10-Q

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 December 31, 2012

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 -    2,585,321 shares as of February 1, 2013.

MICROWAVE FILTER COMPANY, INC.
Form 10-Q

Index

Item	Page
Part I Financial Information
Item 1. Financial Statements	3
Consolidated Balance Sheets (unaudited)	3
Consolidated Statements of Operations (unaudited)	4
Consolidated Statements of Cash Flows (unaudited)	5
Notes to Consolidated Financial Statements (unaudited)	6-7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	8-12
Item 3. Quantitative and Qualitative Disclosures About Market Risk	13
Item 4. Controls and Procedures	14
Part II Other Information	15
Signatures	16

            



<PAGE>                                2

PART I. - FINANCIAL INFORMATION

Microwave Filter Company and Subsidiaries
 Consolidated Balance Sheets (unaudited)

                    December 31, 2012 and September 30, 2012

	December 31, 2012					September 30, 2012
Assets
Current Assets:
Cash and cash equivalents		$		860,596			$		1,023,017
Accounts receivable-trade, net of
allowance for doubtful accounts
of $26,000 and $26,000				162,963					263,385
Inventories, net of obsolete inventory reserve
of $408,340 and $408,340				553,037					529,075
Prepaid expenses and other current assets				98,886					111,342
Total current assets				1,675,482					1,926,819
Property, plant and equipment, net				704,441					672,525
Total assets		$		2,379,923			$		2,599,344
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$		114,810			$		92,325
Customer deposits				40,204					30,563
Accrued payroll and related expenses				33,418					51,289
Accrued compensated absences				164,667					172,198
Other current liabilities				30,188					31,308
Total current liabilities				383,287					377,683
Total liabilities				383,287					377,683
Stockholders' Equity:
Common stock, $.10 par value
Authorized 5,000,000 shares, Issued
4,324,140 shares in 2013 and 2012,
Outstanding 2,585,321 shares in 2013
and 2012				432,414					432,414
Additional paid-in capital				3,248,706					3,248,706
Retained earnings				6,988					232,013
Common stock in treasury, at cost
1,738,819 shares in 2013 and 2012			(	1,691,472	)			(	1,691,472	)
Total stockholders' equity				1,996,636					2,221,661
Total liabilities and  stockholders' equity		$		2,379,923			$		2,599,344

<FN>
See Accompanying Notes to Consolidated Financial Statements




<PAGE>                             3

Microwave Filter Company and Subsidiaries
Consolidated Statements of Operations (unaudited)
For the Three Months Ended December 31, 2012 and 2011

			Three months ended
			December 31,
			2012			2011
Net sales	$		771,244		$	1,317,207
Cost of goods sold			568,044			813,995
Gross profit			203,200			503,212
Selling, general and administrative expenses			430,415			421,970
(Loss) income from operations		(	227,215	)		81,242
Other income (net)			2,190			21,575
(Loss) income before income taxes		(	225,025	)		102,817
Provision (benefit) for income taxes			0			0
NET (LOSS) INCOME	$	(	225,025	)	$	102,817
Per share data:
Basic and diluted (loss) earningsper share	$	(	0.09	)	$	0.04
Shares used in computing net (loss)
earnings per share:			2,585,321			2,586,227

<FN>
See Accompanying Notes to Consolidated Financial Statements

<PAGE>                             4   

Microwave Filter Company and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)

