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 ~~June~~December 3031, 2018

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)

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]~~

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 - 2,579,~~680~~509 shares as of ~~August~~February 1, ~~2018~~2019.

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 Balance Sheets (Unaudited)		3
Condensed Consolidated Statements of Operations (unaudited)		4
Condensed Consolidated Statements of Operations (Unaudited)		4
Condensed Consolidated Statements of Cash Flows (unaudited)		5
Condensed Consolidated Statements of Cash Flows (Unaudited)		5
Notes to Condensed Consolidated Financial Statements (unaudited)		6-8
Notes to Condensed Consolidated Financial Statements (Unaudited)		6-9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		910-1514
Item 3. Quantitative and Qualitative Disclosures About Market Risk		1615
Item 4. Controls and Procedures		1615
Part II Other Information		1716
Signatures		1817

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

Condensed Consolidated Balance Sheets

	December 31, 2018			September 30, 2018
Assets
Current Assets:
Cash and cash equivalents	$	592,215		$	674,045
Accounts receivable-trade, net of allowance for doubtful accounts of $4,000 and $4,000		344,419			402,760
Inventories, net		380,935			377,603
Prepaid expenses and other current assets		31,879			54,416
Total current assets		1,349,448			1,508,824

Property, plant and equipment, net		307,914			261,474
Total assets	$	1,657,362		$	1,770,298

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	79,242		$	116,938
Customer deposits		41,774			35,278
Accrued payroll and related expenses		43,442			38,711
Accrued compensated absences		89,029			90,449
Notes payable - short term		51,684			51,101
Other current liabilities		16,580			28,838
Total current liabilities		321,751			361,315

Notes payable -long term		205,923			219,071
Total other liabilities		205,923			219,071
Total liabilities		527,674			580,386

Stockholders’ Equity:
Common stock, $.10 par value Authorized 5,000,000 shares, Issued 4,324,140 shares in 2019 and 2018, Outstanding 2,579,680 shares in 2019 and 2018		432,414			432,414
Additional paid-in capital		3,248,706			3,248,706
Accumulated deficit		(856,668	)		(796,444	)
Common stock in treasury, at cost 1,744,460 shares in 2019 and 2018		(1,694,764	)		(1,694,764	)
Total stockholders’ equity		1,129,688			1,189,912
Total liabilities and stockholders’ equity	$	1,657,362		$	1,770,298

(Unaudited)

	June 30, 2018			September 30, 2017
Assets
Current Assets:
Cash and cash equivalents	$	550,054		$	667,940
Accounts receivable-trade, net of allowance for doubtful accounts of $4,000 and $4,000		309,877			350,703
Inventories, net		423,024			458,158
Prepaid expenses and other current assets		32,776			27,858
Total current assets		1,315,731			1,504,659
Property, plant and equipment, net		279,751			326,778
Total assets	$	1,595,482		$	1,831,437
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	57,319		$	104,349
Customer deposits		31,886			43,893
Accrued payroll and related expenses		40,850			39,710
Accrued compensated absences		92,507			96,490
Notes payable - short term		50,707			48,826
Other current liabilities		19,133			22,023
Total current liabilities		292,402			355,291
Notes payable - long term		231,855			270,172
Total other liabilities		231,855			270,172
Total liabilities		524,257			625,463
Stockholders’ Equity:
Common stock, $.10 par value Authorized 5,000,000 shares, Issued 4,324,140 shares in 2018 and 2017, Outstanding 2,579,680 shares in 2018 and 2,579,684 in 2017		432,414			432,414
Additional paid-in capital		3,248,706			3,248,706
Retained deficit		(915,131	)		(780,385	)
Common stock in treasury, at cost 1,744,460 shares in 2018 and 1,744,456 shares in 2017		(1,694,764	)		(1,694,761	)
Total stockholders’ equity		1,071,225			1,205,974
Total liabilities and stockholders’ equity	$	1,595,482		$	1,831,437

See Accompanying Notes to Condensed Consolidated Financial Statements

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

	Three months ended						~~Nine months ended~~
	June 30,						June 30,
	December 31,
	2018			2017			~~2018~~			~~2017~~
Net sales	$	~~802~~858,~~140~~318		$	~~702~~786,~~648~~916		$	~~2,323,571~~		$	~~2,307,198~~
Cost of goods sold		~~475~~515,~~250~~173			~~476~~498,~~926~~542			~~1,446,505~~			~~1,559,665~~
Gross profit		~~326~~343,~~890~~145			~~225~~288,~~722~~374			~~877,066~~			~~747,533~~
Selling, general and administrative expenses		~~345~~401,~~188~~471			~~293~~326,~~862~~502			~~1,005,301~~			~~953,485~~
Loss from operations		(1858,~~298~~326	)		(6838,~~140~~128	)		~~(128,235~~	)		~~(205,952~~	)
Other expense, net		(21,~~665~~898	)		(2,~~658~~679	)		~~(6,461~~	)		~~(8,422~~	)
Loss before income taxes		(2060,~~963~~224	)		(7040,~~798~~807	)		~~(134,696~~	)		~~(214,374~~	)
Provision for income taxes		0			0			50			0
Benefit for income taxes		0			0
Net loss	$	(2060,~~963~~224	)	$	(7040,~~798~~807	)	$	~~(134,746~~	)	$	~~(214,374~~	)
Per share data:
Net Loss Per Common Share Basic and diluted loss per share	$	(0.02	)	$	(0.02	)
Basic and diluted loss per common share	$	(0.01	)	$	(0.03	)	$	(0.05	)	$	(0.08	)
Weighted Average Common Shares Outstanding Shares used in computing net loss per share:		2,579,680			2,579,684
Shares used in computing net loss per common share:
Basic and diluted		2,579,680			2,579,928			2,579,682			2,580,459

