United States securities and exchange commission logo
June 7, 2022
James Tivy
Chief Financial Officer
M-tron Industries, Inc.
2525 Shader Road
Orlando, FL 32804
Re: M-tron Industries,
Inc.
Draft Registration
Statement on Form 10
Submitted May 11,
2022
CIK No. 0001902314
Dear Mr. Tivy:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form 10 Submitted May 11, 2022
Summary
How will the Company's indebtedness and cash be allocated, paid or
transferred in connection
with the spin-off?, page 1
1. We note your disclosure
that Mtron and its subsidiaries had no outstanding indebtedness
of as of December 31,
2021. Please update this disclosure.
Our certificate of incorporation will contain an exclusive forum
provision, page 14
2. We note that your forum
selection provision in Art identifies the Court of Chancery of the
State of Delaware as
the exclusive forum for certain litigation, including any derivative
action. Please
disclose whether this provision applies to actions arising under the
James Tivy
FirstName LastNameJames Tivy
M-tron Industries, Inc.
Comapany
June 7, 2022NameM-tron Industries, Inc.
June 7,
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FirstName LastName
Securities Act or Exchange Act. In that regard, we note that Section
27 of the Exchange
Act creates exclusive federal jurisdiction over all suits brought to
enforce any duty or
liability created by the Exchange Act or the rules and regulations
thereunder, and Section
22 of the Securities Act creates concurrent jurisdiction for federal
and state courts over all
suits brought to enforce any duty or liability created by the
Securities Act or the rules and
regulations thereunder. If the provision applies to Securities Act
claims, please also revise
your prospectus to state that there is uncertainty as to whether a
court would enforce such
provision and that investors cannot waive compliance with the federal
securities laws and
the rules and regulations thereunder. If this provision does not apply
to actions arising
under the Securities Act or Exchange Act, please also ensure that the
exclusive forum
provision in the governing documents states this clearly, or tell us
how you will inform
investors in future filings that the provision does not apply to any
actions arising under the
Securities Act or Exchange Act.
3. Please note that your disclosure regarding your exclusive form
provision appears to be
inconsistent with Article XI of your amended and restated certificate
of incorporation. In
that regard, we note your reference in your risk factor to a court in
the State of Florida as
your exclusive forum. Please advise or revise.
Capitalization, page 35
4. Please include a double underline under the amount for cash and cash
equivalents and
remove from the table the due from related party amounts, and instead
include disclosure
of this related party receivable in footnote (1) to the table to be
treated as a reduction or
offset against the special dividend cash payment to LGL. Also, given
that you have no
outstanding debt, it appears the total capitalization amount in the
"actual" column should
equate to your total equity. Please revise your presentation or
otherwise explain to us why
your presentation is appropriate.
Unaudited Pro Forma Financial Statements, page 37
5. Refer to the fourth paragraph of the introductory page where you
discuss the three criteria
for reflecting adjustments in the pro forma financial statements.
Please note that
this criteria has since been replaced pursuant to SEC Release No.
33-10786,
"Amendments to Financial Disclosures About Acquired and Disposed
Businesses", issued
on May 20, 2020. The amended guidance related to pro forma financial
information
under Article 11 of Regulation now requires that pro forma adjustments
be based on the
following three categories: transaction accounting adjustments,
autonomous entity
adjustments, and management's adjustments. The transaction accounting
adjustments and
autonomous entity adjustments are to be reflected in two separate
columns, whereas
management's adjustments, if any, would be presented only in the
explanatory notes to the
pro forma financial statements. Refer to Rule 11-02(a)(6) and (7) of
Regulation S-
X. Further, we note disclosure in the last paragraph on page 37 and in
the top paragraph
on page 38 that you expect to incur additional recurring expenses
estimated to be
James Tivy
FirstName LastNameJames Tivy
M-tron Industries, Inc.
Comapany
June 7, 2022NameM-tron Industries, Inc.
June 7,
Page 3 2022 Page 3
FirstName LastName
approximately $850,000, which have not been reflected in the pro forma
statements of
income. Pursuant to the amended guidance, such costs are to be
reflected as Autonomous
entity adjustments. Please revise your disclosures and presentation
accordingly.
Notes to Unaudited Pro Forma Combined Financial Statements, page 41
6. Please expand the narrative discussion in Note (f) to disclose whether
or not you
anticipate the effect of potential dilutive securities to be material.
