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 December31, 2014

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 -    2,581,547 shares as of January31, 2015.

MICROWAVE FILTER COMPANY, INC.
Form 10-Q

Index

Item	Page
Part I Financial Information
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets (unaudited)	3
Condensed Consolidated Statements of Operations (unaudited)	5
Condensed Consolidated Statements of Cash Flows (unaudited)	6
Notes to Condensed Consolidated Financial Statements (unaudited)	8-10
Item 2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations	11 -1 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk	17
Item 4. Controls and Procedures	17
Part II Other Information	18
Signatures	19

<PAGE>                                2

PART I. - FINANCIAL INFORMATION

Microwave Filter Company and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)

December 31, 2014 September 30, 2014

Assets
Current Assets:
Cash and cash equivalents	$	1,004,705	$	1,081,567
Accounts receivable-trade, net of
allowance for doubtful accounts
of $4,000 and $4,000		361,537		377,473
Inventories, net		467,082		473,839
Prepaid expenses and other current assets		70,830		89,721
Total current assets		1,904,154		2,022,600
Property, plant and equipment, net		486,524		474,694
Total assets	$	2,390,678	$	2,497,294
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	73,747	$	73,293
Customer deposits		27,212		32,431
Accrued payroll and related expenses		55,084		50,234
Accrued compensated absences		152,150		148,903
Notes payable - short term		43,080		42,593
Other current liabilities		27,662		31,954
Total current liabilities		378,935		379,408
Notes payable -long term		399,211		410,178
Total other liabilities		399,211		410,178
Total liabilities		778,146		789,586

<PAGE>                                3

Stockholders' Equity:
Common stock, $.10 par value
Authorized 5,000,000 shares,
Issued 4,324,140 shares in 2015 and 2014,
Outstanding 2,581,547 shares in 2015 and
2,583,507 in 2014			432,414				432,414
Additional paid-in capital			3,248,706				3,248,706
Retained deficit		(	374,919	)		(	280,893	)
Common stock in treasury, at cost
1,742,593 shares in 2015 and
1,740,633 shares in 2014		(	1,693,669	)		(	1,692,519	)
Total stockholders' equity			1,612,532				1,707,708
Total liabilities and  stockholders' equity	$		2,390,678		$		2,497,294

<FN>
See Accompanying Notes to Condensed Consolidated Financial Statements

<PAGE>                                4

Microwave Filter Company and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

			Three months ended
			December 31,
			2014				2013
Net sales	$		849,927		$		655,447
Cost of goods sold			539,813				456,913
Gross profit			310,114				198,534
Selling, general and
administrative expenses			400,188				366,547
Loss from operations		(	90,074	)		(	168,013	)
Other income (expense), net		(	3,952	)		(	3,881	)
Loss before income taxes		(	94,026	)		(	171,894	)
(Benefit) provision
for income taxes			0				0
Net loss	$	(	94,026	)	$	(	171,894	)
Net Loss Per Common Share
Basic and diluted loss per share	$	(	0.04	)	$	(	0.07	)
Weighted Average Common Shares
Outstanding
Shares used in computing net loss
per share:			2,583,025				2,585,086

<FN>
See Accompanying Notes to Condensed Consolidated Financial Statements

<PAGE>                                5

Microwave Filter Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

			Three months ended
			December 31
			2014				2013
Cash flows from operating activities:
Net loss	$	(	94,026	)	$	(	171,894	)
Adjustments to reconcile net loss
to net cash provided by
(used in) operating activities:
Depreciation			26,769				32,702
Change in operating assets and liabilities:
Accounts receivable-trade			15,936				53,916
Federal and state income
tax recoverable			0				37,085
Inventories			6,757				9,894
Prepaid expenses and other assets			18,891			(	24,194	)
Accounts payable and customer
deposits		(	4,765	)			76,021
Accrued payroll and related expenses
and compensated absences			8,097				3,725
Other current liabilities		(	4,292	)			475
Net cash (used in) provided by
operating activities		(	26,633	)			17,730
Cash flows from investing activities:
Property, plant and equipment purchased		(	38,599	)		(	2,361	)
Net cash used in investing activities		(	38,599	)		(	2,361	)
Cash flows from financing activities:
Repayment of note payable		(	10,480	)		(	10,015	)
Purchase of treasury stock		(	1,150	)		(	0	)
Net cash used in financing activities		(	11,630	)		(	10,015	)