See Accompanying Notes to Condensed Consolidated Financial Statements

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

	Nine months ended
	Three months ended
	June 30,
	December 31,
	2018			2017
Cash flows from operating activities:
Net loss	$	(~~134~~60,~~746~~224	)	$	(~~214~~40,~~374~~807	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		5413,~~375~~035			6018,~~495~~041
Change in operating assets and liabilities:
Accounts receivable-trade		4058,~~826~~341			4331,~~841~~908
Inventories		35(3,~~134~~332	)		(834,~~982~~180	)
Prepaid expenses and other assets		(422,~~918~~537	)		12(2,~~553~~080	)
Accounts payable and customer deposits		(5931,~~037~~200	)		(335,~~980~~113	)
Accrued payroll and related expenses and compensated absences		(23,~~843~~311	)		(392,~~261~~548	)
Other current liabilities		(212,~~890~~258	)		1(5,~~033~~288	)
Net cash used in operating activities		(749,~~099~~790	)		(~~148~~1,~~675~~707	)
Cash flows from investing activities:
Property, plant and equipment purchased		(759,~~348~~475	)		~~(56,335~~0	)
Net cash used in investing activities		(759,~~348~~475	)		~~(56,335~~0	)
Cash flows from financing activities:
Repayment of note payable		(3612,~~436~~565	)		(3412,~~819~~008	)
Purchase of treasury stock		(3	)		(662	)
Net cash used in financing activities		(12,565	)		(12,008	)
Net cash used in financing activities		(36,439	)		(35,481	)
Decrease in cash and cash equivalents		(81,830	)		(13,715	)
Net decrease in cash and cash equivalents		(117,886	)		(240,491	)
Cash and cash equivalents at beginning of period		674,045			667,940
Cash and cash equivalents at beginning of period		667,940			923,117
Cash and cash equivalents at end of period	$	592,215		$	654,225
Cash and cash equivalents at end of period	$	550,054		$	682,626
Supplemental Schedule of Cash Flow Information:
Interest paid	$	103,~~337~~026		$	113,~~953~~583
Income taxes paid		50			0

See Accompanying Notes to Condensed Consolidated Financial Statements

MICROWAVE FILTER COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~JUNE~~DECEMBER 3031, 2018

Note 1. Summary of Significant Accounting Policies

In these notes, the terms “MFC” and “Company” mean Microwave Filter Company, Inc. and its subsidiary companies.

The following condensed balance sheet as of September 30, ~~2017~~2018, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the ~~Company~~company believes that the disclosures made are adequate to make the information not misleading. 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 ~~nine~~three month period ended ~~June~~December 3031, 2018 are not necessarily indicative of ~~the~~ the results that may be expected for the year ended September 30, ~~2018~~2019. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest shareholders’ annual report (Form 10-K).

Note 2. Industry Segment Data

The Company’s primary business segment involves the operations of Microwave Filter Company, Inc. 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 net realizable value. Net realizable value is determined as the estimated selling price in the normal course of business, minus the cost of completion, disposal and transportation.

Net realizable value is determined as the estimated selling price in the normal course of business minus the cost of completion, disposal and transportation.

Inventories net of the reserve for obsolescence consisted of the following:

	June 30, 2018		September 30, 2017
	December 31, 2018		September 30, 2018
Raw materials and stock parts	$	~~308~~316,~~831~~556	$	~~337~~306,~~462~~658
Work-in-process		2315,~~139~~818		2137,~~861~~062
Finished goods		9148,~~054~~561		9833,~~835~~883
	$	~~423~~380,~~024~~935	$	~~458~~377,~~158~~603

The Company’s reserve for obsolescence equaled $~~445~~463,~~158~~286 at ~~June~~December 3031, 2018 and September 30, ~~2017~~2018. The Company provides for a a valuation reserve for certain inventory that is deemed to be obsolete, of excess quantity or otherwise impaired.

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 net deferred tax assets.

~~FASB~~The Company follows 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~~ positions 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 will include interest on income tax liabilities in interest expense and penalties in operations if such amounts arise. The Company determined it has no uncertain tax positions and therefore no amounts are recorded.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted, the Act which among other changes, reduces the Federal statutory corporate income tax rate from 35% to 21% effective January 1, 2018. Based on the provisions of the Act, the Company remeasured their net deferred tax assets applying the new lower income tax rates to the Company’s net long term deferred tax assets. As stated above, the Company has provided a full valuation allowance against its net deferred tax assets. The actual impact of the Act may differ due to changes in interpretations, assumptions and the issuance of additional guidance.

Note 5. Legal Matters

None.

Note 6. Fair Value of Financial Instruments

The carrying value of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturity of those instruments. The carrying value of the Company’s note payable approximates its fair value.

