Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2018 | Nov. 16, 2018 | Mar. 31, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | MICROWAVE FILTER CO INC /NY/ | ||
Entity Central Index Key | 716,688 | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 1,681,780 | ||
Entity Common Stock, Shares Outstanding | 2,579,680 | ||
Trading Symbol | MFCO | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Sep. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 674,045 | $ 667,940 |
Accounts receivable-trade, net of allowance for doubtful accounts of $4,000 and $4,000 | 402,760 | 350,703 |
Inventories, net of obsolete inventory reserve of $463,286 and $445,393 | 377,603 | 458,158 |
Prepaid expenses and other current assets | 54,416 | 27,858 |
Total current assets | 1,508,824 | 1,504,659 |
Property, plant and equipment, net | 261,474 | 326,778 |
Total Assets | 1,770,298 | 1,831,437 |
Current liabilities: | ||
Accounts payable | 116,938 | 104,349 |
Customer deposits | 35,278 | 43,893 |
Accrued payroll and related expenses | 38,711 | 39,710 |
Accrued compensated absences | 90,449 | 96,490 |
Notes Payable - Short Term | 51,101 | 48,826 |
Other current liabilities | 28,838 | 22,023 |
Total current liabilities | 361,315 | 355,291 |
Notes Payable - Long Term | 219,071 | 270,172 |
Total other liabilities | 219,071 | 270,172 |
Total liabilities | 580,386 | 625,463 |
Stockholders' equity: | ||
Common stock, $.10 par value. Authorized 5,000,000 shares Issued 4,324,140 in 2018 and 2017, Outstanding 2,579,680 in 2018 and 2,579,684 in 2017 | 432,414 | 432,414 |
Additional paid-in capital | 3,248,706 | 3,248,706 |
Accumulated deficit | (796,444) | (780,385) |
Common stock in treasury, at cost, 1,744,460 shares in 2018 and 1,744,456 shares in 2017 | (1,694,764) | (1,694,761) |
Total stockholders' equity | 1,189,912 | 1,205,974 |
Total Liabilities and Stockholders' Equity | $ 1,770,298 | $ 1,831,437 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2018 | Sep. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 4,000 | $ 4,000 |
Inventory reserve | $ 463,286 | $ 445,393 |
Common stock, par value | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 5,000,000 | 5,000,000 |
Common stock, shares issued | 4,324,140 | 4,324,140 |
Common stock, shares outstanding | 2,579,680 | 2,579,684 |
Treasury stock, shares | 1,744,460 | 1,744,456 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||
Net sales | $ 3,341,811 | $ 3,036,669 |
Cost of goods sold | 2,015,927 | 2,028,000 |
Gross profit | 1,325,884 | 1,008,669 |
Selling, general and administrative expenses | 1,333,710 | 1,261,755 |
Loss from operations | (7,826) | (253,086) |
Non-operating Income (Expense) | ||
Interest income | 1,243 | 1,880 |
Interest expense | (13,366) | (15,545) |
Miscellaneous | 3,940 | 2,535 |
Loss before income taxes | (16,009) | (264,216) |
Provision for income taxes | (50) | 0 |
NET LOSS | $ (16,059) | $ (264,216) |
Per share data: | ||
Basic and Diluted Loss Per Common Share | $ (0.01) | $ (0.10) |
Shares used in computing net loss per common share: | ||
Basic and diluted | 2,579,681 | 2,580,271 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Treasury Stock [Member] | Total |
Balance at Sep. 30, 2016 | $ 432,414 | $ 3,248,706 | $ (516,169) | $ (1,693,950) | $ 1,471,001 |
Balance, shares at Sep. 30, 2016 | 4,324,140 | 1,743,133 | |||
Net loss | $ (264,216) | $ (264,216) | |||
Purchase of treasury stock | $ (811) | $ (811) | |||
Purchase of treasury stock, shares | 1,323 | ||||
Balance at Sep. 30, 2017 | $ 432,414 | $ 3,248,706 | $ (780,385) | $ (1,694,761) | $ 1,205,974 |
Balance, shares at Sep. 30, 2017 | 4,324,140 | 1,744,456 | |||
Net loss | (16,059) | (16,059) | |||
Purchase of treasury stock | $ (3) | (3) | |||
Purchase of treasury stock, shares | 4 | ||||
Balance at Sep. 30, 2018 | $ 432,414 | $ 3,248,706 | $ (796,444) | $ (1,694,764) | $ 1,189,912 |
Balance, shares at Sep. 30, 2018 | 4,324,140 | 1,744,460 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (16,059) | $ (264,216) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation | 72,652 | 81,488 |
Inventory obsolescence provision | 17,893 | 9,865 |
Changes in assets and liabilities: | ||
Accounts receivable-trade | (52,057) | (4,070) |
Inventories | 62,662 | (19,276) |
Prepaid and other current assets | (26,558) | 33,815 |
Accounts payable and customer deposits | 3,974 | 57,654 |
Accrued payroll, compensated absences and related expenses | (7,040) | (52,388) |
Other current liabilities | 6,815 | 5,749 |
Net cash provided by (used in) operating activities | 62,282 | (151,379) |
Cash flows from investing activities: | ||
Capital expenditures | (7,348) | (56,335) |
Net cash used in investing activities | (7,348) | (56,335) |
Cash flows from financing activities: | ||