For the Three Months Ended December 31, 2012 and 2011

			Three months ended
			December 31
			2012				2011
Cash flows from operating activities:
Net (loss) income	$	(	225,025	)	$		102,817
Adjustments to reconcile net (loss) income
to net cash provided by (used in)
operating activities:
Depreciation			41,337				37,583
Gain on sale of fixed assets			0			(	20,000	)
Change in assets and liabilities:
Accounts receivable			100,422				130,368
Federal and state income tax recoverable			0				25,402
Inventories		(	23,962	)			49,870
Prepaid expenses and other assets			12,456				12,247
Accounts payable and customer deposits			32,126			(	37,811	)
Accrued payroll, compensated absences
and related expenses		(	25,402	)		(	39,691	)
Other current liabilities		(	1,120	)		(	51,899	)
Net cash (used in) provided by
operating activities		(	89,168	)			208,886
Cash flows from investing activities:
Capital expenditures		(	73,253	)		(	189,078	)
Proceeds from sale of fixed assets			0				20,000
Net cash (used in) provided by
investing activities		(	73,253	)		(	169,078	)
Net (decrease) increase in cash
and cash equivalents		(	162,421	)			39,808
Cash and cash equivalents
at beginning of period			1,023,017				1,258,885
Cash and cash equivalents
at end of period	$		860,596		$		1,298,693
Supplemental Schedule of Cash Flow Information:
Income taxes paid	$		0		$		15,000

<FN>


See Accompanying Notes to Consolidated Financial Statements



<PAGE>                          5

MICROWAVE FILTER COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  December 31, 2012

Note 1. Summary of Significant Accounting Policies   

   The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-K. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. 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 three month period ended December 31, 2012 are not necessarily indicative of the results that may be expected for the year ended September 30, 2013. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10K for the year ended September 30, 2012.

Note 2. Industry Segment Data

  The Company's business 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. 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 market.

  Inventories net of reserve for obsolescence consisted of the following:

December 31, 2012 September 30, 2012

Raw materials and stock parts	$	468,732	$	455,000
Work-in-process		14,170		13,554
Finished goods		70,135		60,521
	$	553,037	$	529,075

  The Company's reserve for obsolescence equaled $408,340 at December 31, 2012 and September 30, 2012.

<PAGE>                             6
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 deferred tax assets.

  FASB ASC 740-10 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 determined it has no uncertain tax positions and therefore no amounts are recorded.

Note 5. Legal Matters

  The State of New York Workers’ Compensation Board has commenced an action against Microwave Filter Company, Inc. to recover for an underfunded self insured program that Microwave Filter Company, Inc. participated in. Due to the relatively short period of time Microwave Filter Company, Inc. participated in the program and the limited amount of potential exposure, we do not expect the resolution of this action will have a material adverse effect on our financial condition, results of operations or cash flows. The Company has accrued $12,000 for this action in other current liabilities.


Note 6. Fair Value of Financial Instruments

  The carrying values of the Company cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturity of those instruments.

   The Company currently does not trade in or utilize derivative financial instruments.

Note 7. Significant Customers

  Sales to one customer represented approximately 22% of total sales for the three months ended December 31, 2012 compared to 16% of total sales for the three months ended December 31, 2011.

Note 8. Recent Accounting Pronouncements

  None applicable.  

<PAGE>                             7

MICROWAVE FILTER COMPANY, INC.

MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

  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. (MFC) 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 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, and taxes. Note 1 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012 describes the significant accounting policies used in preparation of the 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.

  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.

  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 market. 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.

<PAGE>                              8
  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.

  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.

<PAGE>                               9

RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2012 vs. THREE MONTHS ENDED DECEMBER 31, 2011.

The following table sets forth the Company's net sales by major product group for the three months ended December 31, 2012 and 2011.

		Quarter ended		Quarter ended
Product group	Dec. 31, 2012		Dec. 31, 2011
Microwave Filter (MFC):
RF/Microwave	$	324,127	$	525,932
Cable TV		183,390		433,447
Satellite		243,130		331,354
Broadcast TV		18,627		25,128
Niagara Scientific (NSI):		1,970		1,346
Total	$	771,244	$	1,317,207
Sales backlog at December 31	$	325,852	$	303,666

  Net sales for the three months ended December 31, 2012 equaled $771,244, a decrease of $545,963 or 41.4%, when compared to net sales of $1,317,207 for the three months ended December 31, 2011. The Company has been experiencing a slowdown in quote activity and orders which management attributes to the specific decrease in the economic activity in the military/aerospace sector and related national and international markets. It is believed that the documented general slowdown in business capital expenditures has exacerbated the turn down in MFC sales activity. Many of MFC products are utilized in capital projects such as new satellite communication systems and cable plant expansions. The Company is actively sourcing complimentary products to distribute to augment sales as well as additions to our traditional product lines.    