<PAGE>                                6

(Decrease) increase  in cash and
cash equivalents		(	76,862	)		5,354
Cash and cash equivalents
at beginning of period			1,081,567			939,959
Cash and cash equivalents
at end of period	$		1,004,705		$	945,313
Supplemental Schedule of Cash Flow Information:
Interest	$		5,111		$	5,575

<FN>


See Accompanying Notes to Condensed Consolidated Financial Statements

<PAGE>                                7

MICROWAVE FILTER COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER  31, 2014

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, 2014 are not necessarily indicative of the results that may be expected for the year ended September 30, 2015. For further information, refer to the condensed consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10K for the year ended September 30, 2014.

Note 2. Industry Segment Data

  The Company's primary business segment involves the operations of Microwave Filter Company, Inc. (MFC) which designs, develops, manufactures and sells electronic filters, both for radio and microwave frequencies, to help process signal distribution and to prevent unwanted signals from disrupting transmit or receive operations. 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, 2014		September 30, 2014
Raw materials and stock parts	$	352,764	$	334,891
Work-in-process		32,221		46,292
Finished goods		82,097		92,656
	$	467,082	$	473,839

  The Company's reserve for obsolescence equaled $413,447 at December  31, 2014 and September 30, 2014. The Company provides for a valuation reserve for certain inventory that is deemed to be obsolete, of excess quantity or otherwise impaired. 

<PAGE>                                8

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.

  The Company adopted FASB ASC 740-10. 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

  None.

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 28% of total sales for the three months ended December  31, 2014 compared to approximately 10% of total sales for the three months ended December  31, 2013. This one customer has represented approximately 25%, 14% and 21% of total sales for the fiscal years ending September 30, 2014, 2013 and 2012, respectively. A loss of this customer or programs related to this customer could materially impact the Company. Management does anticipate future orders from this customer upon completion of a current contract.

<PAGE>                                9

Note 8.  Notes Payable

  On July 2, 2013, Microwave Filter Company, Inc. (the “Company”) entered into a Ten Year Term Loan with KeyBank National Association in the amount of Five Hundred Thousand and No/100 Dollars ($500,000.00). The amount of all advances outstanding together with accrued interest thereon shall be due and payable on July 2, 2023 (“Maturity”). The Company shall pay interest on the outstanding principal balance of this Note at the rate per annum equal to 4.5%. The net proceeds from the Term Loan will be available to provide working capital as needed. The total amount outstanding as of December  31, 2014 and 2013 was $442,291 and $483,453 respectively. Interest accrued as of December 31, 2014 and 2013 was $1,603 and $1,749 respectively.

  The Company has secured this Note by: (a) a Mortgage, Assignment of Rents, Security Agreement and Fixture Filing which creates a 1st lien on real property situated in the Town of Dewitt, County of Onondaga, and State of New York and known as 6743 Kinne Street, East Syracuse, New York; (b) a General Assignment of Rents and Leases; (c) an Environmental Compliance and Indemnification; and (d) such other security as may now or hereafter be given to Lender as collateral for the loan.

Note 9.  Earnings Per Share

  The Company presents basic earnings per share (“EPS”), computed based on the weighted average number of common shares outstanding for the period, and when applicable diluted EPS, which gives the effect to all dilutive potential shares outstanding (i.e. options) during the period after restatement for any stock dividends. There were no dividends declared during the quarters ending December 31, 2014 and 2013. Income (loss) used in the EPS calculation is net income (loss) for each period. There were no dilutive potential shares outstanding for the periods ending December 31, 2014 and 2013.

Note 10. Recent Accounting Pronouncements

  None applicable.

<PAGE>                                10

  MICROWAVE FILTER COMPANY, INC.

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

Business Overview

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 condensed 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, 2014 describes the significant accounting policies used in preparation of the condensed 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 condensed 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>                                11

  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>                                12

RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER  31, 2014 vs. THREE MONTHS ENDED DECEMBER  31, 2013

  The following table sets forth the Company's net sales by major product group  for the three months ended December  31, 2014 and 2013.