Repayment of note payable | (48,826) | (46,652) |
Purchase of treasury stock | (3) | (811) |
Net cash used in financing activities | (48,829) | (47,463) |
Net increase (decrease) in cash and cash equivalents | 6,105 | (255,177) |
Cash and cash equivalents at beginning of year | 667,940 | 923,117 |
Cash and cash equivalents at end of year | 674,045 | 667,940 |
Supplemental disclosures of cash flows: | ||
Interest | 13,538 | 15,712 |
Taxes | $ 50 | $ 0 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Nature of Business Microwave Filter Company, Inc. (MFC) 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. b. Basis of Consolidation The consolidated financial statements include the accounts of Microwave Filter Company, Inc. (MFC) and its wholly-owned subsidiaries, Niagara Scientific, Inc. (NSI) and Microwave Filter International, LTD. (MFI) (dormant); located in Syracuse, New York. All significant intercompany balances and transactions have been eliminated in consolidation. c. Revenue Recognition 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 consolidated balance sheet. d. Cash and Cash Equivalents The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and accounts receivable. Cash and cash equivalents consist of cash in banks and money market funds. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company’s cash is held at federally insured institutions and balances may periodically exceed insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk with respect to cash. The Company also routinely assesses the financial strength of its customers and, as a consequence, believes that its trade accounts receivable credit risk exposure is limited. e. Trade Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company reviews its allowance for doubtful accounts monthly. Past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. f. Inventories and Reserve for Obsolescence 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 records a reserve for obsolete or excess inventory. The Company considers inventory quantities greater than a three year supply based on current year activity as well as any additional specifically identified inventory to be excess. The Company also provides for the total value of inventories that are determined to be obsolete based on criteria such as customer demand and changing technologies. g. Research and Development Costs in connection with research and development, which amount to $334,851 and $326,965 for the fiscal years 2018 and 2017, respectively, are charged to operations as incurred. h. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets. Buildings and building improvements are depreciated over an estimated service life of 10 to 30 years. Machinery and equipment are depreciated over an estimated useful life of 3 to 10 years. Office equipment and fixtures are depreciated over an estimated useful life of 3 to 10 years. At the time of sale or retirement, the cost and accumulated depreciation are removed from the respective accounts and the resulting gain or loss is recognized in income. i. 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 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 positions 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. j. 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 fiscal year ended September 30, 2018 and 2017. Loss used in the EPS calculation is net loss for each year. There were no dilutive potential shares outstanding for the years ended September 30, 2018 and 2017. k. Fair Value of Financial Instruments The carrying value of the Company 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 its fair value. The Company currently does not trade in or utilize derivative financial instruments. l. Miscellaneous Non-operating Income Miscellaneous non-operating income generally consists of sales of scrap material and the forfeiture of non-refundable deposits and other incidental items. m. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. n. Warranty Costs The Company established a warranty reserve which provides for the estimated cost of product returns based upon historical experience and any known conditions or circumstances. Our warranty obligation is affected by product that does not meet specifications and performance requirements and any related costs of addressing such matters. Warranty costs were approximately $5,000 for the fiscal years ended September 30, 2018 and 2017, respectively. o. Impairment of Long-Lived Assets The carrying values of long-lived assets other than goodwill are generally evaluated for impairment only if events or changes in facts and circumstances indicate that carrying values may not be recoverable. Any impairment determined would be recorded in the current period and would be measured by comparing the fair value of the related asset to its carrying value. Fair value is generally determined by identifying estimated undiscounted cash flows to be generated by those assets. No impairments have been recorded for the fiscal years ended September 30, 2018 and 2017. p. New Accounting Pronouncements In February 2016, the FASB issued FASB ASU No. 2016-02, Leases (Topic 842) |