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

Note 7. Significant Customers

Net sales to two ~~significant~~ customers represented 4255.15% of the Company’s total sales for the ~~nine~~three months ended ~~June~~December 3031, 2018 and net sales to ~~one~~two ~~significant~~customers ~~customer~~ represented 4338.15% of the Company’s total sales for the ~~nine~~three months ended ~~June 30~~December 31, 2017. A loss of one of these customers or programs related to these customers could significantly impact the Company.

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 ~~June~~December 3031, 2018 and September 30, ~~2017~~2018 was $~~282~~257,~~562~~607 and $~~318~~270,~~998~~172 respectively. Interest accrued as of ~~June~~December 3031, 2018 and September 30, ~~2017~~2018 was $~~989~~932 and $~~1,113,~~946 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 begiven to Lender as collateral for the loan.7

The Company has secured this Note by: (a) a Mortgage, Assignment of Rents, Security Agreement and Fixture Filing which creates a 1^stlien 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 ended ~~June~~December 3031, 2018 and 2017. Income (loss) used in the EPS calculation is net income (loss) for each period. There were no ~~dilutive~~ dilutive potential shares outstanding for the periods ended ~~June~~December 3031, 2018 and 2017.

Note 10. Recent Accounting Pronouncements

~~Update~~In ~~2015-14-~~February ~~Revenue~~2016, ~~from~~the ~~Contracts~~FASB ~~with~~issued ~~Customers~~FASB ASU No. 2016-02, Leases (Topic ~~606~~842):. ~~affects~~The ~~any~~core ~~entity~~principle ~~that~~of ~~either~~Topic ~~enters~~842 ~~into~~is ~~contracts~~that ~~with~~a ~~customers~~lessee toshould ~~transfer~~recognize ~~goods~~the orassets ~~services~~and orliabilities ~~enters~~that ~~into~~arise ~~contracts~~from ~~for~~leases. ~~the~~For ~~transfer~~operating ofleases, ~~nonfinancial~~a ~~assets~~lessee ~~unless~~is ~~those~~required ~~contracts~~to ~~are~~recognize ~~within~~a ~~the scope~~ right-of-use ~~other~~asset ~~standards~~and ~~(for~~a ~~example~~lease liability, ~~insurance~~initially ~~contracts~~measured orat ~~lease~~the ~~contracts).~~present ~~The~~value ~~core principle~~ of the ~~guidance~~lease ispayments, ~~that an~~in ~~entity~~the ~~should~~statement ~~recognize~~of ~~revenue~~financial position. toFor ~~depict~~leases ~~the~~with ~~transfer~~a term of ~~promised~~12 ~~goods~~months or ~~services~~less, toa ~~customers~~lessee inis permitted to make an ~~amount~~accounting ~~that~~policy ~~reflects~~election by class of ~~the~~underlying ~~consideration~~asset not to ~~which~~recognize ~~the~~lease ~~entity~~assets ~~expects~~and tolease beliabilities. ~~entitled~~The inaccounting ~~exchange~~applied ~~for~~by ~~those~~a ~~goods~~lessor oris ~~services~~largely unchanged from that applied under previous GAAP. ~~The~~This ~~guidance~~ASU is ~~applicable to~~effective ~~annual~~for ~~reporting~~fiscal ~~periods~~years beginning after December 15, ~~2017~~2018, including interim ~~reporting~~ periods within ~~that~~those ~~reporting~~fiscal ~~period~~years. Earlier application is permitted. ~~only~~In astransition, oflessees ~~annual~~and ~~reporting~~lessors ~~periods~~are ~~beginning~~required ~~after~~to ~~December~~recognize and ~~15,~~measure ~~2016,~~leases ~~including~~at ~~interim~~the ~~reporting periods~~beginning ~~within~~of ~~that~~the ~~reporting~~earliest period. ~~Management~~presented ~~plans~~using toa ~~evaluate~~modified ~~the~~retrospective ~~applicability~~approach. ~~and~~The ~~impact~~Company ofis currently evaluating the effect that the adoption of this ~~standards update~~ASU ~~over~~will ~~the~~have ~~coming~~on ~~year~~its financial statements.

Note 11. Revenue Recognition

Revenue Recognition

Effective October 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective method. This update outlined a comprehensive new revenue recognition model designed to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional quantitative and qualitative disclosures, as explained below. The adoption allows companies to apply the new revenue standard to reporting periods beginning in the year the standard is first implemented, while prior periods continue to be reported in accordance with previous accounting guidance. Since the adoption of Accounting Standards Codification (“ASC”) 606 did not have a significant impact on the recognition of revenue, the Company did not have an opening retained earnings adjustment or an effect on prior reported periods.

Pursuant to Topic 606, revenues are recognized upon the application of the following steps:

●	Identification of the contract, or contracts, with a customer;

●	Identification of the performance obligations in the contract;

●	Determination of the transaction price;

●	Allocation of the transaction price to the performance obligations in the contract; and

●	Recognition of revenues when, or as, the contractual performance obligations are satisfied.

The Company accounts for a contract with a client when it has written approval, the contract (or customer sales order) is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection.