  MFC’s RF/Microwave product sales decreased $201,805 or 38.4% to $324,127 for the three months ended December 31, 2012 when compared to RF/Microwave product sales of $525,932 during the same period last year. MFC’s RF/Microwave products are sold primarily to Original Equipment Manufacturers that serve the mobile radio, commercial communications and defense electronics markets. 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. Sales to one OEM customer represented approximately 22% of total sales for the quarter ended December 31, 2012 compared to approximately 16% of total sales for the quarter ended December 31, 2011.

  MFC’s Cable TV product sales decreased $250,057 or 57.7% to $183,390 for the three months ended December 31, 2012 when compared to Cable TV product sales of $433,447 during the same period last year. Management has projected 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.

<PAGE>                             10

  MFC’s Satellite product sales decreased $88,224 or 26.6% to $243,130 for the three months ended December 31, 2012 when compared to Satellite product sales of $331,354 during the same period last year. The decrease can be attributed to a decrease in demand for the Company’s filters which suppress strong out-of-band interference caused by military and civilian radar systems and other sources. Management attributes the decrease in sales to global economic conditions. Although economic conditions do impact sales, management expects demand for these types of filters to continue with the proliferation of earth stations world wide and increased sources of interference.

  MFC’s Broadcast TV/Wireless Cable product sales decreased $6,501 or 25.9% to $18,627 for the three months ended December 31, 2011 when compared to sales of $25,128 during the same period last year. The decrease can be attributed to a decrease in demand for UHF Broadcast products which are primarily sold to system integrators for rural communities.

  MFC's sales order backlog equaled $325,852 at December 31, 2012 compared to sales order backlog of $303,666 at December 31, 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. The total sales order backlog at December 31, 2012 is scheduled to ship by September 30, 2013.

  Gross profit for the three months ended December 31, 2012 equaled $203,200, a decrease of $300,012 or 59.6%, when compared to gross profit of $503,212 for the three months ended December 31, 2011. As a percentage of sales, gross profit decreased to 26.3% for the three months ended December 31, 2012 compared to 38.2% for the three months ended December 31, 2011.The decrease in gross profit can primarily be attributed to fixed manufacturing overhead costs and lower sales volume this year when compared to the same period last year. 

  Selling, general and administrative (SGA) expenses for the three months ended December 31, 2012 equaled $430,415, an increase of $8,445 or 2.0%, when compared to SGA expenses of $421,970 for the three months ended December 31, 2011. As a percentage of sales, SGA expenses increased to 55.8% for the three months ended December 31, 2012 when compared to 32.0% for the three months ended December 31, 2011 primarily due to the lower sales volume this year when compared to the same period last year.

  The Company recorded a loss from operations of $227,215 for the three months ended December 31, 2012 compared to income from operations of $81,242 for the three months ended December 31, 2011. The decrease in operating income can primarily be attributed to the lower sales volume this year when compared to the same period last year.

  Other income for the three months ended December 31, 2012 equaled $2,190, a decrease of $19,385, when compared to other income of $21,575 for the three months ended December 31, 2011. The decrease can be attributed to a $20,000 gain on the sale of a fixed asset during the quarter ended December 31, 2011.

  The provision (benefit) for income taxes equaled $0 for the three months ended December 31, 2012 and December 31, 2011. We have not recognized any provision for income taxes because taxable income was reduced by bonus tax basis depreciation and offset by a reduction in our deferred tax asset valuation reserve. 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 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.

<PAGE>                             11

Off-Balance Sheet Arrangements

  At December 31, 2012 and 2011, 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.


LIQUIDITY and CAPITAL RESOURCES

	December 31, 2012	September 30, 2012
Cash & cash equivalents	$860,596	$1,023,017
Working capital	$1,292,195	$1,549,136
Current ratio	4.37 to 1	5.10 to 1
Long-term debt	$0	$0

  Cash and cash equivalents increased $162,421 to $860,596 at December 31, 2012 when compared to cash and cash equivalents of $1,023,017 at September 30, 2012. The decrease was a result of $89,168 in net cash used in operating activities and $73,253 in net cash used for capital expenditures.