Inventories
Inventories | 12 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | 2. INVENTORIES Inventories net of provision for obsolescence consisted of the following: September 30 2018 2017 Raw materials and stock parts $ 306,658 $ 337,462 Work-in-process 37,062 21,861 Finished goods 33,883 98,835 $ 377,603 $ 458,158 The Company’s reserve for obsolescence equaled $463,286 at September 30, 2018 and $445,393 at September 30, 2017. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | 3. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: September 30 2018 2017 Land $ 143,000 $ 143,000 Building and improvements 1,928,599 1,928,599 Machinery and equipment 3,501,925 3,497,015 Office equipment and fixtures 1,919,178 1,916,740 7,492,702 7,485,354 Less: Accumulated depreciation 7,231,228 7,158,576 Property, plant and equipment, net $ 261,474 $ 326,778 Depreciation expense $ 72,652 $ 81,488 |
Notes Payable
Notes Payable | 12 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable | 4. 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 September 30, 2018 and 2017 was $270,172 and $318,998 respectively. Interest accrued as of September 30, 2018 and 2017 was $946 and $1,113 respectively. The Company has secured this Note by: (a) a Mortgage, Assignment of Rents, Security Agreement and Fixture Filing which creates a 1 st Year Ended Principal Interest Total September 30, Payments Payments Payments 2019 51,101 11,263 62,364 2020 53,456 8,908 62,364 2021 55,972 6,392 62,364 2022 58,680 3,684 62,364 2023 50,963 1,007 51,970 $ 270,172 $ 31,254 $ 301,426 |
Profit Sharing and 401-K Plans
Profit Sharing and 401-K Plans | 12 Months Ended |
Sep. 30, 2018 | |
Profit Sharing And 401-k Plans | |
Profit Sharing and 401-K Plans | 5. PROFIT SHARING AND 401-K 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 during fiscal 2018. The maximum corporate match was 6% of an employee’s compensation during fiscal 2018. The Company’s matching contributions to the 401-K plan for the years ended September 30, 2018 and 2017 were $71,392 and $70,316, respectively. Additionally, the Company may make discretionary contributions to the non-contributory profit sharing plan. These contributions were $0 in 2018 and 2017. |
Obligations Under Operating Lea
Obligations Under Operating Leases | 12 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Obligations Under Operating Leases | 6. OBLIGATIONS UNDER OPERATING LEASES The Company leases equipment under an operating lease agreement expiring on December 31, 2018. Rental expense under this lease for the year ended September 30, 2018 was $4,930. Minimum rental commitments at September 30, 2018 for this lease are: Year Ended Lease September 30 Payments 2019 1,232 $ 1,232 |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. INCOME TAXES The components of the provision for income taxes in the accompanying consolidated statements of operations are as follows: Year Ended September 30, 2018 2017 Currently payable: Federal $ 0 $ 0 State 50 0 Deferred (credit) 0 0 $ 50 $ 0 The components of the provision for income taxes differs from the amount that would result from applying the federal statutory rate for the periods ended September 30, 2018 and 2017 is as follows: Year ended September 30, 2018 2017 Amount % Amount % Statutory tax rate $ 8,797 24.2 % $ (89,833 ) (34.0 )% Effect of change in income tax rates (87,833 ) (242.1 )% 0 0 % Research and development tax credits (14,728 ) (40.5 )% (13,883 ) (5.2 )% Valuation allowance change 93,764 258.4 % 103,647 39.2 % Permanent differences 0 0.0 % 69 0.0 % $ 0 0.0 % $ 0 0.0 % The temporary differences which give rise to deferred tax assets and (liabilities) at September 30 are as follows: 2018 2017 Inventory $ 101,398 $ 157,515 Accrued warranty 2,625 4,250 Accrued vacation 15,004 26,347 Accounts receivable 885 1,432 Accelerated depreciation 22,477 27,320 Research and development tax credit carryforward 305,357 288,369 AMT credit carryforward 37,521 37,521 NOL carryforward 232,389 268,666 Valuation allowance (717,656 ) (811,420 ) Net deferred tax assets $ 0 $ 0 During December 2017, the Tax Cuts and Jobs Act (the “ACT”) was signed into law reducing the Federal corporate income tax rate from 34 percent to 21 percent. Based on the provisions of the ACT, the Company remeasured their net deferred tax assets applying the lower income tax