Product group	Fiscal 2015		Fiscal 2014
Microwave Filter (MFC):
RF/Microwave	$	384,632	$	241,349
Satellite		307,206		305,626
Cable TV		129,112		84,685
Broadcast TV		26,321		21,582
Niagara Scientific (NSI):		2,656		2,205
Total	$	849,927	$	655,447
Sales backlog at December 31	$	352,787	$	1,331,100

  Net sales for the three months ended December  31, 2014 equaled $849,927,  anincrease of $194,480 or29.7%, when compared to net sales of $655,447 for the three months ended December  31, 2013.  The increase in sales can primarily be attributed to the increase in the Company’s RF/Microwave product sales.

  MFC’s RF/Microwave product sales increased $143,283 or 59.4% to $384,632 for the three months ended December  31, 2014 when compared to RF/Microwave product sales of $241,349 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 28% of total sales forthe three months ended December  31, 2014andapproximately 10% of total sales for the three months ended December  31, 2013.

MFC’s Satellite product sales increased $1,580 or 0.5% to $307,206 for the three months ended December  31, 2014 when compared to Satellite product sales of $305,626 during the same period last year. The increase can be attributed to anincrease in demand for the Company's filters which suppress strong out-of-band interference caused by military and civilian radar systems and other sources. 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.

<PAGE>                                13

MFC’s Cable TV product sales increased $44,427 or 52.5% to $129,112 for the three months ended December  31, 2014 when compared to Cable TV product sales of $84,685 during the same period last year. 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 $4,739 to $26,321 for the three months ended December  31, 2014 when compared to sales of $21,582 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 $352,787 at December  31, 2014 compared to sales order backlog of $1,133,100 at December  31, 2013.  The decrease can primarily be attributed to one large OEM order received during the quarter ended December 31, 2013. The Company is still shipping on this order and management anticipates future orders from this Company upon completion of this current contract which ends in April 2015.  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, 2014 is scheduled to ship by September 30, 2015.

  Gross profit for the three months ended December  31, 2014 equaled $310,114, anincrease of $111,580 or56.2%, when compared to gross profit of $198,534 for the three months ended December  31, 2013. As a percentage of sales, gross profit equaled 36.5% for the three months ended December  31, 2014 compared to 30.3% for the three months ended December  31, 2013.  The improvements in gross profit can primarily be attributed to the higher sales volume this year when compared to the same period last year providing a larger base to absorb expenses.  

  Selling, general and administrative (SGA) expenses for the three months ended December  31, 2014 equaled $400,188, anincrease of $33,641 or 9.2%, when compared to SGA expenses of $366,547 for the three months ended December  31, 2013.  The increase can primarily be attributed to higher payroll and payroll related expenses. The Company has been participating in the New York State Shared Work Program which allows employers to reduce the hours of all or a particular group of employees. The employees whose hours are reduced can receive partial unemployment insurance benefits to supplement their lost wages or elect to use accrued vacation. As a percentage of sales, SGA expenses decreased to47.1% for the three months ended December  31, 2014 compared to 55.9% for the three months ended December  31, 2013 primarily due to the higher sales volume this year when compared to the same period last year.

  The Company recorded a loss from operations of $90,074 for the three months ended December  31, 2014 compared to aloss from operations of $168,013 for the three months ended December  31, 2013. The  improvement can primarily be attributed to the higher  sales volume this year when compared to the same period last year.

Other income (expense) was an expense of $3,952 for the three months ended December 31, 2014 compared to an expense of $3,881 for the for the three months ended December 31, 2013 primarily due to interest expense of $5,129 for the three months ended December 31, 2014 and interest expense of $5,598 for the three months ended December 31, 2013.

<PAGE>                                14

The (benefit) provision for income taxes equaled $0 for the three months ended December  31, 2014 and December  31, 2013. 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 (Prior Authoritative Literature: SFAS 109, Accounting for Income Taxes), 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.

Off-Balance Sheet Arrangements

  At December  31, 2014 and 2013, 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

  MFC defines liquidity as the ability to generate adequate funds to meet its operating and capital needs. The Company’s primary source of liquidity has been funds provided by operations.

