MFCO Microwave Filter Company Inc (PK)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

Quarterly Report Pursuant to Section 13 OR 15(d) of the Securities Exchange
Act of 1934.

For the quarterly period ended March 31, 2008

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)

Registrant's telephone number, including area code: (315) 438-4700

Indicate by check mark whether 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 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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YES ( ) NO ( 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 practical date:

Common Stock, $.10 Par Value - 2,894,594 shares as of April 30, 2008.

PART I. - FINANCIAL INFORMATION

MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)
 March 31, 2008 September 30, 2007
 (Unaudited)
Assets

Current Assets:

Cash and cash equivalents $ 1,311 $ 1,267
Accounts receivable-trade, net 280 371
Inventories 680 661
Prepaid expenses and other
 current assets 107 86
 ------- -------

Total current assets 2,378 2,385

Property, plant and equipment, net 424 441
 ------- -------

Total assets $ 2,802 $ 2,826
 ======= =======

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ 188 $ 163
Customer deposits 34 47
Accrued federal and state income
 taxes payable 1 1
Accrued payroll and related
 expenses 80 58
Accrued compensated absences 195 209
Other current liabilities 28 30
 ------- -------

Total current liabilities 526 508
 ------- -------

Total liabilities 526 508
 ------- -------

Stockholders' Equity:

Common stock,$.10 par value 432 432
Additional paid-in capital 3,249 3,249
Retained earnings 122 163
 ------- -------

 3,803 3,844
Common stock in treasury,
 at cost (1,527) (1,526)
 ------- -------

Total stockholders' equity 2,276 2,318
 ------- -------

Total liabilities and
 stockholders' equity $ 2,802 $ 2,826
 ======= =======

See Accompanying Notes to Consolidated Financial Statements

MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS
ENDED MARCH 31, 2008 AND 2007
(Unaudited)

(Amounts in thousands, except per share data)

 Three months ended Six months ended
 March 31 March 31
 2008 2007 2008 2007

Net sales $1,217 $1,276 $2,560 $2,321

Cost of goods sold 816 792 1,645 1,501
 ------ ------ ------ ------
Gross profit 401 484 915 820

Selling, general and
 administrative expenses 490 475 980 960
 ------ ------ ------ ------
(Loss) income from
 operations (89) 9 (65) (140)

Other income (net),
 principally interest 10 15 24 34
 ------ ------ ------ ------

(Loss) income before
 income taxes (79) 24 (41) (106)

Provision for income
 taxes 0 0 0 0
 ------ ------ ------ ------

NET (LOSS) INCOME ($79) $24 ($41) ($106)
 ====== ====== ====== ======
Per share data:

Basic (loss) earnings
 per share ($0.03) $0.01 ($0.01) ($0.04)
 ====== ====== ====== ======
Diluted (loss) earnings
 per share ($0.03) $0.01 ($0.01) ($0.03)
 ====== ====== ====== ======
Shares used in computing

net earnings (loss) per share:
Basic 2,895 2,902 2,895 2,902 Diluted 3,033 3,040 3,034 3,041

See Accompanying Notes to Consolidated Financial Statements

MICROWAVE FILTER COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2008 AND 2007
(Unaudited)

(Amounts in thousands)

 Six months ended
 March 31
 2008 2007

Cash flows from operating
 activities:

Net (loss) income ($ 41) ($ 106)

Adjustments to reconcile
 net (loss) income to net
 cash (used in) provided by
 operating activities:
Depreciation and amortization 38 57

Change in assets and liabilities:
Accounts receivable 91 (107)
Federal and state income
 tax recoverable 0 138
Inventories (20) (126)
Prepaid expenses & other
 assets (21) (12)
Accounts payable & accrued
 expenses 32 11
Customer deposits (13) (2)
 ----- -----
Net cash provided by (used in)
 operating activities 66 (147)
 ----- -----