The Company allocates the transaction price to each performance obligation on a standalone selling price basis, as agreed-upon between the customer and the Company in the related customer sales order.

Revenue is recognized when the performance obligation has been satisfied: at the time products are shipped and title and risk of loss have passed to the customer, 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.

Product Warranty

The Company has established a warranty reserve which provides for the estimated cost of product returns based upon historical experience and any known conditions or circumstances. No revenues are recognized in connection with the performance of the warranty repair or fulfillment function. The warranty obligation is affected by product that does not meet specifications and performance requirements and any related costs of addressing such matters. Products must be returned within one year of the date of purchase. The warranty liability was insignificant at December 31, 2018 and September 30, 2018.

Disaggregation of Revenue

The following tables provide details of revenue by major products group:

Product group	Fiscal 2019		Fiscal 2018
Microwave Filter (MFC):
RF/Microwave	$	291,653	$	239,969
Satellite		190,829		359,690
Cable TV		145,861		78,576
Broadcast TV		229,975		104,026
Niagara Scientific (NSI):		0		4,655
Total	$	858,318	$	786,916

Sales backlog at December 31	$	1,369,213	$	1,042,517

MICROWAVE FILTER COMPANY, INC.

ITEM 2.

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. 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, warranty reserves and taxes. Note 1 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017~~2018 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~~Effective October 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective method. This update outlined a comprehensive new revenue recognition model designed to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In general, 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. See Note 11 to the condensed consolidated financial statements.

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 net realizable value. Net realizable value is determined as the estimated selling price in the normal course of business, minus the cost of completion, disposal and transportation. 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. The warranty obligation is affected by product that does not meet specifications and performance requirements and any related costs of addressing such matters. Product must be returned within one year of the date of purchase.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2018 vs. THREE MONTHS ENDED JUNE 30, 2017

The following table sets forth the Company’s net sales by major product group for the three months ended June 30, 2018 and 2017.

Product group	Fiscal 2018		Fiscal 2017
Microwave Filter (MFC):
RF/Microwave	$	413,611	$	394,092
Satellite		204,474		210,703
Cable TV		101,467		56,902
Broadcast TV		82,588		40,286
Niagara Scientific (NSI):		0		665
Total	$	802,140	$	702,648
Sales backlog at June 30	$	1,193,829	$	463,727

Net sales for the three months ended June 30, 2018 equaled $802,140 an increase of $99,492 or 14.2%, when compared to net sales of $702,648 for the three months ended June 30, 2017.

MFC’s RF/Microwave product sales increased $19,519 or 5% to $413,611 for the three months ended June 30, 2018 when compared to RF/Microwave product sales of $394,092 during the same period last year. The Company’s RF/Microwave products are sold primarily to Original Equipment Manufacturers (OEM) that serve the mobile radio, commercial communications and defense electronics markets. Sales to one OEM customer increased $38,825 to $323,725 during the three months ended June 30, 2018 compared to sales of $284,900 during the same period last year. These sales are in connection with a multiyear program in which the Company is a subcontractor. 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. Over the last year, MFC, in conjunction with various OEM’s, has developed and supplied prototypes as well as small production runs in support of new programs being introduced to the marketplace. It is our belief that a continuation of this effort will help increase sales as well as reinforcing MFC’s position as a quality manufacturer of RF filters and assemblies.

~~MFC’s~~RESULTS ~~Satellite~~OF product sales decreased $6,229 or 3% to $204,474 for the three months ended June 30, 2018 when compared to Satellite product sales of $210,703 during the same period last year. The decrease in sales 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. Despite the decrease in sales, management expects demand for these types of filters to continue with the proliferation of earth stations world-wide and increased sources of interference.OPERATIONS

~~MFC’s~~THREE ~~Cable~~MONTHS TVENDED ~~product~~DECEMBER ~~sales increased $44~~31,~~565~~ ~~or 78.3% to $101,467 for the three months ended June 30,~~ 2018 ~~when compared to Cable TV product sales of $56,902 during the same period last year~~vs. ~~Management~~THREE ~~continues~~MONTHS toENDED ~~project~~DECEMBER ~~flat or a decrease in demand for standard Cable TV products due to the shift from analog to digital television. Due to the inherent nature of digital modulation versus analog modulation~~31, fewer filters are 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.2017

~~MFC’s~~The ~~Broadcast~~following ~~TV/Wireless~~table ~~Cable~~sets ~~product~~forth ~~sales~~the ~~increased~~Company’s ~~$42,302~~net orsales ~~105%~~by tomajor ~~$82,588~~product group for the three months ended ~~June~~December 3031, 2018 ~~when compared~~and ~~to sales of $40,286 during the same period last year~~2017. ~~The increase can primarily be attributed to an increase in sales to one customer. The Company has developed new products for this market and is hopeful that sales will increase in the future.~~

The Company’s international sales decreased $2,621 to $80,072 for the three months ended June 30, 2018 compared to $82,693 for the same period last year.