	December31, 2014	September 30, 2014
Cash & cash equivalents	$1,004,705	$1,081,567
Working capital	$1,525,219	$1,643,192
Current ratio	5.02 to 1	5.33 to 1
Long-term debt	$399,211	$410,178

  Cash and cash equivalents decreased $76,862 to $1,004,705 at December  31, 2014 when compared to cash and cash equivalents of $1,081,567 at September 30, 2014. The decrease was a result of $26,633 in net cash used in operating activities, $38,599 in net cash used for capital expenditures,  $10,480in net cash used forrepayment of a note payable and $1,150 in net cash used to purchase treasury stock.  

On July 2, 2013, Microwave Filter Company, Inc. (the “Company”) entered into a Ten Year Term Loan with KeyBank National Association in the amount of Five Hundred Thousand and No/100 Dollars ($500,000.00). The amount of all advances outstanding together with accrued interest thereon shall be due and payable on July 2, 2023 (“Maturity”). The Company shall pay interest on the outstanding principal balance of this Note at the rate per annum equal to 4.5%. The net proceeds from the Term Loan will be available to provide working capital as needed.

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

<PAGE>                                15

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 2013 Annual Report and Form 10-K for the fiscal year ended September 30, 2014 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.

<PAGE>                                16

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  As a “smaller reporting company”’ we are not required to provide information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

  Management’s responsibility includes establishing and maintaining adequate internal control over financial reporting. 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(f) and 15d-15(f) 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.

<PAGE>                                17

                     PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

 None.

Item 1A. Risk Factors

         Not applicable.

Item 2.  Changes in Securities

The Company purchased 1,960 shares of common stock at an average price of $.59 per share

         into treasury during the three months ended December 31, 2014.

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>                                18

  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  13, 2015       Carl F. Fahrenkrug
(Date)                              --------------------------
                                        Carl F. Fahrenkrug
                                        Chief Executive Officer

February  13, 2015        Richard L. Jones
(Date)                               --------------------------
                                         Richard L. Jones
                                         Chief Financial Officer

<PAGE>                                19

EX-31

Exhibit 31.1

RULE 13a-14(a) CERTIFICATION

 I, Carl F. Fahrenkrug, certify that:

1. I have reviewed this report Quarterly 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 13, 2015                             /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 Quarterly 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 13, 2015                             /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

In connection with the Quarterly Report of Microwave Filter Company, Inc. (the "Company") on Form 10-Q for the period ended December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Carl F. Fahrenkrug, Chief Executive Officer, and Richard L. Jones, Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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 13, 2015                            /s/ Carl F. Fahrenkrug
                                                                    Carl F. Fahrenkrug
                                                                    Chief Executive Officer


Dated: February 13, 2015                            /s/ Richard L. Jones
                                                                    Richard L. Jones
                                                                    Chief Financial Officer

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Income Taxes

3 Months Ended

Dec. 31, 2014

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.

  The Company adopted FASB ASC 740-10. 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, 2014

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, 2014		September 30, 2014
Raw materials and stock parts	$	352,764	$	334,891
Work-in-process		32,221		46,292
Finished goods		82,097		92,656
	$	467,082	$	473,839

 The Company's reserve for obsolescence equaled $413,447 at December 31, 2014 and September 30, 2014. The Company provides for a valuation reserve for certain inventory that is deemed to be obsolete, of excess quantity or otherwise impaired. 

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Condensed Consolidated Balance Sheets (USD $)	Dec. 31, 2014	Sep. 30, 2014
Current Assets:
Cash and cash equivalents	$ 1,004,705	$ 1,081,567
Accounts receivable-trade, net of allowance for doubtful accounts of $4,000 and $4,000	361,537	377,473
Inventories, net	467,082	473,839
Prepaid expenses and other current assets	70,830	89,721
Total current assets	1,904,154	2,022,600
Property, plant and equipment, net	486,524	474,694
Total assets	2,390,678	2,497,294
Current liabilities:
Accounts payable	73,747	73,293
Customer deposits	27,212	32,431
Accrued payroll and related expenses	55,084	50,234
Accrued compensated absences	152,150	148,903
Notes payable - short term	43,080	42,593
Other current liabilities	27,662	31,954
Total current liabilities	378,935	379,408
Notes payable - long term	399,211	410,178
Total other liabilities	399,211	410,178
Total liabilities	778,146	789,586
Stockholders' Equity:
Common stock, $.10 par value Authorized 5,000,000 shares, Issued 4,324,140 shares in 2015 and 2014, Outstanding 2,581,547 shares in 2015 and 2,583,507 in 2014	432,414	432,414
Additional paid-in capital	3,248,706	3,248,706
Retained deficit	(374,919)	(280,893)
Common stock in treasury, at cost 1,742,593 shares in 2015 and 1,740,633 shares in 2014	(1,693,669)	(1,692,519)
Total stockholders' equity	1,612,532	1,707,708
Total liabilities and stockholders' equity	$ 2,390,678	$ 2,497,294