If so, consider
providing an estimated range of the impact.
Business
International Revenues, page 43
7. Please reconcile the disclosure that international revenues in 2021
were 21.5% of total
combined revenues with that in Risk Factors on page 17 that foreign
revenues for 2021
accounted for 10.3% of your 2021 combined revenues.
Business, page 43
8. Please describe the operations of all of your subsidiaries including
your Hong Kong
operations. Please consider including an organizational chart.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources, page 48
9. Please refer to the last paragraph under this heading. Include within
MD&A a description
of your Revolving Credit Agreement to provide the material terms
including: identifying
the lender, total revolver amount, maturity date, interest rate,
amounts available and
outstanding as of the most recent balance sheet date, and the
repayment terms.
December 31, 2021 Audited Financial Statements
Note B. Summary of Significant Accounting Policies, page F-7
10. Refer to your discussion of revenue recognition and expand to disclose
that you have a
portfolio of two product groupings: Frequency Control and Spectrum
Control, as
discussed in the Business section. Disclose the difference between the
two product
groupings and discuss if the revenue recognition is the same or
different for each group.
Also, if there is more than one distinct performance obligation,
describe and discuss when
each performance obligation is satisfied. Please also give
consideration to further
disaggregating your revenue by these two product groupings.
General
James Tivy
FirstName LastNameJames Tivy
M-tron Industries, Inc.
Comapany
June 7, 2022NameM-tron Industries, Inc.
June 7,
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FirstName LastName
11. In an amendment to the filing, please update to include unaudited
interim financial
statements for the three months ended March 31, 2022 and 2021. In
addition, related
financial information, such as, but not limited to: Capitalization,
unaudited pro forma
financial statements and MD&A should be updated accordingly. Refer to
Rule 8-08 of
Regulation S-X for guidance.
12. Please include page numbers with your next filing.
13. Please disclose whether and how your business segments, products,
lines of service,
projects, or operations are materially impacted by supply chain
disruptions. For example,
discuss whether you have or expect to:
suspend the production, purchase, sale or maintenance of certain
items due to a lack
of raw materials, parts, or equipment; inventory shortages; closed
factories; reduced
headcount; or delayed projects;
experience labor shortages that impact your business;
experience cybersecurity attacks in your supply chain;
experience higher costs due to constrained capacity or increased
commodity prices or
challenges sourcing materials;
experience surges or declines in consumer demand for which you are
unable to
adequately adjust your supply;
be unable to supply products at competitive prices or at all due
to export
restrictions, sanctions, tariffs, trade barriers, or political or
trade tensions among
countries; or
be exposed to supply chain risk in light of Russia s invasion of
Ukraine and/or related
geopolitical tension or have sought to de-globalize your
supply chain.
Explain whether and how you have undertaken efforts to mitigate the
impact and where
possible quantify the impact to your business.
14. Please disclose whether you are subject to material cybersecurity
risks in your supply
chain based on third-party products, software, or services used in
your products, services,
or business and how a cybersecurity incident in your supply chain
could impact your
business. Discuss the measures you have taken to mitigate these risks.
15. Please describe the extent and nature of the role of the board of
directors in overseeing
cybersecurity risks, including in connection with the company s
supply
chain/suppliers/service providers.
16. We note your disclosure that your gross margins improved over last
year but were muted
by inflationary cost pressures. Please expand to identify the
principal factors contributing
to the inflationary pressures the company has experienced and clarify
the resulting impact
to the company.
17. Please update your disclosure to identify actions planned or taken, if
any, to mitigate
inflationary pressures.
James Tivy
M-tron Industries, Inc.
June 7, 2022
Page 5
You may contact Beverly Singleton, Staff Accountant at (202) 551-3328
or Kevin
Stertzel, Staff Accountant at (202) 551-3723 if you have questions regarding
comments on the
financial statements and related matters. Please contact Sherry Haywood, Staff
Attorney at (202)
551-3345 or Asia Timmons-Pierce, Special Counsel at (202) 551-3754 with any
other questions.
FirstName LastNameJames Tivy Sincerely,
Comapany NameM-tron Industries, Inc.
Division of
Corporation Finance
June 7, 2022 Page 5 Office of
Manufacturing
FirstName LastName