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 30,December 31, 2002

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)

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 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 -    2,904,781 shares as of June 30,December 31, 2002.












                     PART I. - FINANCIAL INFORMATION


                         MICROWAVE FILTER COMPANY, INC.

                          CONSOLIDATED BALANCE SHEETS


(Amounts in thousands)
JUNE 30,
December 31, 2002 SEPTEMBER 30, 20012002 (Unaudited) Assets Current Assets: Cash and cash equivalents $ 608270 $ 373649 Investments 1,383 9001,368 1,378 Accounts receivable-trade, net 517 600545 379 Federal and state income tax recoverable 15 0 Inventories 887 884806 963 Deferred tax asset - current 165 165180 180 Prepaid expenses and other current assets 124 8798 120 -------- -------- Total current assets 3,684 3,0093,282 3,669 Property, plant and equipment, net 1,269 1,2611,136 1,197 -------- -------- Total assets $ 4,9534,418 $ 4,2704,866 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 162176 $ 192180 Customer deposits 145 23138 140 Accrued federal and state income taxes 298 610 234 Accrued payroll and related expenses 140 109 126 Accrued compensated absences 303 265243 249 Cash dividend payable 290 0 Other current liabilities 105 7147 146 -------- -------- Total current liabilities 1,153 7211,003 1,075 Deferred tax liability - noncurrent 19 1930 30 -------- -------- Total liabilities 1,172 7401,033 1,105 -------- -------- Stockholders' Equity: Common stock,$.10 par value 432 432 Additional paid-in capital 3,240 3,240 Retained earnings 1,615 1,3641,219 1,595 -------- -------- 5,287 5,0364,891 5,267 Common stock in treasury, at cost (1,506) (1,506) -------- -------- Total stockholders' equity 3,781 3,5303,385 3,761 -------- -------- Total liabilities and stockholders' equity $ 4,9534,418 $ 4,2704,866 ======== ========
See Accompanying Notes to Consolidated Financial Statements MICROWAVE FILTER COMPANY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30,MICROWAVE FILTER COMPANY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2002 AND 2001 (Unaudited) (Amounts in thousands, except per share data)
Three months ended Nine months ended June 30 June 30 2002 2001December 31 2002 2001 Net sales $1,517 $1,782 $6,019 $5,391$1,489 $2,390 Cost of goods sold 1,104 1,286 3,642 3,654 ------- -------1,039 1,220 ------- ------- Gross profit 413 496 2,377 1,737450 1,170 Selling, general and administrative expenses 544 553 1,716 1,708 ------- -------589 610 ------- ------- (Loss) income from operations (131) (57) 661 29(139) 560 Other income (net), principally interest 9 19 32 66 ------- -------8 13 ------- ------- (Loss) income before income taxes (122) (38) 693 95(131) 573 (Benefit) provision for income taxes (42) (13) 239 33 ------- -------(45) 198 ------- ------- NET (LOSS) INCOME ($80) ($25) $454 $62 ======= =======86) $375 ======= ======= Basic (loss) earnings per share ($0.03) ($0.01) $0.16 $0.02.03) $0.13 ======= ======= Weighted average number of common shares outstanding 2,905 2,905 ======= =======
See Accompanying Notes to Consolidated Financial Statements MICROWAVE FILTER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30,MICROWAVE FILTER COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 31, 2002 AND 2001 (Unaudited) (Amounts in thousands)
Three months ended Nine months ended June 30 June 30December 31 2002 2001 2002 2001 Cash flows from operating activities: Net (loss) income $ (80)(86) $ (25) $ 454 $ 62375 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 74 77 205 22476 65 Change in assets and liabilities: (Increase) decrease in: Accounts receivable 285 181 83 350(166) (326) Inventories 122 430 (3) 118157 (170) Prepaid expenses & other assets 19 22 (37) (39)7 (35) Increase (decrease) in: Accounts payable & accrued expenses (263) (410) 432 (531)(362) 677 ------- ------- -------- ------- Net cash (used in) provided by operating activities 157 275 1,134 184(374) 586 ------- ------- -------- ------- Cash flows from investing activities: Investments 47 0 (483) 92510 510 Capital expenditures (177) (20) (213) (213)(15) (28) ------- ------- -------- ------- Net cash (used in) provided by investing activities (130) (20) (696) 712(5) 482 Cash flows from financing activities: Purchase of treasury stock 0 0 0 (382) Cash dividend paid 0 0 (203) 0 ------- ------- ------- ------- Net cash (used in) financing activities 0 0 (203) (382) Increase------- ------- (Decrease)increase in cash and cash equivalents 27 255 235 514(379) 1,068 Cash and cash equivalents at beginning of period 581 884649 373 625 ------- ------- ------- ------- Cash and cash equivalents at end of period $ 608 $1,139 $ 608 $1,139 ===== ====== ======270 $1,441 ======= =======