rates to the Company’s net deferred tax assets. In addition, in accordance with the applicable Internal Revenue Code, the Company is required to calculate its current tax provision for fiscal 2018 using a blended corporate tax rate, resulting in a reduction in the effective current tax rate from 34.00 percent to 24.25 percent. The Company has provided a full valuation allowance against its net deferred tax assets. Accordingly, no impact arising from the change in the tax rates arising from the provisions of the ACT is reflected in these consolidated financial statements. As required by FASB ASC 740 the Company has evaluated the positive and negative evidence bearing upon the realization of its net deferred tax assets. The Company has determined that, at this time, it is more likely than not that the Company will not realize all of the benefits of federal and state net deferred tax assets, and, as a result, a valuation allowance was established. The research and development tax credit carryforwards and NOL carryforwards generated through September 30, 2017, of approximately $300,000 and $800,000 expire at various times through 2037. Pursuant to the ACT, any of the Company’s newly-generated Federal NOL carryforwards can be carried forward indefinitely, while being limited to 80% of taxable income (determined without regard to the deduction.) As of September 30, 2018, the Company’s Federal AMT credit carryforward of approximately $35,000 is refundable in any year prior to 2022, in an amount equal to 50% (100% for tax years beginning in 2021) of the excess minimum tax credit for the tax year, over the amount of the credit allowable for the year against the regular tax liability. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the fiscal years September 30, 2016 through September 30, 2018. The Company has no uncertain tax positions. As of September 30, 2018 and 2017 there is no accrual for interest or penalties related to uncertain tax positions. |
Industry Segment Data
Industry Segment Data | 12 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Industry Segment Data | 8. INDUSTRY SEGMENT DATA The Company’s primary business segment involves the operations of Microwave Filter Company, Inc. (MFC) 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. |
Significant Customers
Significant Customers | 12 Months Ended |
Sep. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Significant Customers | 9. SIGNIFICANT CUSTOMERS Sales to one customer represented 32% of total sales for the fiscal year ended September 30, 2018 compared to 41.2% of total sales for the fiscal year ended September 30, 2017. A loss of this customer or programs related to this customer could materially impact the Company. |
Legal Matters
Legal Matters | 12 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters | 10. LEGAL MATTERS None. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Nature of Business | a. Nature of Business Microwave Filter Company, Inc. (MFC) 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. |
Basis of Consolidation | b. Basis of Consolidation The consolidated financial statements include the accounts of Microwave Filter Company, Inc. (MFC) and its wholly-owned subsidiaries, Niagara Scientific, Inc. (NSI) and Microwave Filter International, LTD. (MFI) (dormant); located in Syracuse, New York. All significant intercompany balances and transactions have been eliminated in consolidation. |
Revenue Recognition | c. Revenue Recognition 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 consolidated balance sheet. |
Cash and Cash Equivalents | d. Cash and Cash Equivalents The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and accounts receivable. Cash and cash equivalents consist of cash in banks and money market funds. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company’s cash is held at federally insured institutions and balances may periodically exceed insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk with respect to cash. The Company also routinely assesses the financial strength of its customers and, as a consequence, believes that its trade accounts receivable credit risk exposure is limited. |
Trade Accounts Receivable and Allowance for Doubtful Accounts | e. Trade Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company reviews its allowance for doubtful accounts monthly. Past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. |
Inventories and Reserve for Obsolescence | f. Inventories and Reserve for Obsolescence 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 records a reserve for obsolete or excess inventory. The Company considers inventory quantities greater than a three year supply based on current year activity as well as any additional specifically identified inventory to be excess. The Company also provides for the total value of inventories that are determined to be obsolete based on criteria such as customer demand and changing technologies. |