Product group	Fiscal 2019		Fiscal 2018
Microwave Filter (MFC):
RF/Microwave	$	291,653	$	239,969
Satellite		190,829		359,690
Cable TV		145,861		78,576
Broadcast TV		229,975		104,026
Niagara Scientific (NSI):		0		4,655
Total	$	858,318	$	786,916

Sales backlog at December 31	$	1,369,213	$	1,042,517

~~MFC’s~~Net sales ~~order~~for ~~backlog~~the ~~equaled~~three ~~$1,193,829~~months atended ~~June~~December 3031, 2018 ~~compared~~equaled ~~to sales order backlog of~~ $~~463~~858,~~727 at June 30~~318, ~~2017.~~an ~~The~~ increase in ~~backlog~~of ~~can primarily be attributed to orders received from one OEM customer to be shipped over the next fifteen months. However~~$71, ~~backlog~~402 isor ~~not necessarily indicative of future sales~~9. ~~Accordingly~~1%, ~~the~~when ~~Company~~compared ~~does~~to ~~not~~net ~~believe that its backlog as of any particular~~sales ~~date is representative~~ of ~~actual~~$786,916 ~~sales~~ for ~~any succeeding period. Approximately 45% of~~ the ~~total~~three ~~sales~~months ~~order~~ended ~~backlog~~December ~~at June 30~~31, ~~2018~~ ~~is scheduled to ship by September 30, 2018~~2017.

~~Gross~~MFC’s ~~profit~~RF/Microwave product sales increased $51,684 or 21.5% to $291,653 for the three months ended ~~June~~December 3031, 2018 ~~equaled~~when compared to RF/Microwave product sales of $~~326~~239,~~890~~969 during the same period last year. MFC’s RF/Microwave products are sold primarily to Original Equipment Manufacturers that serve the mobile radio, ancommercial ~~increase~~communications ofand defense electronics markets. Sales to one OEM customer increased $~~101~~47,~~168~~300 orto ~~44.8%~~$250,725 ~~when~~for the three months ended December 31, 2018 compared to ~~gross~~sales ~~profit~~ of $~~225~~203,~~722~~425 for the three months ended ~~June~~December 3031, 2017. ~~The~~These ~~increase~~sales are in ~~gross~~connection ~~profit~~with ~~can~~a ~~primarily~~multiyear beprogram ~~attributed~~in towhich the ~~higher~~Company ~~sales~~is a subcontractor. ~~volume~~The Company’s backlog of orders with this ~~year~~customer ~~providing~~is a$1,089,575 ~~higher~~and ~~base~~is scheduled to ~~absorb~~ship ~~fixed~~over ~~expenses~~the next nine months. The Company continues to invest in production engineering and ~~lower~~infrastructure ~~direct~~development ~~material~~to ~~costs~~penetrate OEM market segments as athey become ~~percentage~~popular. ofMFC ~~sales~~is ~~due primarily~~concentrating toits technical resources and product ~~sales~~development ~~mix.~~efforts Astoward apotential ~~percentage~~high volume customers as part of ~~sales,~~a ~~gross~~concentrated ~~profit~~effort ~~equaled~~to 40provide substantial long-term growth.8% ~~for~~Over the ~~three~~last ~~months~~year, ~~ended~~MFC, ~~June~~in ~~30,~~conjunction ~~2018~~with various ~~compared~~OEM’s, has developed and supplied prototypes as well as small production runs in support of new programs being introduced to 32the marketplace.1% ~~for~~It ~~the~~is ~~three~~our ~~months~~belief ~~ended~~that ~~June~~a ~~30,~~continuation ~~2017~~of this effort will help increase sales as well as reinforcing MFC’s position as a quality manufacturer of RF filters and assemblies.

~~Selling,~~MFC’s ~~general~~Satellite ~~and~~product ~~administrative~~sales ~~(SGA)~~decreased ~~expenses for the three months ended June 30, 2018 equaled~~ $~~345~~168,~~188,~~861 ~~an increase of $51,326~~ or 17 46.59%, ~~when compared~~ to ~~SGA expenses of~~ $~~293~~190,~~862~~829 for the three months ended ~~June~~December 3031, ~~2017.~~2018 ~~The~~when ~~increase~~compared ~~can be attributed~~ to ~~higher~~ ~~payroll~~Satellite ~~expenses~~product ~~due~~sales ~~to an increase in the number~~ of ~~hours~~$359,690 ~~worked~~during ~~versus workshare when compared to~~ the same period last year. The ~~Company~~decrease ~~has been participating~~ in ~~the~~sales ~~New~~can ~~York~~primarily ~~State~~be ~~Shared~~attributed ~~Work program which allows employers~~ to ~~reduce~~a ~~the~~decrease in ~~hours~~sales of ~~all or~~ a ~~particular~~new ~~group~~product ofwhich ~~employees.~~was ~~The~~developed ~~employees~~for ~~whose~~one ~~hours~~customer ~~are~~last ~~reduced~~year ~~can~~and ~~receive partial unemployment insurance benefits or elect to use accrued vacation. The Company also hired~~ a ~~sales~~decrease ~~professional~~in ~~during~~demand ~~the beginning of April. As a percentage of sales, SGA expenses equaled 43%~~ for the ~~three~~Company’s ~~months~~filters which ~~ended~~suppress ~~June~~strong ~~30,~~out-of-band ~~2018~~interference ~~compared~~caused toby ~~41.8%~~military ~~for~~and ~~the~~civilian ~~three~~radar ~~months~~systems ~~ended~~and ~~June~~other ~~30, 2017~~sources.

