MACT 8-K
MachTen, Inc. (MACT)
8-K
2023-11-14
For: 2023-11-14
View Original
Added on
April 06, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 14, 2023
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(Exact Name of Registrant as Specified in Its Charter)
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(State or other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (855 )
642-4227
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(Former name or former address if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the follow provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act: None
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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N/A
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N/A
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N/A
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 4.01 |
Change in Registrant’s Certifying Accountant.
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(a) Dismissal of independent registered public accounting firm
On November 8, 2023, the Board of Directors of MachTen, Inc. (the “Company”) dismissed BDO USA, P.C. (“BDO”) as the Company’s independent registered public accounting
firm, effective Tuesday November 14, 2023, in anticipation of the appointment of FORVIS, LLP (“FORVIS”) as the Company’s new independent registered public accounting firm as discussed below. The decision to change the Company’s independent
registered public accounting firm from BDO to FORVIS was unanimously approved by the Board.
The reports of BDO on the consolidated financial statements of the Company for the fiscal years ended December 31, 2022 did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal year ended December 31, 2022 and the subsequent interim periods through September 30, 2023, there was no “disagreement” (as defined in Item
304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and BDO on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreement, if not resolved to
BDO’s satisfaction, would have caused BDO to make reference to the subject matter of the disagreements in its reports on the consolidated financial statements for such periods. During the fiscal year ended December 31, 2022 and the subsequent
interim periods through September 30, 2023, there were no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K, other than the continuing material weakness in the Company’s internal controls over financial reporting
previously reported. The material weakness was identified during the 2022 audit, and relate to lack of effective controls over the financial reporting process and insufficient information technology general controls in the areas of logical security
access in certain financially relevant systems.
In accordance with Item 304(a)(3) of Regulation S-K, the Company provided BDO with a copy of the disclosures contained in this Item 4.01 of this Form 8-K and requested
that BDO furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements contained herein. A copy of BDO’s letter, dated November 14, 2023, is filed as Exhibit 16.1 to this Form
8-K.
(b) Appointment of independent registered public accounting firm
As discussed above, the Committee appointed FORVIS as the Company’s new independent registered public accounting firm effective as of November 13, 2023.
During the Company’s two most recent years ended December 31, 2022 and December 31, 2021, neither the Company nor anyone on its behalf consulted FORVIS regarding
either: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to
the Company nor oral advice was provided to the Company that FORVIS concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either
the subject of a disagreement or reportable event as defined in Regulation S-K, Item 304(a)(1)(iv) and Item 304(a)(1)(v), respectively. The Board has authorized BDO to respond fully to all inquiries of FORVIS.
| Item 5.02. |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On November 14, 2023, the Board of Directors of MachTen, Inc. (the “Company”) accepted the resignation of Stephen J. Moore as the Company’s Interim Chief Financial
Officer. Stephen assumed the role of Interim CFO as part of a transition plan to ensure continuity prior to, during, and immediately after the spin-off of the Company from LICT Corporation. Stephen remains Vice President of Finance with LICT
Corporation.
Also on November 14, 2023, the Board announced that it had appointed Bridget Betcher to the role of Chief Accounting Officer. Bridget has been serving as a consultant to
the Company since July 2023, and has been instrumental in establishing financial controls and procedures.
For the last 24 years, Bridget has provided public accounting, audit, compliance, rate design, regulatory and governance reporting, and consulting services for the
broadband and telecommunications industries. From 2003 to June 2021, Bridget managed the financial and regulatory operations of a large tele-communications cooperative (with approximately 30,000 access lines) and its related companies. During her
tenure as a Chief Financial Officer she was involved in strategic planning, financial forecasting, budgeting, regulatory reporting, loan and grant applications, and internal control reviews. Bridget served two terms as President of her state
Telecommunications Accounting Association, is a licensed CPA in Tennessee and holds professional memberships in the American Institute of Certified Public Accountants (AICPA) and the Tennessee Society of CPAs (TSCPA).
| Item 8.01 |
Other Events.
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On November 13, 2023, the Company issued a press release related to its third quarter earnings. A copy is furnished as Exhibit 99.1
and is incorporated herein by reference.
| Item 9.01. |
Financial Statements and Exhibits.
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| (d) |
The following exhibits are being filed herewith:
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Exhibit
No.
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Description
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Letter from BDO dated November 14, 2023.
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Press Release dated November 13, 2023.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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MACHTEN, INC.