Research and Development | g. Research and Development Costs in connection with research and development, which amount to $334,851 and $326,965 for the fiscal years 2018 and 2017, respectively, are charged to operations as incurred. |
Property, Plant and Equipment | h. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets. Buildings and building improvements are depreciated over an estimated service life of 10 to 30 years. Machinery and equipment are depreciated over an estimated useful life of 3 to 10 years. Office equipment and fixtures are depreciated over an estimated useful life of 3 to 10 years. At the time of sale or retirement, the cost and accumulated depreciation are removed from the respective accounts and the resulting gain or loss is recognized in income. |
Income Taxes | i. 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 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 positions 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. |
Earnings Per Share | j. 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 fiscal year ended September 30, 2018 and 2017. Loss used in the EPS calculation is net loss for each year. There were no dilutive potential shares outstanding for the years ended September 30, 2018 and 2017. |
Fair Value of Financial Instruments | k. Fair Value of Financial Instruments The carrying value of the Company 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 its fair value. The Company currently does not trade in or utilize derivative financial instruments. |
Miscellaneous Non-operating Income | l. Miscellaneous Non-operating Income Miscellaneous non-operating income generally consists of sales of scrap material and the forfeiture of non-refundable deposits and other incidental items. |
Use of Estimates | m. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Warranty Costs | n. Warranty Costs The Company established a warranty reserve which provides for the estimated cost of product returns based upon historical experience and any known conditions or circumstances. Our warranty obligation is affected by product that does not meet specifications and performance requirements and any related costs of addressing such matters. Warranty costs were approximately $5,000 for the fiscal years ended September 30, 2018 and 2017, respectively. |
Impairment of Long-Lived Assets | o. Impairment of Long-Lived Assets The carrying values of long-lived assets other than goodwill are generally evaluated for impairment only if events or changes in facts and circumstances indicate that carrying values may not be recoverable. Any impairment determined would be recorded in the current period and would be measured by comparing the fair value of the related asset to its carrying value. Fair value is generally determined by identifying estimated undiscounted cash flows to be generated by those assets. No impairments have been recorded for the fiscal years ended September 30, 2018 and 2017. |
New Accounting Pronouncements | p. New Accounting Pronouncements In February 2016, the FASB issued FASB ASU No. 2016-02, Leases (Topic 842) |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories Net of Reserve for Obsolescence | Inventories net of provision for obsolescence consisted of the following: September 30 2018 2017 Raw materials and stock parts $ 306,658 $ 337,462 Work-in-process 37,062 21,861 Finished goods 33,883 98,835 $ 377,603 $ 458,158 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property Plant and Equipment | Property, plant and equipment consisted of the following: September 30 2018 2017 Land $ 143,000 $ 143,000 Building and improvements 1,928,599 1,928,599 Machinery and equipment 3,501,925 3,497,015 Office equipment and fixtures 1,919,178 1,916,740 7,492,702 7,485,354 Less: Accumulated depreciation 7,231,228 7,158,576 Property, plant and equipment, net $ 261,474 $ 326,778 Depreciation expense $ 72,652 $ 81,488 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Future Obligations of Loan | The future obligations of the loan are as follows: Year Ended Principal Interest Total September 30, Payments Payments Payments 2019 51,101 11,263 62,364 2020 53,456 8,908 62,364 2021 55,972 6,392 62,364 2022 58,680 3,684 62,364 2023 50,963 1,007 51,970 $ 270,172 $ 31,254 $ 301,426 |
Obligations Under Operating L_2