Cash flows from investing
activities:
Investments 0 14
Capital expenditures (21) (1)
 ----- -----
Net cash (used in) provided by
 investing activities (21) 13
 ----- -----
Cash flows from financing
activities:
Purchase of treasury stock (1) (1)
 ----- -----
Net cash used in financing
 activities (1) (1)
 ----- -----

Increase (decrease) in cash
 and cash equivalents 44 (135)

Cash and cash equivalents
 at beginning of period 1,267 706
 ----- -----

Cash and cash equivalents
 at end of period $1,311 $ 571
 ===== =====

See Accompanying Notes to Consolidated Financial Statements

MICROWAVE FILTER COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2008

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-QSB and Regulation S-B. 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 six month period ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ended September 30, 2008. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10KSB for the year ended September 30, 2007.

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:

 (thousands of dollars) March 31, 2008 September 30, 2007

Raw materials and stock parts $550 $517
Work-in-process 51 55
Finished goods 79 89
 ---- ----
 $680 $661
 ==== ====

The Company's reserve for obsolescence equaled $389,726 at March 31, 2008 and September 30, 2007.

Note 4. Income Taxes

The Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (FIN 48) as of October 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes, 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, FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. No adjustments were required upon adoption of FIN 48. The Company has provided a full valuation allowance against its deferred tax assets.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the fiscal years 2004 through 2007. The Company's state tax returns are open to audit under the statute of limitations for the fiscal years 2004 through 2007.

Note 5. Stock Options

On April 9, 1998, the Board of Directors and Shareholders of Microwave Filter Company, Inc. approved the 1998 Microwave Filter Company, Inc. Incentive Stock Plan (the "1998 Plan"). Under the 1998 Plan, the Company may grant incentive stock options ("ISOs"), non-qualified stock options ("NQSOs") and stock appreciation rights to directors, officers and employees of the Company and its affiliates. The 1998 Plan reserves 150,000 shares for issuance. The exercise price of the ISOs and NQSOs will be 100% of the fair market value of the Common Stock on the date the ISOs and NQSOs are granted. The 1998 Plan will terminate on April 10, 2008. On June 21, 2004, the Board of Directors granted ISOs totaling 115,000 shares and NQSOs totaling 35,000 shares at an exercise price of $1.47. All options were 100% vested.

We accounted for our incentive stock plan under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, Accounting for stock issued to employees. No compensation expense has been recognized in the accompanying financial statements relative to our stock option plan.

The Company has adopted the provisions of SFAS No. 123R, "Share-Based Payment", for the fiscal year beginning October 1, 2006.

A summary of all stock option activity and information related to all options outstanding follows:

 Six months ended
 March 31, 2008
 ------------------
 ISOs NQSOs
 -------- --------
 Exercise Shares Exercise Shares
 Price Price
 -------- -------- -------- --------
Outstanding at
 beginning of period $1.47 108,548 $1.47 30,000
Granted - 0 - 0
Exercised - 0 - 0
Cancelled - 0 - 0
 ------ -------- ------ --------
Outstanding at
 end of period $1.47 108,548 $1.47 30,000
 ------ -------- ------ --------
Exercisable at
 end of period $1.47 108,548 $1.47 30,000
 ------ -------- ------- --------

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. Niagara Scientific, Inc. (NSI), a wholly owned subsidiary, custom designs case packing machines to automatically pack products into shipping cases. Customers are typically processors of food and other commodity products with a need to reduce labor cost with a modest investment and quick payback.

Critical Accounting Policies

The Company's consolidated financial statements are based on the application of 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-KSB for the fiscal year ended September 30, 2007 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.

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 Statement of Financial Accounting Standards (SFAS) No. 109. 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.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2008 vs. THREE MONTHS ENDED MARCH 31, 2007 The following table sets forth the Company's net sales by major product group for the three months ended March 31, 2008 and 2007.