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Dated: November 14, 2023
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By:
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/s/ Daniel M. Miller
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Name:
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Daniel M. Miller
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Title:
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Chairman and Chief Executive Officer
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Exhibit 16.1
November 14, 2023
Securities and Exchange Commission
100 F Street N.E.
Washington, D.C. 20549
We have been furnished with a copy of the response to Item 4.01 of Form 8-K for the event that occurred on November 8, 2023, to be filed by our former
client, MachTen, Inc. We agree with the statements made in response to that Item insofar as they relate to our Firm.
Very truly yours,
/s/ BDO USA, P.C.
Exhibit 99.1
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For Immediate Release:
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Contact:
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Dan Miller
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Chief Executive Officer
(914) 921-5193
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MachTen, Inc. Reports Results for the Third Quarter 2023
Traverse City, Michigan, November 14, 2023 – MachTen, Inc. (“MACT”) (OTC: MACT) today reported its operating results for the quarter ended September 30, 2023.
“It’s an exciting time for MachTen! We completed the spin-off from LICT on August 31, and appreciate the unwavering efforts of our teams in Carney, Traverse City and
Rye. While our 3rd quarter earnings reflect a strong foundation, we have very significant opportunities to improve operating efficiencies as a standalone public company with a focused management team. We are well positioned to benefit
from industry trends, and have a clear plan for meaningful growth in the years ahead,” commented Dan Miller, Chief Executive Officer.
Financial Highlights
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(In thousands)
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Three Months Ended
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September 30, 2023
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September 30, 2022
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Regulated revenue
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$
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3,079
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$
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3,120
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Non-regulated revenue
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$
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1,052
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$
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941
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Operating profit
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$
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1,553
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$
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1,502
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Net income
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$
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1,090
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$
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1,082
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Revenue
Regulated revenue was $3.08 million in the 3rd quarter of 2023, down slightly from the prior year, attributable to the elimination of a Michigan Universal
Service Fund (USF) program in 2022.
Regulated revenue included $2.2 million from the Federal Communications Commission’s Alternative Connect America Model (“A-CAM”) program. As previously disclosed, ACAM
will be replaced by Enhanced-ACAM (“E-ACAM”) beginning in January 2024. Annual support from E-ACAM of approximately $9.7 million for 15 years, through 2038, will replace annual ACAM support of $8.7 million that was scheduled to expire in 2028.
Local access revenue of $355,000 in the 3rd quarter was generated from providing services to 3,971 access lines.
Non-regulated revenue increased to $1.05 million in the 3rd quarter of 2023, up from $941,000 in the prior year period. The increase is attributable to
growth in fiber-based broadband subscribers in expansion markets including Escanaba, Traverse City and Bergland. Fiber passings in competitive markets continue to increase, and were approximately 4,200 as of September 30. Fiber-based subscribers
increased to 900 as of quarter-end, up from 753 on June 30, and 428 a year ago.
Expenses
The cost of revenue for the 3rd quarter increased to $1.43 million from $1.42 million in the prior year, primarily attributable to additional staffing,
sales and marketing expense. General and administrative costs, along with depreciation expense, remained relatively consistent with the year ago period.
Balance Sheet
As of September 30, 2023, cash and cash equivalents were $1.57 million, compared with $1.2 million as of December 31, 2022. Prior to
being spun-off from LICT Corporation, MachTen declared a $15 million distribution to its former parent. While MachTen continues to evaluate financing options that will facilitate payment of the distribution, and address long-term investment
priorities, interest will be paid to LICT at a rate of SOFR + 1.5% under the terms of a promissory note dated August 30, 2023.
Capital Investments
MachTen and its’ operating subsidiaries are in the early stages of significant capital investments that coincide with participation in
E-CAM, while also targeting attractive returns in strategic growth markets.
A $4 million project being funded through a 50% Connecting Michigan Communities 3.0 grant began this summer in Wallace and Carney. Once
complete, this grant will bring fiber-based services to more than 700 homes and businesses.
Construction will begin in 2024 on several ReConnect America 3 (“RC3”) projects that will bring fiber-based service to more than 2,500
locations over 600 miles. These grants were awarded by the United States Department of Agriculture’s Rural Utility Service, and will impact areas that are considered amongst the highest cost to serve. On a combined basis, the RC3 grant projects may
have a total cost of approximately $85 million over a 5-year period, inclusive of a matching investment from MachTen of up to $16 million.
The deployment of fiber-based broadband services in the nineteen incumbent exchanges that benefit from E-CAM support will also accelerate
in 2024. MachTen is committed to delivering at least 100 Mbps download / 20 Mbps upload speeds to 8,900 locations in its rural network, bringing state of the art communications services to the communities of Northern Michigan.