~~The~~MFC’s ~~Company~~Cable ~~recorded~~TV aproduct ~~loss~~sales ~~from~~increased ~~operations~~$67,285 ofor 85.6% to $18145,~~298~~861 for the three months ended ~~June~~December 3031, 2018 when compared to aCable TV ~~loss~~product ~~from~~sales ~~operations~~ of $6878,~~140~~576 ~~for~~during the ~~three~~same ~~months~~period ~~ended~~last ~~June 30, 2017~~year. The ~~improvement~~increase can primarily be attributed to ~~the higher~~ sales ~~volume~~to ~~and~~one customer. ~~higher~~Management ~~gross~~continues ~~profit~~to ~~this~~project ~~year~~flat ~~when~~or ~~compared~~a decrease in demand for Cable TV products due to the ~~same~~shift ~~period~~from ~~last~~analog ~~year~~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.

~~Other~~MFC’s ~~expense~~Broadcast ~~was~~TV/Wireless ~~$2,665~~Cable ~~for~~product ~~the~~sales ~~three~~increased ~~months ended June 30~~$125,949 ~~2018~~or ~~compared~~121.1% to ~~expense of~~ $2229,~~658~~975 for the three months ended ~~June~~December 3031, 2018 ~~2017~~when ~~primarily~~compared ~~due~~ to ~~interest~~sales ~~expense~~ of $3104,~~266~~026 ~~offset~~during ~~by miscellaneous non-operating income of $601 for~~ the ~~three~~same ~~months~~period ~~ended June~~last ~~30, 2018 and interest expense of $3,813 offset by miscellaneous non-operating income of $1,155 for the three months ended June 30, 2017~~year. ~~Other~~The ~~income~~increase ~~generally~~in ~~consists of interest income,~~ sales ofcan ~~scrap~~primarily ~~material,~~be ~~the~~attributed ~~forfeiture~~to ~~of non-refundable deposits~~sales ~~and~~to ~~other~~one ~~incidental items~~customer.

The ~~benefit~~Company’s ~~for~~international ~~income~~sales ~~taxes~~ equaled $078,508 for the three months ended ~~June~~December 3031, 2018 ~~and~~when ~~2017.~~compared ~~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~~international bysales ~~FASB ASC 740, the Company has evaluated the positive and negative evidence bearing upon the realization~~ of ~~its deferred tax assets. The Company has determined that~~$60,376 atduring ~~this time, it is more likely than not that~~ the ~~Company~~same ~~will~~period ~~not~~last ~~realize all of the benefits of federal and state deferred tax assets, and, as a result, a valuation allowance was established~~year.

~~NINE~~MFC’s ~~MONTHS~~sales ~~ENDED~~order ~~JUNE~~backlog 30equaled $1,369,213 at December 31, 2018 vscompared to sales order backlog of $1,042,517 at December 31, 2017. However, ~~NINE~~backlog ~~MONTHS~~is ~~ENDED~~not ~~JUNE~~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, 2018 is scheduled to ship by September 30, ~~2017~~2019.

~~The~~Gross ~~following~~profit ~~table~~for ~~sets~~the ~~forth~~three months ended December 31, 2018 equaled $343,145, an increase of $54,771 or 19%, when compared to gross profit of $288,374 for the ~~Company’s~~three ~~net~~months ended December 31, 2017. As a percentage of sales, bygross ~~major~~profit ~~product~~equaled ~~group~~40% for the ~~nine~~three months ended ~~June~~December 3031, 2018 ~~and~~compared to 36.6% for the three months ended December 31, 2017. The increase in gross profit can primarily be attributed to the higher sales volume providing a higher base to absorb overhead expenses.

Product group	Fiscal 2018		Fiscal 2017
Microwave Filter (MFC):
RF/Microwave	$	950,099	$	1,324,803
Satellite		877,520		567,287
Cable TV		246,854		245,878
Broadcast TV		244,261		165,137
Niagara Scientific (NSI):		4,837		4,093
Total	$	2,323,571	$	2,307,198
Sales backlog at June 30	$	1,193,829	$	463,727

Selling, general and administrative (SGA) expenses for the three months ended December 31, 2018 equaled $401,471, an increase of $74,969 or 23%, when compared to SGA expenses of $326,502 for the three months ended December 31, 2017. The increase can primarily be attributed to higher payroll and payroll related expenses due to the hiring of two sales professionals and an investment in new sales and marketing technologies.

~~Net~~The ~~sales~~Company ~~for~~recorded ~~the~~a ~~nine~~loss ~~months~~from ~~ended~~operations ~~June~~of 30$58,326 ~~2018~~for ~~equaled~~the ~~$2,323,571,~~three anmonths ~~increase~~ended ofDecember ~~$16~~31,~~373~~ or2018 ~~0.7%, when~~ compared to ~~net~~a ~~sales~~loss offrom operations of $238,~~307,198~~128 for the ~~nine~~three months ended ~~June~~December 3031, 2017.

