MFC’s Cable
TV product sales increased $58,637 or
18.8% to $370,369 for the three months
ended June 30, 2012 when compared to Cable
TV product sales of $311,732 during the
same period last year. Despite the quarter
over quarter increase, management
continues to project a decrease in demand
for 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
will be 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 $8,623 or 30.0% to
$37,394 for the three months ended June
30, 2012 when compared to sales of $28,771
during the same period last year. The
increase can be attributed to an increase
in demand for UHF Broadcast products which
are primarily sold to system integrators
for rural communities.
MFC's sales order backlog equaled
$394,680 at June 30, 2012 compared to
sales order backlog of $671,978 at June
30, 2011. 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. Approximately 70% of
the total sales order backlog at June 30,
2012 is scheduled to ship by September 30,
2012.
Gross profit for the three months
ended June 30, 2012 equaled $434,143, a
decrease of $7,661 or 1.7%, when compared
to gross profit of $441,804 for the three
months ended June 30, 2011. The dollar
decrease in gross profit can primarily be
attributed to the lower sales volume this
year when compared to the same period last
year. As a percentage of sales, gross
profit equaled 37.8% for the three months
ended June 30, 2012 compared to 37.5% for
the three months ended June 30, 2011.
Selling, general and
administrative (SGA) expenses for the
three months ended June 30, 2012 equaled
$381,294, a decrease of $14,178 or 3.6%,
when compared to SGA expenses of $395,472
for the three months ended June 30, 2011.
The decrease can primarily be attributed
to a decrease in payroll expense when
compared to the same period last year. As
a percentage of sales, SGA expenses
equaled 33.2% for the three months ended
June 30, 2012 when compared to 33.5% for
the three months ended June 30,
2011.
The Company recorded income from
operations of $52,849 for the three months
ended June 30, 2012 compared to income
from operations of $46,332 for the three
months ended June 30, 2011. The increase
in operating income can primarily be
attributed to the lower SGA expenses this
year when compared to the same period last
year.
The Company recorded a benefit
for income taxes of $38,582 for the three
months ended June 30, 2012 compared to $0
for the three months ended June 30, 2011.
The benefit for the current year can be
attributed to a New York State qualified
research expenses tax credit which was
received in July of 2012. We have not
recognized any (benefit) provision for
income taxes. 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.
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