Obligations Under Operating Leases (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Minimum rental commitments at September 30, 2018 for this lease are: Year Ended Lease September 30 Payments 2019 1,232 $ 1,232 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provision for Income Taxes | The components of the provision for income taxes in the accompanying consolidated statements of operations are as follows: Year Ended September 30, 2018 2017 Currently payable: Federal $ 0 $ 0 State 50 0 Deferred (credit) 0 0 $ 50 $ 0 |
Schedule of Reconciliation of Statutory Federal Income Tax Rate | The components of the provision for income taxes differs from the amount that would result from applying the federal statutory rate for the periods ended September 30, 2018 and 2017 is as follows: Year ended September 30, 2018 2017 Amount % Amount % Statutory tax rate $ 8,797 24.2 % $ (89,833 ) (34.0 )% Effect of change in income tax rates (87,833 ) (242.1 )% 0 0 % Research and development tax credits (14,728 ) (40.5 )% (13,883 ) (5.2 )% Valuation allowance change 93,764 258.4 % 103,647 39.2 % Permanent differences 0 0.0 % 69 0.0 % $ 0 0.0 % $ 0 0.0 % |
Schedule of Temporary Differences Which Give Rise to Deferred Tax Assets and Liabilities | The temporary differences which give rise to deferred tax assets and (liabilities) at September 30 are as follows: 2018 2017 Inventory $ 101,398 $ 157,515 Accrued warranty 2,625 4,250 Accrued vacation 15,004 26,347 Accounts receivable 885 1,432 Accelerated depreciation 22,477 27,320 Research and development tax credit carryforward 305,357 288,369 AMT credit carryforward 37,521 37,521 NOL carryforward 232,389 268,666 Valuation allowance (717,656 ) (811,420 ) Net deferred tax assets $ 0 $ 0 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Research and development expense | $ 334,851 | $ 326,965 |
Dilutive potential shares outstanding | ||
Warranty costs | $ 5,000 | $ 5,000 |
Impairment of long-lived assets | ||
Buildings and Building Improvements [Member] | Minimum [Member] | ||
Property, plant and equipment, useful life | 10 years | |
Buildings and Building Improvements [Member] | Maximum [Member] | ||
Property, plant and equipment, useful life | 30 years | |
Machinery and Equipment [Member] | Minimum [Member] | ||
Property, plant and equipment, useful life | 3 years | |
Machinery and Equipment [Member] | Maximum [Member] | ||
Property, plant and equipment, useful life | 10 years | |
Office Equipment and Fixtures [Member] | Minimum [Member] | ||
Property, plant and equipment, useful life | 3 years | |
Office Equipment and Fixtures [Member] | Maximum [Member] | ||
Property, plant and equipment, useful life | 10 years |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) | Sep. 30, 2018 | Sep. 30, 2017 |
Inventory Disclosure [Abstract] | ||
Reserve for obsolescence | $ 463,286 | $ 445,393 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories Net of Reserve for Obsolescence (Details) - USD ($) | Sep. 30, 2018 | Sep. 30, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials and stock parts | $ 306,658 | $ 337,462 |
Work-in-process | 37,062 | 21,861 |
Finished goods | 33,883 | 98,835 |
Inventory net | $ 377,603 | $ 458,158 |
Property, Plant and Equipment -
Property, Plant and Equipment - Schedule of Property Plant and Equipment (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Property, plant and equipment, gross | $ 7,492,702 | $ 7,485,354 |
Less: Accumulated depreciation | 7,231,228 | 7,158,576 |
Property, plant and equipment, net | 261,474 | 326,778 |
Depreciation expense | 72,652 | 81,488 |
Land [Member] | ||
Property, plant and equipment, gross | 143,000 | 143,000 |
Building and Improvements [Member] | ||
Property, plant and equipment, gross | 1,928,599 | 1,928,599 |
Machinery and Equipment [Member] | ||
Property, plant and equipment, gross | 3,501,925 | 3,497,015 |
Office Equipment and Fixtures [Member] | ||
Property, plant and equipment, gross | $ 1,919,178 | $ 1,916,740 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Jul. 02, 2013 | Sep. 30, 2018 | Sep. 30, 2017 |
Outstanding total amount | $ 270,172 | $ 318,998 | |
Interest accrued | $ 946 | $ 1,113 | |
KeyBank National Association [Member] | |||
Loan term | 10 years | ||
Loan amount | $ 500,000 | ||
Loan maturity date | Jul. 2, 2023 | ||
Percentage of interest rate | 4.50% |
Notes Payable - Schedule of Fut
Notes Payable - Schedule of Future Obligations of Loan (Details) | 12 Months Ended |
Sep. 30, 2018USD ($) | |
Principal Payments | $ 270,172 |
Interest Payments | 31,254 |
Total Payments | 301,426 |
2019 [Member] | |
Principal Payments | 51,101 |
Interest Payments | 11,263 |
Total Payments | 62,364 |
2020 [Member] | |
Principal Payments | 53,456 |
Interest Payments | 8,908 |
Total Payments | 62,364 |
2021 [Member] | |
Principal Payments | 55,972 |
Interest Payments | 6,392 |
Total Payments | 62,364 |
2022 [Member] | |
Principal Payments | 58,680 |
Interest Payments | 3,684 |
Total Payments | 62,364 |
2023 [Member] | |
Principal Payments | 50,963 |