~~MFC’s~~Other ~~RF/Microwave~~expense ~~product sales decreased $374,704 or 28.3% to $950,099,~~ for the ~~nine~~three months ended ~~June~~December 3031, 2018 ~~when~~was $1,898 compared to ~~RF/Microwave product~~other ~~sales~~expense of $12,~~324,803~~679 ~~during~~for the ~~same~~for ~~period~~the ~~last~~three ~~year.~~months ended ~~MFC’s~~December ~~RF/Microwave~~31, ~~products~~2017 ~~are sold~~ primarily due to ~~OEMs~~interest ~~that serve~~expense ~~the~~of ~~mobile radio~~$3,012 ~~commercial~~offset ~~communications~~by ~~and~~miscellaneous ~~defense~~non-operating ~~electronics~~income ~~markets.~~of ~~Sales to one OEM customer decreased~~ $~~262~~1,~~880 to~~114 ~~$731,450 during~~ for the ~~nine~~three months ended ~~June~~December 3031, 2018 ~~compared~~and tointerest ~~sales~~expense of $~~994~~3,~~330~~580 ~~during~~offset ~~the~~by ~~same~~miscellaneous ~~period~~non-operating ~~last~~income ~~year.~~of ~~These~~$901 ~~sales~~for ~~are in connection with a multiyear program in which~~ the ~~Company~~three ismonths aended ~~subcontractor.~~December ~~The~~31, ~~Company continues to invest in production engineering and infrastructure development to penetrate OEM market segments as they become popular~~2017. ~~MFC~~Miscellaneous isnon-operating ~~concentrating~~income ~~its~~generally ~~technical resources~~consists ~~and~~of ~~product~~sales ~~development efforts toward potential high volume customers as part~~ of ascrap ~~concentrated~~material ~~effort to provide substantial long-term growth. Over the last year, MFC, in conjunction with various OEM’s, has developed~~ and ~~supplied prototypes as well~~ ~~as small production runs in support of new programs being introduced to~~ the ~~marketplace.~~forfeiture ~~It is our belief that a continuation~~ of ~~this~~non-refundable ~~effort~~deposits ~~will~~and ~~help~~other ~~increase~~incidental ~~sales as well as reinforcing MFC’s position as a quality manufacturer of RF filters and assemblies~~items.

The benefit for income taxes equaled $0 for the three months ended December 31, 2018 and December 31, 2017. We have not recognized any benefit for income taxes. Any benefit for losses has been subject to a valuation allowance since the realization of the deferred tax benefit is not considered more likely than not. As required by FASB ASC 740, the Company has evaluated the positive and negative evidence bearing upon the realization of its deferred tax assets. The Company has determined that, at this time, it is more likely than not that the Company will not realize all of the benefits of federal and state deferred tax assets, and, as a result, a valuation allowance was established. See Note 4.

MFC’s Satellite product sales increased $310,233 or 54.7% to $877,520 for the nine months ended June 30, 2018 when compared to satellite product sales of $567,287 during the same period last year. The increase in sales can primarily be attributed to the sales of a new product developed for one customer and 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. Sales to this one customer equaled $247,875 for the nine months ended June 30, 2018 compared to $33,810 for the nine months ended June 30, 2017. Management expects sales of this product to continue but is unable to predict demand at this time.

MFC’s Cable TV product sales increased $976 or 0.4% to $246,854 for the nine months ended June 30, 2018 compared to Cable TV product sales of $245,878 during the same period last year. Management continues to project flat or a decrease in demand for standard 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 are 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 $79,124 or 47.9% to $244,261 for the nine months ended June 30, 2018 when compared to sales of $165,137 during the same period last year. The increase can primarily be attributed to an increase in sales to one customer. The Company has developed new products for this market and is hopeful that sales will increase in the future.

The Company’s international sales decreased $23,576 to $232,239 for the nine months ended June 30, 2018 compared to $255,815 for the same period last year.

MFC’s sales order backlog equaled $1,193,829 at June 30, 2018 compared to sales order backlog of $463,727 at June 30, 2017. The increase in backlog can primarily be attributed to orders received from one OEM customer to be shipped over the next fifteen months. However, backlog is not necessarily indicative of future sales. Accordingly, the Company does not believe that its backlog as of any particular date is representative of actual sales for any succeeding period. Approximately 45% of the total sales order backlog at June 30, 2018 is scheduled to ship by September 30, 2018.

Gross profit for the nine months ended June 30, 2018 equaled $877,066, an increase of $129,533 or 17.3%, when compared to gross profit of $747,533 during the nine months ended June 30, 2017. The increase in gross profit as a percentage of sales can be attributed to lower direct material costs as a percentage of sales primarily due to product sales mix and lower payroll and payroll related expenses due to a reduction in head count in production labor and production support positions due to retirement and employee turnover with the positions not immediately filled. As a percentage of sales, gross profit equaled 37.7% for the nine months ended June 30, 2018 compared to 32.4% for the nine months ended June 30, 2017.

SG&A expenses for the nine months ended June 30, 2018 equaled $1,005,301 an increase of $51,816 or 5.4%, when compared to SG&A expenses of $953,485 during the nine months ended June 30, 2017. The increase can primarily be attributed to increases in payroll expenses. As a percentage of sales, SGA expenses increased to 43.3% for the nine months ended June 30, 2018 compared to 41.3% for the nine months ended June 30, 2017.