Product group (in thousands) Fiscal 2008 Fiscal 2007

Microwave Filter (MFC):
 Cable TV $ 486 $ 537
 RF/Microwave 368 462
 Satellite 312 234
 Broadcast TV 48 36
Niagara Scientific (NSI) 3 7
 ------ ------
 Total $1,217 $1,276
 ====== ======
Sales backlog at 3/31 $ 443 $ 634
 ====== ======

Net sales for the three months ended March 31, 2008 equaled $1,216,664, a decrease of $59,727 or 4.7%, when compared to net sales of $1,276,391 for the three months ended March 31, 2007.

MFC's Cable TV product sales decreased $51,667 or 9.6% to $485,643 during the three months ended March 31, 2008 when compared to Cable TV product sales of $537,310 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. Although the Company has developed filters for digital television, the demand for these types of filters is unknown at this time.

MFC's RF/Microwave product sales decreased $93,866 or 20.3% to $368,318 for the three months ended March 31, 2008 when compared to RF/Microwave product sales of $462,184 during the same period last year. The decrease can be attributed to a decrease in sales to the U. S. Government. For the three months ended March 31, 2008 sales to the U.S. Government equaled $4,488 compared to sales to the U.S. Government of $134,930 during the three months ended March 31, 2007. MFC's RF/Microwave products are sold primarily to original equipment manufacturers (OEMs) 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 (Original Equipment Manufacturer) 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.

MFC's Satellite product sales for the three months ended March 31, 2008 equaled $312,163, an increase of $77,965 or 33.3%, when compared to sales of $234,198 during the same period last year. The increase can be attributed to an increase 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 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 for the three months ended March 31, 2008 equaled $47,674, an increase of $12,113 or 34.1%, when compared to sales of $35,561 during the same period last year. The increase can be attributed to an increase in demand for UHF Broadcast products.

MFC's sales order backlog equaled $442,722 at March 31, 2008 compared to sales order backlog of $502,760 at September 30, 2007. 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 March 31, 2008 is scheduled to ship by September 30, 2008.

NSI sales for the three months ended March 31, 2008 equaled $2,866, a decrease of $4,272, when compared to sales of $7,138 for the three months ended March 31, 2007. NSI sales consist primarily of field service and spare part orders.

Gross profit for the three months ended March 31, 2008 equaled $400,404, a decrease of $83,793 or 17.3%, when compared to gross profit of $484,197 for the three months ended March 31, 2007. As a percentage of sales, gross profit equaled 32.9% for the three months ended March 31, 2008 compared to 37.9% for the three months ended March 31, 2007. The decreases in gross profit can be attributed to the lower sales volume, product sales mix and higher direct material costs this year when compared to the same period last year.

Selling, general and administrative (SGA) expenses for the three months ended March 31, 2008 equaled $489,785, an increase of $14,962 or 3.2%, when compared to SG&A expenses of $474,823 for the three months ended March 31, 2007. The increase can primarily be attributed to increases in printing and postage costs which were associated with promotional mailings this year when compared to the same period last year. As a percentage of sales, SGA expenses increased to 40.3% for the three months ended March 31, 2008 compared to 37.2% for the three months ended March 31, 2007 due to both the higher expenses and lower sales volume this year when compared to the same period last year.

The Company recorded a loss from operations of $89,381 for the second quarter ended March 31, 2008 compared to income from operations of $9,374 for the three months ended March 31, 2007. The decrease in operating income can be attributed to the lower sales volume, lower gross profit and higher SGA expenses this year when compared to the same period last year.

Other income for the three months ended March 31, 2008 equaled $10,259, a decrease of $5,159 when compared to other income of $15,418 for the three months ended March 31, 2007. Other income is primarily interest income earned on invested cash balances. The decrease in other income can primarily be attributed to the decrease in invested cash balances and lower market interest rates when compared to last year. Other income may fluctuate based on market interest rates and levels of invested cash balances.