Interest Payments | 1,007 |
Total Payments | $ 51,970 |
Profit Sharing and 401-K Plans
Profit Sharing and 401-K Plans (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Profit Sharing And 401-k Plans | ||
Minimum age required for profit sharing and 401-K plans | 21 years | |
Number of years of service required for profit sharing and 401-K plans | 1 year | |
Percentage of employee's contributions matched by employer | 100.00% | |
Maximum corporate match of employee's compensation | 6.00% | |
Employer's matching contributions to 401-K plan | $ 71,392 | $ 70,316 |
Discretionary contributions to non-contributory profit sharing plan | $ 0 | $ 0 |
Obligations Under Operating L_3
Obligations Under Operating Leases (Details Narrative) | 12 Months Ended |
Sep. 30, 2018USD ($) | |
Leases [Abstract] | |
Operating lease expiry date | Dec. 31, 2018 |
Rental expense | $ 4,930 |
Obligations Under Operating L_4
Obligations Under Operating Leases - Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Sep. 30, 2018USD ($) |
Leases [Abstract] | |
2,019 | $ 1,232 |
Total | $ 1,232 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Federal statutory corporate income tax rate | 24.20% | (34.00%) |
Effective current tax rate | 0.00% | 0.00% |
Research and development tax credit carryforwards | $ 300,000 | |
NOL carry forwards | $ 800,000 | |
NOL carryforwards expire year | 2,037 | |
NOL Carryforward limits description | Company's newly-generated Federal NOL carryforwards can be carried forward indefinitely, while being limited to 80% of taxable income (determined without regard to the deduction.) | |
Accrual for interest or penalties related to uncertain tax positions | ||
Fiscal 2018 [Member] | ||
Income tax reconciliation description | In addition, in accordance with the applicable Internal Revenue Code, the Company is required to calculate its current tax provision for fiscal 2018 using a blended corporate tax rate, resulting in a reduction in the effective current tax rate from 34.00 percent to 24.25 percent. | |
Effective current tax rate | 24.25% | |
Tax Cuts and Jobs Act [Member] | ||
Income tax reconciliation description | During December 2017, the Tax Cuts and Jobs Act (the "ACT") was signed into law reducing the Federal corporate income tax rate from 34 percent to 21 percent. | |
Federal statutory corporate income tax rate | 21.00% | |
Federal AMT Credit [Member] | ||
Tax credit carryforward description | As of September 30, 2018, the Company's Federal AMT credit carryforward of approximately $35,000 is refundable in any year prior to 2022, in an amount equal to 50% (100% for tax years beginning in 2021) of the excess minimum tax credit for the tax year, over the amount of the credit allowable for the year against the regular tax liability. | |
Tax credit carryforward amount | $ 35,000 |
Income Taxes - Schedule of Prov
Income Taxes - Schedule of Provision for Income Taxes (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||
Federal | $ 0 | $ 0 |
State | 50 | 0 |
Deferred (credit) | 0 | 0 |
Provision (benefit) for income taxes | $ (50) | $ 0 |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Statutory Federal Income Tax Rate (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||
Statutory tax rate, amount | $ 8,797 | $ (89,833) |
Effect of change in income tax rates, amount | (87,833) | 0 |
Research and development tax credits, amount | (14,728) | (13,883) |
Valuation allowance change, amount | 93,764 | 103,647 |
Permanent differences, amount | 0 | 69 |
Provision (benefit) for income taxes | $ 50 | $ 0 |
Statutory tax rate, percent | 24.20% | (34.00%) |
Effect of change in income tax rates, percent | (242.10%) | 0.00% |
Research and development tax credits, percent | (40.50%) | (5.20%) |
Valuation allowance change, percent | 258.40% | 39.20% |
Permanent differences, percent | 0.00% | 0.00% |
Effective tax rate, percent | 0.00% | 0.00% |
Income Taxes - Schedule of Temp
Income Taxes - Schedule of Temporary Differences Which Give Rise to Deferred Tax Assets and Liabilities (Details) - USD ($) | Sep. 30, 2018 | Sep. 30, 2017 |
Income Tax Disclosure [Abstract] | ||
Inventory | $ 101,398 | $ 157,515 |
Accrued warranty | 2,625 | 4,250 |
Accrued vacation | 15,004 | 26,347 |
Accounts receivable | 885 | 1,432 |
Accelerated depreciation | 22,477 | 27,320 |
Research and development tax credit carry forward | 305,357 | 288,369 |
AMT credit carry forward | 37,521 | 37,521 |
NOL carry forward | 232,389 | 268,666 |
Valuation allowance | (717,656) | (811,420) |
Net deferred tax assets | $ 0 | $ 0 |
Significant Customers (Details
Significant Customers (Details Narrative) | 12 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
One Customer [Member] | ||
Percentage of sales | 32.00% | 41.20% |