About MachTen, Inc.
MachTen is a holding company for Upper Peninsula Telephone Company (UPTC), Michigan Central Broadband Company (MCBC), and Alpha Communications. MachTen’s subsidiaries
provide broadband internet access and communications services, including voice, video, home automation and managed hosting services. Investors should refer to our 10-Q and other filings that have been posted to www.machteninc.com
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Our disclosure and analysis in this press release, which do not present historical information, contain “forward-looking statements” within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. Forward-looking statements convey our current expectations or forecasts of future events. You can identify these statements because they do not relate strictly to historical or current facts. They
use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning. They also appear in any discussion of future operating or financial performance. In particular, these
include statements relating to future actions, future performance of our products, expenses, the outcome of any legal proceedings, and financial results. Although we believe that we are basing our expectations and beliefs on reasonable assumptions
within the bounds of what we currently know about our business and operations, the economy, and other conditions, there can be no assurance that our actual results will not differ materially from what we expect or believe. Therefore, you should
proceed with caution in relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.
Forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors, some of which are listed below, that are difficult
to predict and could cause actual results and outcomes to differ materially from any future results or outcomes expressed or implied by such forward-looking statements. Some of the factors that may cause our actual results to differ from our
expectations include risks associated with the duration and scope of the ongoing coronavirus pandemic resulting in volatile market conditions, a decline in the securities markets that adversely affect our assets under management, negative
performance of our products, the failure to perform as required under our investment management agreements, and a general downturn in the economy that negatively impacts our operations. We also direct your attention to the more specific discussions
of these and other risks, uncertainties and other important factors contained in our Annual Report and other public filings. Other factors that could cause our actual results to differ may emerge from time to time, and it is not possible for us to
predict all of them. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations whether as a result of new information, future developments or otherwise, except as
may be required by law.
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MachTen, Inc. and Subsidiaries
Condensed Consolidated Statements of Financial Condition
(in thousands, except per share data)
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September,
2023
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December 31,
2022
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(Unaudited)
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(Audited)
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Assets
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Cash and cash equivalents
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$
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1,567
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$
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1,202
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Accounts receivable
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906
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868
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Materials and supplies
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2,505
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1,408
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Other current assets
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474
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507
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Current assets
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$
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5,452
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$
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3,985
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Property, plant and equipment, net
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23,707
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20,818
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Right-of-use assets, net
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679
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747
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Goodwill
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100
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100
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Other noncurrent assets
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66
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70
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Total assets
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$
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30,004
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$
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25,720
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Liabilities and Shareholders' Equity
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Current liabilities:
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Trade accounts payable
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$
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92
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$
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3,362
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Note payable
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$
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15,000
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$
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-
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Accrued liabilities
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3,112
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1,157
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Current operating lease liability
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78
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74
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Total current liabilities
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18,282
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4,593
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Deferred income taxes
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2,486
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2,726
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Long term operating lease liability
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644
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710
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Asset retirement obligations
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144
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136
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Other noncurrent liabilities
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26
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26
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Total liabilities
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21,582
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8,191
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Shareholders' equity
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Additional paid-in capital
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23,009
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Dividends declared
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(15,000
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)
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Retained earnings
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410
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17,529
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Total shareholders' equity
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8,422
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17,529
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Total liabilities and shareholders' equity
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$
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30,004
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$
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25,720
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Basic shares outstanding
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3,172
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3,172
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MachTen, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
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Three Months Ended
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Sept 30,
2023
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June 30,
2023
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Revenue:
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Regulated revenue
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$
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3,079
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$
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3,120
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Non-regulated revenue
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1,052
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941
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Total revenue
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4,131
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4,061
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Operating Costs:
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Cost of revenue
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1,426
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1,420
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General and administrative
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639
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610
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Depreciation and accretion
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513
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529
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Total costs
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2,578
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2,559
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Operating income
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1,553
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1,502
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Other Income (Expense):
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Interest expense
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(88
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-
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Investment income
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4
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3
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Total non-operating income / (loss)
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(84
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3
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Income before provision for income taxes
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1,469
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1,505
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Provision for income taxes
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(379
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(423
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)
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Net income
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$
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1,090
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$
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1,082
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Earnings per share attributable to common stockholders:
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Basic
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$
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0.34
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$
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0.34
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Diluted
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$
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0.34
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$
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0.34
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Weighted average shares outstanding:
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Basic
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3,172
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3,172
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Diluted
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3,172
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3,172
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