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Summary Of Significant Accounting Policies

3 Months Ended

Dec. 31, 2014

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, 2014 are not necessarily indicative of the results that may be expected for the year ended September 30, 2015. For further information, refer to the condensed consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10K for the year ended September 30, 2014.

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Industry Segment Data

3 Months Ended

Dec. 31, 2014

Industry Segment Data [Abstract]

Industry Segment Data

Note 2. Industry Segment Data

  The Company's primary business segment involves the operations of Microwave Filter Company, Inc. (MFC) which designs, develops, manufactures and sells electronic filters, both for radio and microwave frequencies, to help process signal distribution and to prevent unwanted signals from disrupting transmit or receive operations. Markets served include cable television, television and radio broadcast, satellite broadcast, mobile radio, commercial communications and defense electronics.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2014	Sep. 30, 2014
Condensed Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 4,000	$ 4,000
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	2,581,547	2,583,507
Treasury stock, shares	1,742,593	1,740,633

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Inventories (Details) (USD $)	Dec. 31, 2014	Sep. 30, 2014
Inventories [Abstract]
Raw materials and stock parts	$ 352,764	$ 334,891
Work-in-process	32,221	46,292
Finished goods	82,097	92,656
Inventories, net	467,082	473,839
Reserve for obsolescence	$ 413,447	$ 413,447

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Document And Entity Information	3 Months Ended
	Dec. 31, 2014	Jan. 31, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2015
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		2,581,547

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Income Taxes (Details) (USD $)	Dec. 31, 2014
Income Taxes [Abstract]
Uncertain tax positions	$ 0

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Condensed Consolidated Statements Of Operations (USD $)	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Condensed Consolidated Statements Of Operations [Abstract]
Net sales	$ 849,927	$ 655,447
Cost of goods sold	539,813	456,913
Gross profit	310,114	198,534
Selling, general and administrative expenses	400,188	366,547
Loss from operations	(90,074)	(168,013)
Other income (expense), net	(3,952)	(3,881)
Loss before income taxes	(94,026)	(171,894)
(Benefit) provision for income taxes	0	0
Net loss	$ (94,026)	$ (171,894)
Net Loss Per Common Share
Basic and diluted loss per share	$ (0.04)	$ (0.07)
Shares used in computing net loss per share:
Weighted Average Common Shares Outstanding	2,583,025	2,585,086

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Significant Customers

3 Months Ended

Dec. 31, 2014

Significant Customers [Abstract]

Significant Customers

Note 7. Significant Customers

  Sales to one customer represented approximately 28% of total sales for the three months ended December 31, 2014 compared to approximately 10% of total sales for the three months ended December 31, 2013. This one customer has represented approximately 25%,  14% and 21% of total sales for the fiscal years ending September 30, 2014, 2013 and 2012, respectively. A loss of this customer or programs related to this customer could materially impact the Company. Management does anticipate future orders from this customer upon completion of a current contract.

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Fair Value Of Financial Instruments

3 Months Ended

Dec. 31, 2014

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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Significant Customers (Details)	3 Months Ended		12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012
Significant Customers [Abstract]
Percentage of sales to one customer of total sales	28.00%	10.00%	25.00%	14.00%	21.00%

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Recent Accounting Pronouncements

3 Months Ended

Dec. 31, 2014

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Note 10. Recent Accounting Pronouncements

  None applicable.