  The net decrease in accounts receivable of $100,422 at December 31, 2012 when compared to September 30, 2012 can primarily be attributed to the lower shipments during the quarter ended December 31, 2012 when compared to the quarter ended September 30, 2012. Net sales for the quarter ended December 31, 2012 equaled $771,244 compared to net sales of $968,356 for the quarter ended September 30, 2012.

  The increase in inventories of $23,962 at December 31, 2012 when compared to September 30, 2012 can be attributed to the higher sales order backlog at December 31, 2012 when compared to September 30, 2012, our customer's scheduled delivery dates and the lower than expected sales volume during the quarter ended December 31, 2012. At December 31, 2012, the Company's total backlog of orders, which represents firm orders from customers, equaled $325,852 compared to $272,318 at September 30, 2012.
 
  The increase in accounts payable of $22,485 at December 31, 2012 when compared to September 30, 2012 can primarily be attributed to the higher inventories at December 31, 2012 when compared to September 30, 2012.

   At December 31, 2012, the Company had unused aggregate lines of credit totaling $750,000 collateralized by all inventory, equipment and accounts receivable.

  Management believes that its working capital requirements for the forseeable future will be met by its existing cash balances, future cash flows from operations and its current credit arrangements.

<PAGE>                             12
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 2012 Annual Report and Form 10-K for the fiscal year ended September 30, 2012 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.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  There has been no significant change in our exposures to market risk during the three months ended December 31, 2012. For a detailed discussion of market risk, see our Annual Report on Form 10-K for the fiscal year ended September 30, 2012, Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk.


<PAGE>                             13
ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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.

  This Quarterly Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm.

<PAGE>                             14
                     PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         The State of New York Workers’ Compensation Board has commenced an action   
         against Microwave Filter Company, Inc. to recover for an underfunded self
         insured program that Microwave Filter Company, Inc. participated in. Due
         to the relatively short period of time Microwave Filter Company, Inc.
         participated in the program and the limited amount of potential exposure,
         we do not expect the resolution of this action will have a material adverse
         effect on our financial condition, results of operations or cash flows. The
         Company has accrued $12,000 for this action in other current liabilities.

Item 1A. Risk Factors

         Not applicable.

Item 2.  Changes in Securities

         None during this reporting period.

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 Carl F. Fahrenkrug
 
            31.2  Section 13a-14(a)/15d-14(a) Certification of Richard L. Jones

            32.1  Section 1350 Certification of Carl F. Fahrenkrug

            32.2  Section 1350 Certification of Richard L. Jones

 


<PAGE>                            15

    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.


February 14, 2013             Carl F. Fahrenkrug
(Date)                              --------------------------
                                          Carl F. Fahrenkrug
                                          Chief Executive Officer

February 14, 2013               Richard L. Jones
(Date)                               --------------------------
                                            Richard L. Jones
                                           Chief Financial Officer

<PAGE>                             16

EX-31

Exhibit 31.1

RULE 13a-14(a) CERTIFICATION

 I, Carl F. Fahrenkrug, certify that:

1. I have reviewed this 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

<PAGE>

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:  February 14, 2013                        /s/ Carl F. Fahrenkrug
                  
                                                                    Carl F. Fahrenkrug
                                                                    Chief Executive Officer  

<PAGE>
Exhibit 31.2

RULE 13a-14(a) CERTIFICATION

 I, Richard L. Jones, certify that:

1. I have reviewed this 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

<PAGE>

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:  February 14, 2013                        /s/ Richard L. Jones
                  
                                                                    Richard L. Jones
                                                                    Chief Financial Officer  

EX-32

 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

I, Carl F. Fahrenkrug, Chief Executive Officer of Microwave Filter Company, Inc. (the Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) the quarterly Report on Form 10-Q of the Company for the period ended December 31, 2012 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d); 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: February 14, 2013                      /s/ Carl F. Fahrenkrug
                                                                    Carl F. Fahrenkrug
                                                                    Chief Executive Officer


<page>
                                                                    Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard L. Jones, Chief Financial Officer of Microwave Filter Company, Inc. (the Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) the quarterly Report on Form 10-Q of the Company for the period ended December 31, 2012 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d); 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: February 14, 2013                      /s/ Richard L. Jones
                                                                    Richard L. Jones
                                                                    Chief Financial Officer

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Income Taxes

3 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income Taxes

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 deferred tax assets.