The provision (benefit) for income taxes equaled $0 for the three months ended March 31, 2008. The benefit for the current year loss has been subject to a valuation allowance since the realization of the deferred tax benefit is not considered more likely than not.

SIX MONTHS ENDED MARCH 31, 2008 vs. SIX MONTHS ENDED MARCH 31, 2007 The following table sets forth the Company's net sales by major product group for the six months ended March 31, 2008 and 2007.

Product group (in thousands) Fiscal 2008 Fiscal 2007

Microwave Filter (MFC):
 Cable TV $ 985 $ 954
 RF/Microwave 813 754
 Satellite 684 487
 Broadcast TV 73 101
Niagara Scientific (NSI) 5 25
 ------ ------
 Total $2,560 $2,321
 ====== ======
Sales backlog at 3/31 $ 443 $ 634
 ====== ======

Net sales for the six months ended March 31, 2008 equaled $2,559,975, an increase of $238,511 or 10.3%, when compared to net sales of $2,321,464 for the six months ended March 31, 2007.

MFC's Cable TV product sales increased $30,953 or 3.2% to $985,230 during the six months ended March 31, 2008 when compared to Cable TV product sales of $954,277 during the six months ended March 31, 2007. Despite the increase in Cable TV sales, management continues to project a decrease in demand for Cable TV products due to the shift from analog to digital television. Although the Company has developed filters for digital television, the demand for these types of filters is unknown at this time.

MFC's RF/Microwave product sales increased $58,687 or 7.8% to $812,813 for the six months ended March 31, 2008 when compared to RF/Microwave product sales of $754,126 during the same period last year. MFC's RF/Microwave products are sold primarily to original equipment manufacturers (OEMs) 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 (Original Equipment Manufacturer) 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.

MFC's Satellite product sales for the six months ended March 31, 2008 equaled $683,769, an increase of $196,550 or 40.3%, when compared to sales of $487,219 during the same period last year. The increase can be attributed to an increase 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 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 for the six months ended March 31, 2008 equaled $73,523, a decrease of $27,487 or 27.2%, when compared to sales of $101,010 during the same period last year. The decrease can be attributed to a decrease in demand for UHF Broadcast products.

NSI sales for the six months ended March 31, 2008 equaled $4,640, a decrease of $20,192, when compared to sales of $24,832 for the six months ended March 31, 2007. NSI sales consist primarily of field service and spare part orders.

Gross profit for the six months ended March 31, 2008 equaled $914,843, an increase of $94,546, or 10.3%, when compared to gross profit of $820,297 for the six months ended March 31, 2007. As a percentage of sales, gross profit equaled 35.7% for the six months ended March 31, 2008 compared to 35.3% for the six months ended March 31, 2007. The increases in gross profit can primarily be attributed to the higher sales volume this year when compared to last year.

SG&A expenses for the six months ended March 31, 2008 equaled $979,867 an increase of $19,424 or 2.0%, when compared to SG&A expenses of $960,443 for the six months ended March 31, 2007. The increase can be attributed to increases in printing and postage costs which were associated with promotional mailings this year. As a percentage of sales, SGA expenses decreased to 38.3% for the six months ended March 31, 2008 compared to 41.4% for the six months ended March 31, 2007 due primarily to the higher sales volume this year.

The Company recorded a loss from operations of $65,024 for the six months ended March 31, 2008 compared to a loss from operations of $140,146 for the six months ended March 31, 2007. The improvement can primarily be attributed to the higher sales volume this year when compared to the same period last year.

Other income for the six months ended March 31, 2008 equaled $23,652, a crease of $10,722, when compared to other income of $34,374 for the six months ended March 31, 2007. Other income is primarily interest income earned on invested cash balances. The decrease in other income can primarily be attributed to the decrease in invested cash balances and lower market interest rates when compared to last year. Other income may fluctuate based on market interest rates and levels of invested cash balances.