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Notes Payable

3 Months Ended

Dec. 31, 2014

Notes Payable [Abstract]

Notes Payable

Note 8.  Notes Payable

  On July 2, 2013, Microwave Filter Company, Inc. (the “Company”) entered into a Ten Year Term Loan with KeyBank National Association in the amount of Five Hundred Thousand and No/100 Dollars ($500,000.00). The amount of all advances outstanding together with accrued interest thereon shall be due and payable on July 2, 2023 (“Maturity”). The Company shall pay interest on the outstanding principal balance of this Note at the rate per annum equal to 4.5%. The net proceeds from the Term Loan will be available to provide working capital as needed. The total amount outstanding as of December 31, 2014 and 2013 was $442,291 and $483,453 respectively. Interest accrued as of December 31, 2014 and 2013 was $1,603 and $1,749 respectively.

 The Company has secured this Note by: (a) a Mortgage, Assignment of Rents, Security Agreement and Fixture Filing which creates a 1st lien on real property situated in the Town of Dewitt, County of Onondaga, and State of New York and known as 6743 Kinne Street, East Syracuse, New York; (b) a General Assignment of Rents and Leases; (c) an Environmental Compliance and Indemnification; and (d) such other security as may now or hereafter be given to Lender as collateral for the loan.

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Earnings Per Share

3 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Note 9.  Earnings Per Share

 The Company presents basic earnings per share (“EPS”), computed based on the weighted average number of common shares outstanding for the period, and when applicable diluted EPS, which gives the effect to all dilutive potential shares outstanding (i.e. options) during the period after restatement for any stock dividends. There were no dividends declared during the quarters ending December 31, 2014 and 2013. Income (loss) used in the EPS calculation is net income (loss) for each period. There were no dilutive potential shares outstanding for the periods ending December 31, 2014 and 2013.

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Inventories (Tables)

3 Months Ended

Dec. 31, 2014

Inventories [Abstract]

Schedule Of Inventories Net Of Reserve For Obsolescence

	December 31, 2014		September 30, 2014
Raw materials and stock parts	$	352,764	$	334,891
Work-in-process		32,221		46,292
Finished goods		82,097		92,656
	$	467,082	$	473,839

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Earnings Per Share (Details) (USD $)	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Earnings Per Share [Abstract]
Dividends declared	$ 0	$ 0
Dilutive potential shares outstanding	0	0

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Condensed Consolidated Statements Of Cash Flows (USD $)	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Cash flows from operating activities:
Net loss	$ (94,026)	$ (171,894)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	26,769	32,702
Change in operating assets and liabilities:
Accounts receivable-trade	15,936	53,916
Federal and state income tax recoverable	0	37,085
Inventories	6,757	9,894
Prepaid expenses and other assets	18,891	(24,194)
Accounts payable and customer deposits	(4,765)	76,021
Accrued payroll and related expenses and compensated absences	8,097	3,725
Other current liabilities	(4,292)	475
Net cash (used in) provided by operating activities	(26,633)	17,730
Cash flows from investing activities:
Property, plant and equipment purchased	(38,599)	(2,361)
Net cash used in investing activities	(38,599)	(2,361)
Cash flows from financing activities:
Repayment of note payable	(10,480)	(10,015)
Purchase of treasury stock	(1,150)	0
Net cash used in financing activities	(11,630)	(10,015)
(Decrease) increase in cash and cash equivalents	(76,862)	5,354
Cash and cash equivalents at beginning of period	1,081,567	939,959
Cash and cash equivalents at end of period	1,004,705	945,313
Supplemental Schedule of Cash Flow Information:
Interest	$ 5,111	$ 5,575

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Legal Matters

3 Months Ended

Dec. 31, 2014

Legal Matters [Abstract]

Legal Matters

Note 5. Legal Matters

 None.

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Notes Payable (Details) (USD $)	3 Months Ended		0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Jul. 02, 2013
Line of Credit Facility [Line Items]
Ten year term loan, maturity date	Jul. 02, 2023
Total amount outstanding	$ 442,291	$ 483,453
Interest accrued	1,603	1,749
KeyBank National Association [Member]
Line of Credit Facility [Line Items]
Loan term			10 years
Ten year term loan, amount			$ 500,000.00
Per annum interest rate			4.50%