  FASB ASC 740-10 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 determined it has no uncertain tax positions and therefore no amounts are recorded.

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Inventories

3 Months Ended

Dec. 31, 2012

Inventories [Abstract]

Inventories

Note 3. Inventories                  

  Inventories are stated at the lower of cost determined on the first-in, first-out method or market.

Inventories net of reserve for obsolescence consisted of the following:

December 31, 2012
September 30, 2012

Raw materials and stock parts	$	468,732	$	455,000
Work-in-process		14,170		13,554
Finished goods		70,135		60,521
	$	553,037	$	529,075

  The Company's reserve for obsolescence equaled $408,340 at December 31, 2012 and September 30, 2012.

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Consolidated Balance Sheets (USD $)	Dec. 31, 2012	Sep. 30, 2012
Assets
Cash and cash equivalents	$ 860,596	$ 1,023,017
Accounts receivable-trade, net of allowance for doubtful accounts of $26,000 and $26,000	162,963	263,385
Inventories, net of obsolete inventory reserve of $408,340 and $408,340	553,037	529,075
Prepaid expenses and other current assets	98,886	111,342
Total current assets	1,675,482	1,926,819
Property, plant and equipment, net	704,441	672,525
Total assets	2,379,923	2,599,344
Liabilities and Stockholders' Equity
Accounts payable	114,810	92,325
Customer deposits	40,204	30,563
Accrued payroll and related expenses	33,418	51,289
Accrued compensated absences	164,667	172,198
Other current liabilities	30,188	31,308
Total current liabilities	383,287	377,683
Total liabilities	383,287	377,683
Stockholders' Equity:
Common stock, $.10 par value Authorized 5,000,000 shares, Issued 4,324,140 shares in 2013 and 2012, Outstanding 2,585,321 shares in 2013 and 2012	432,414	432,414
Additional paid-in capital	3,248,706	3,248,706
Retained earnings	6,988	232,013
Common stock in treasury, at cost, 1,738,819 shares in 2013 and 2012	(1,691,472)	(1,691,472)
Total stockholders' equity	1,996,636	2,221,661
Total liabilities and stockholders' equity	$ 2,379,923	$ 2,599,344

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Summary Of Significant Accounting Policies

3 Months Ended

Dec. 31, 2012

Summary Of Significant Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

Note 1. Summary of Significant Accounting Policies   

   The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-K. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. 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 three month period ended December 31, 2012 are not necessarily indicative of the results that may be expected for the year ended September 30, 2013. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10K for the year ended September 30, 2012.

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Industry Segment Data

3 Months Ended

Dec. 31, 2012

Industry Segment Data [Abstract]

Industry Segment Data

Note 2. Industry Segment Data

  The Company's business 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. Markets served include cable television, television and radio broadcast, satellite broadcast, mobile radio, commercial communications and defense electronics. 

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Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2012	Sep. 30, 2012
Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 26,000	$ 26,000
Inventories, obsolete inventory reserve	$ 408,340	$ 408,340
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	2,585,321	2,585,321
Treasury stock, shares	1,738,819	1,738,819

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Significant Customers (Details)	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Significant Customers [Abstract]
Percentage of sales to one customer	22.00%	16.00%

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Document And Entity Information	3 Months Ended
	Dec. 31, 2012	Feb. 01, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Entity Filer Category	Smaller Reporting Company
Entity Registrant Name	MICROWAVE FILTER CO INC /NY/
Entity Central Index Key	0000716688
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding		2,585,321