The provision (benefit) for income taxes equaled $0 for the six months ended March 31, 2008. The benefit for the current year loss has been subject to a valuation allowance since the realization of the deferred tax benefit is not considered more likely than not.

Off-Balance Sheet Arrangements

At March 31, 2008 and 2007, 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

 Mar. 31, 2008 Sep. 30, 2007

Cash & cash equivalents $1,310,595 $1,266,979
Working capital $1,851,956 $1,876,767
Current ratio 4.52 to 1 4.69 to 1
Long-term debt $ 0 $ 0

Cash and cash equivalents increased $43,616 to $1,310,595 at March 31, 2008 when compared to cash and cash equivalents of $1,266,979 at September 30, 2007. The increase was a result of $65,415 in net cash provided by operating activities, $20,851 in net cash used in investing activities and $948 in net cash used in financing activities.

The decrease of $90,974 in accounts receivable at March 31, 2008, when compared to September 30, 2007, can primarily be attributable to an improvement in accounts receivable collections during the quarter ended March 31, 2008 when compared to the quarter ended September 30, 2007.

Cash used in investing activities during the six months ended March 31, 2008 consisted of funds used for capital expenditures of $20,851.

Cash used in financing activities during the six months ended March 31, 2008 consisted of funds used to purchase treasury stock of $948.

At March 31, 2008, 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.

In February 2007, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115". SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. This Statement applies to all entities, including not-for- profit organizations. SFAS 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended September 30, 2009. The Company is currently evaluating the impact of SFAS 159 on its consolidated financial statements.

In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ("SFAS") No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51". SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended September 30, 2010. The Company is currently evaluating the impact of SFAS 160 on its consolidated financial statements.

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- QSB 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 2007 Annual Report and Form 10-KSB for the fiscal year ended September 30, 2007 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 six months ended March 31, 2008. For a detailed discussion of market risk, see our Annual Report on Form 10-K for the fiscal year ended September 30, 2007, Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk.

ITEM 4. CONTROLS AND PROCEDURES

1. Evaluation of disclosure controls and procedures. Based on their evaluation 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 of the end of the period covered by this Quarterly Report on Form 10-Q, the Company's chief executive officer and chief financial officer have concluded that the Company's disclosure controls and procedures are effective.

2. Changes in internal control over financial reporting. During the period covered by this Quarterly Report on Form 10-Q, there were no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f)) that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is unaware of any material threatened or pending litigation against the Company.

Item 1A. The Company is exposed to certain risk factors that may effect
operations and/or financial results. The significant factors known to the Company are described in the Company's most recently filed annual report on Form 10-KSB. There have been no material changes from the risk factors as previously disclosed in the Company's annual report on Form 10-KSB.

Item 2. Changes in Securities

None during this reporting period.

Item 3. Defaults Upon Senior Securities

The Company has no senior securities.

Item 4. Submission of Matters to a Vote of Security Holders

a. The Annual meeting of the Shareholders was held on April 2, 2008 at the Holiday Inn, Carrier Circle, East Syracuse, New York 13057 at 10:00 A.M. pursuant to notice to the shareholders.

The following matter was submitted to the vote of shareholders:

Proposal 1. The election of four directors to hold office until the Annual Meeting of the Shareholders at which their term expires or until their successors have been duly elected.

b. The following named persons received the number of votes set opposite their respective names for election to the Board of Directors:

 DIRECTORS VOTES FOR AUTHORITY
 WITHHELD

Carl F. Fahrenkrug 2,269,569 221,840
Daniel P. Galbally 2,271,311 220,098
Frank S. Markovich 2,271,996 219,413
Perry A. Harvey 2,271,311 220,098

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

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.

May 13, 2008 Carl F. Fahrenkrug
(Date) --------------------------
 Carl F. Fahrenkrug
 Chief Executive Officer

May 13, 2008 Richard L. Jones
(Date) --------------------------
 Richard L. Jones
 Chief Financial Officer

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