan will be available to provide working
capital as needed.
Management believes that its working capital
requirements for at least the next twelve months will be met by its existing
cash balances, future cash flows from operations and its current credit
arrangements.
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17 |
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
In an effort to provide investors a balanced view of
the Company’s current condition and future growth opportunities, this
Quarterly Report on Form 10-Q includes comments by the Company’s
management about future performance. These statements which are not historical
information are “forward-looking statements” pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
These, and other forward-looking statements, are subject to business and
economic risks and uncertainties that could cause actual results to differ
materially from those discussed. These risks and uncertainties include, but are
not limited to: risks associated with demand for and market acceptance of
existing and newly developed products as to which the Company has made
significant investments; general economic and industry conditions; slower than
anticipated penetration into the satellite communications, mobile radio and
commercial and defense electronics markets; competitive products and pricing
pressures; increased pricing pressure from our customers; risks relating to
governmental regulatory actions in broadcast, communications and defense
programs; as well as other risks and uncertainties, including but not limited
to those detailed from time to time in the Company’s Securities and
Exchange Commission filings. These forward-looking statements are made only as
of the date hereof, and the Company undertakes no obligation to update or
revise the forward-looking statements, whether as a result of new information,
future events or otherwise. You are encouraged to review Microwave Filter
Company’s 2018 Annual Report and Form 10-K for the fiscal year ended
September 30, 2018 and other Securities and Exchange Commission filings.
Forward looking statements may be made directly in this document or
“incorporated by reference” from other documents. You can find many
of these statements by looking for words like “believes,”
“expects,” “anticipates,” “estimates,” or
similar expressions.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK |
As a “smaller reporting company” we are
not required to provide information required by this item.
CONTROLS AND PROCEDURES |
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Management’s responsibility includes
establishing and maintaining adequate internal control over financial
reporting. The Company’s management, with the participation of the
Company’s Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of the Company’s disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) as of the
end of the period covered by this report. Based on such evaluation, the Company’s
Chief Executive Officer and Chief Financial Officer have concluded that, as of
the end of such period, the Company’s disclosure controls and procedures
were effective as of the end of the period covered by this report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in the Company’s
internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) during the most recent fiscal quarter that
have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
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18 |
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Item 1. |
Legal Proceedings |
None.
Item 1A. |
Rzisk
Factors |
Not applicable.
Item 2. |
Changes in
Securities |
None.
Item 3. |
Defaults
Upon Senior Securities |
The Company has no senior securities.
Item 4. |
Mine
Safety Disclosures |
Not applicable.
Item 5. |
Other
Information |
None.
Item 6. |
Exhibits |
a. Exhibits
31.1 Section 13a-14(a)/15d-14(a) Certification of Paul
W. Mears
31.2 Section 13a-14(a)/15d-14(a) Certification of
Richard L. Jones
32.1 Section 1350 Certification of Paul W. Mears and
Richard L. Jones
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19 |
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Pursuant to the requirements of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
|
MICROWAVE FILTER COMPANY, INC. |
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August 13, 2019 |
/s/ Paul W. Mears |
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(Date) |
Paul W. Mears |
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Chief Executive Officer |
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August 13, 2019 |
/s/ Richard L. Jones |
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(Date) |
Richard L. Jones |
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Chief Financial Officer |
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20 |
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Exhibit 31.1
RULE 13a-14(a) CERTIFICATION
I, Paul W. Mears, certify that:
1. I have reviewed this report Quarterly Report on
Form 10-Q of Microwave Filter Company, Inc.;
2. Based on my knowledge, this report 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 report;
3. Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s)
and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and we have:
a)
designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
d)
disclosed in this report any change in the registrant’s internal control
over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer(s)
and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing
the equivalent functions):
a) all
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over
financial reporting.
Date: August 13, 2019 |
/s/ Paul W. Mears |
|
Paul W. Mears |
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Chief Executive Officer |
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Exhibit 31.2
RULE 13a-14(a) CERTIFICATION
I, Richard L. Jones, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q
of Microwave Filter Company, Inc.;
2. Based on my knowledge, this report 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 report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s)
and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f))for the registrant and we have:
a)
designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d)
disclosed in this report any change in the registrant’s internal control
over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer(s)
and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing
the equivalent functions):
a) all
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over
financial reporting.
Date: August 13, 2019 |
/s/ Richard L. Jones |
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Richard L. Jones |
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Chief Financial Officer |
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Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Microwave
Filter Company, Inc. (the “Company”) on Form 10-Q for the period
ended June 30, 2019, as filed with the Securities and Exchange Commission on
the date hereof (the “Report”), Paul W. Mears, Chief Executive
Officer, and Richard L. Jones, Chief Financial Officer, of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: August 13, 2019 |
/s/ Paul W. Mears |
|
Paul W. Mears |
|
Chief Executive Officer |
Dated: August 13, 2019 |
/s/ Richard L. Jones |
|
Richard L. Jones |
|
Chief Financial Officer |
|
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