The Company recorded a loss from operations of $128,235 for the nine months ended June 30, 2018 compared to a loss from operations of $205,952 for the nine months ended June 30, 2017. The improvement can primarily be attributed to the higher gross profit this year when compared to the same period last year.

Other expense was $6,461 for the nine months ended June 30, 2018 compared to expense of $8,422 for the nine months ended June 30, 2017 primarily due to interest expense of $10,209 offset by miscellaneous non-operating income of $3,748 for the nine months ended June 30, 2018 and interest expense of $11,831 offset by miscellaneous non-operating income of $3,409 for the nine months ended June 30, 2017. Other income generally consists of interest income, sales of scrap material, the forfeiture of non-refundable deposits and other incidental items.

The provision for income taxes equaled $50 for the nine months ended June 30, 2018 and $0 for the nine months ended June 30, 2017. Any benefit for losses has been subject to a valuation allowance since the realization of the deferred tax benefit is not considered more likely than not. As required by FASB ASC 740, the Company has evaluated the positive and negative evidence bearing upon the realization of its deferred tax assets. The Company has determined that, at this time, it is more likely than not that the Company will not realize all of the benefits of federal and state deferred tax assets, and, as a result, a valuation allowance was established.

Off-Balance Sheet Arrangements

At ~~June~~December 3031, 2018 and 2017, 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.

	June 30, 2018		September 30, 2017
	December 31, 2018		September 30, 2018
Cash & cash equivalents	$	~~550~~592,~~054~~215	$	~~667~~674,~~940~~045
Working capital	$	1,~~023~~027,~~329~~697	$	1,~~149~~147,~~368~~509
Current ratio		4.519 to 1		4.2418 to 1
Long-term debt	$	~~231~~205,~~855~~923	$	~~270~~219,~~172~~071

Cash and cash equivalents decreased $~~117~~81,~~886~~830 to $~~550~~592,~~054~~215 at ~~June~~December 3031, 2018 when compared to cash and cash equivalents of $~~667~~674,~~940 at~~045 at September 30, ~~2017~~2018. The decrease was a result of $749,~~099~~790 in net cash used in operating activities, $759,~~348~~475 in ~~net~~ cash used ~~for~~to purchase ~~capital~~fixed ~~expenditures,~~assets and $3612,~~436~~565 in net cash used for repayment of a note payable ~~and $3 used to purchase treasury stock~~.

Net cash provided by operating activities can fluctuate between periods as a result of differences in net income, the timing of the collection of accounts receivable, purchase of inventory and payment of accounts payable. ~~The $74,099 in net cash used in operating activities can primarily be attributed the net loss of $134,746 net of depreciation expense of $54,375.~~

OnThe ~~July 2~~$59,475 ~~2013,~~in ~~Microwave~~fixed ~~Filter~~asset ~~Company,~~purchases ~~Inc.~~consisted ~~entered into a Ten Year Term Loan with KeyBank National Association in the amount~~ of ~~Five Hundred Thousand and No/100 Dollars (~~$~~500~~54,~~000.00).~~900 ~~The~~to ~~amount~~repair ofpart ~~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~~roof ~~per~~and ~~annum equal to~~ $4~~.5%.~~,575 ~~The~~used ~~net proceeds from the Term Loan will be available~~ to ~~provide~~purchase ~~working capital~~computer ~~as needed~~software.

~~The~~On July 2, 2013, the Company ~~plans~~entered oninto ~~spending~~a ~~approximately~~Ten Year Term Loan with KeyBank National Association in the amount of Five Hundred Thousand and No/100 Dollars ($55500,000.00). ~~over~~The ~~the~~amount ~~next~~of ~~four~~all ~~months~~advances outstanding together with accrued interest thereon shall be due and payable on ~~plant~~July ~~improvements~~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 ~~forseeable~~next ~~future~~twelve months will be met by its existing cash balances, future cash flows from operations and its current credit arrangements.

1513

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 ~~2017~~2018 Annual Report and Form 10-K for the fiscal year ended September 30, ~~2017~~2018 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

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(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.

1615

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None. ~~Item 1A. Risk Factors~~

~~Not~~Item ~~applicable~~1A. ~~Item~~ 2.Risk ~~Changes in Securities~~Factors

~~None~~Not ~~during the three months ended June 30, 2018~~applicable. ~~Item 3. Defaults Upon Senior Securities~~

~~The~~Item ~~Company has no senior securities~~2. ~~Item~~ 4.Changes ~~Mine~~in ~~Safety Disclosures~~Securities

~~Not applicable~~None. ~~Item 5. Other Information~~

~~None.~~ Item 6 3. ~~Exhibits~~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 Paul W. Mears

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

32.1 Section 1350 Certification of Paul W. Mears and Richard L. Jones

1716

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.
August 13, 2018	/s/ Paul W. Mears
(Date)	Paul W. Mears
	Chief Executive Officer
August 13, 2018	/s/ Richard L. Jones
(Date)	Richard L. Jones
	Chief Financial Officer

MICROWAVE FILTER COMPANY, INC.

February 13, 2019	/s/ Paul W. Mears
(Date)	Paul W. Mears
	Chief Executive Officer

February 13, 2019	/s/ Richard L. Jones
(Date)	Richard L. Jones
	Chief Financial Officer

Filing Compare · MICROWAVE FILTER CO INC /NY/