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Consolidated Statements Of Operations (USD $)	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Consolidated Statements Of Operations [Abstract]
Net sales	$ 771,244	$ 1,317,207
Cost of goods sold	568,044	813,995
Gross profit	203,200	503,212
Selling, general and administrative expenses	430,415	421,970
(Loss) income from operations	(227,215)	81,242
Other income (net)	2,190	21,575
(Loss) income before income taxes	(225,025)	102,817
Provision (benefit) for income taxes	0	0
NET (LOSS) INCOME	$ (225,025)	$ 102,817
Per share data:
Basic and diluted (loss) earnings per share	$ (0.09)	$ 0.04
Shares used in computing net (loss) earnings per share:
Basic and diluted	2,585,321	2,586,227

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Significant Customers

3 Months Ended

Dec. 31, 2012

Significant Customers [Abstract]

Significant Customers

Note 7. Significant Customers

Sales to one customer represented approximately 22% of total sales for the three months ended December 31, 2012 compared to 16% of total sales for the three months ended December 31, 2011.

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Fair Value Of Financial Instruments

3 Months Ended

Dec. 31, 2012

Fair Value Of Financial Instruments [Abstract]

Fair Value Of Financial Instruments

Note 6. Fair Value of Financial Instruments

  The carrying values of the Company cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturity of those instruments.

   The Company currently does not trade in or utilize derivative financial instruments.

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Inventories (Schedule Of Inventories Net Of Provision For Obsolescence) (Details) (USD $)	Dec. 31, 2012	Sep. 30, 2012
Inventories [Abstract]
Raw materials and stock parts	$ 468,732	$ 455,000
Work-in-process	14,170	13,554
Finished goods	70,135	60,521
Inventories, net	553,037	529,075
Reserve for obsolescence	$ 408,340	$ 408,340

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Recent Accounting Pronouncements

3 Months Ended

Dec. 31, 2012

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

Note 8. Recent Accounting Pronouncements

None applicable.

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Inventories (Tables)

9 Months Ended

Jun. 30, 2012

Inventories [Abstract]

Schedule Of Inventories Net Of Provision For Obsolescence

Raw materials and stock parts	$	468,732	$	455,000
Work-in-process		14,170		13,554
Finished goods		70,135		60,521
	$	553,037	$	529,075

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Legal Matters (Details) (USD $)	Dec. 31, 2012
Legal Matters [Abstract]
Accrued action in other current liabilities	$ 12,000

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Consolidated Statements Of Cash Flows (USD $)	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Cash flows from operating activities:
Net (loss) income	$ (225,025)	$ 102,817
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation	41,337	37,583
Gain on sale of fixed assets	0	(20,000)
Change in assets and liabilities:
Accounts receivable	100,422	130,368
Federal and state income tax recoverable	0	25,402
Inventories	(23,962)	49,870
Prepaid expenses and other assets	12,456	12,247
Accounts payable and customer deposits	32,126	(37,811)
Accrued payroll, compensated absences and related expenses	(25,402)	(39,691)
Other current liabilities	(1,120)	(51,899)
Net cash (used in) provided by operating activities	(89,168)	208,886
Cash flows from investing activities:
Capital expenditures	(73,253)	(189,078)
Proceeds from sale of fixed assets	0	20,000
Net cash (used in) provided by investing activities	(73,253)	(169,078)
Net (decrease) increase in cash and cash equivalents	(162,421)	39,808
Cash and cash equivalents at beginning of period	1,023,017	1,258,885
Cash and cash equivalents at end of period	860,596	1,298,693
Supplemental Schedule of Cash Flow Information:
Income taxes paid	$ 0	$ 15,000

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Legal Matters

3 Months Ended

Dec. 31, 2012

Legal Matters [Abstract]

Legal Matters

Note 5. Legal Matters

The State of New York Workers' Compensation Board has commenced an action against Microwave Filter Company, Inc. to recover for an underfunded self insured program that Microwave Filter Company, Inc. participated in. Due to the relatively short period of time Microwave Filter Company, Inc. participated in the program and the limited amount of potential exposure, we do not expect the resolution of this action will have a material adverse effect on our financial condition, results of operations or cash flows. The Company has accrued $12,000 for this action in other current liabilities.