See Accompanying Notes to Consolidated Financial Statements MICROWAVE FILTER COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30,DECEMBER 31, 2002 Note 1. Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. 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 ninethree month period ended June 30,December 31, 2002 are not necessarily indicative of the results that may be expected for the year ended September 30, 2002.2003. For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10K for the year ended September 30, 2001.2002. Note 2. Industry Segment Data The Company's primary business segments involve (1) operations of Microwave Filter Company, Inc. (MFC) which designs, develops, manufactures and sells electronic filters, usedboth for preventing interferenceradio and microwave frequencies, to help process signal distribution and to prevent unwanted signals from disrupting transmit or signal processing inreceive operations. Markets served include cable television, television and radio broadcast, satellite broadcast, aerospacemobile radio, commercial and government markets;defense electronics; and (2) operations of Niagara Scientific, Inc. (NSI), a wholly owned subsidiary, which manufactures industrial automation equipment.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. Information by segment is as follows: Three months ended Nine months ended (thousands of dollars) June 30 June 30, 2002 2001December 31 2002 2001 Net Sales (Unaffiliated): MFC $1,389 $1,245 $5,480 $4,445$1,301 $2,369 NSI 128 537 539 946 ------ ------188 21 ------ ------ Total $1,517 $1,782 $6,019 $5,391 ====== ======$1,489 $2,390 ====== ====== Operating (loss) profit : (a) MFC ($32) ($42) $811 $13310) $614 NSI (99) (15) (150) (104) ------ ------(129) (54) ------ ------ Total ($131) ($57) $661 $29139) $560 ====== ====== ======= ======= Identifiable assets: (b) MFC $4,023 $2,867 $4,023 $2,867$3,802 $3,944 NSI 322 286 322 286 ------ ------346 436 ------ ------ Subtotal 4,345 3,153 4,345 3,1534,148 4,380 Corporate Assets - Cash And Cash Equivalents 608 1,139 608 1,139 ------ ------270 942 ------ ------ Total $4,953 $4,292 $4,953 $4,292 ====== ======$4,418 $5,322 ====== ====== (a) Operating profit (loss) is total revenue less cost of goods sold and operating expenses. In computing operating profit, none of the following items have been added or deducted: interest expense, income taxes and miscellaneous income. Expenses incurred on behalf of both Companies are allocated based upon estimates of their relationship to each entity. (b) Identifiable assets by industry are those assets that are used in the Companies operations in each industry. Note 3. Inventories Inventories net of provision for obsolescence consisted of the following: (thousands of dollars) June 30,December 31, 2002 September 30, 20012002 Raw materials and stock parts $630 $702$545 $636 Work-in-process 188 106202 257 Finished goods 69 7659 70 ---- ---- $887 $884$806 $963 ==== ==== The Company's provision for obsolescence equaled $297,634$345,161 at June 30,December 31, 2002 and September 30, 2001.2002. Note 4. Cash Dividend Payable On December 18, 2002, the Board of Directors of Microwave Filter Company, Inc. declared a ten cents per share cash dividend to shareholders of record on January 17, 2003 to be distributed on January 31, 2003. Note 5. Recent Accounting Pronouncements InSFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," was issued June 2001, the Financial Accounting Standards Board ("FASB") approved Statements of Financial Accounting Standards2002 and is effective for exit or disposal activities initiated after December 31, 2002. SFAS No. 141 "Business Combinations" ("SFAS 141")146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 142 "Goodwill94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Intangible Assets" ("SFAS 142") which are effective July 1, 2001 and October 1, 2002, respectively, for the Corporation. SFAS 141 requires that the purchase methodCosts to Exit an Activity Including Certain Costs Incurred in a Restructuring." The adoption of accounting be used for all business combinations initiated after June 30, 2001. Thisthis standard has no material impact on the financial statements of the Company. Under SFAS 142, amortization of goodwill, including goodwill recorded in past business combinations, will discontinue upon adoption of this standard. The Company has no goodwill or other intangibles as of June 30, 2002 or September 30, 2001. In October 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 provides guidance on the accounting for long-lived assets to be held and used and for assets to be disposed of through sale or other means. SFAS 144 is effective for fiscal years beginning after December 15, 2001. The Company does not expect the adoption of SFAS 144 to have a material impact on its financial statements. 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 two industries. 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 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. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30,DECEMBER 31, 2002 vs. THREE MONTHS ENDED JUNE 30,DECEMBER 31, 2001. Net sales for the three months ended June 30,December 31, 2002 equaled $1,517,312,$1,489,157, a decrease of $264,720$901,303 or 14.9%37.7% when compared to net sales of $1,782,032$2,390,460 for the three months ended June 30,December 31, 2001. MFC sales for the three months ended June 30,December 31, 2002 equaled $1,389,010, an increase$1,301,163, a decrease of $143,815$1,068,565 or 11.5%45.1% when compared to sales of $1,245,195$2,369,728 for the three months ended JuneDecember 31, 2001. The increasedecrease in MFC sales can primarily be attributed to an increasea decrease in the sales of the company's standard cable/satellite TV products, which management attributes toproducts. Last year, the Company saw an increase in demand for the company's filters which suppress strong out-of-band interference caused by military and civilian radar systems. This increase in demand cansystems, primarily be attributeddue to the increased security measures beingthat were taken as a result of the September 11th terrorist attacks. The Company is uncertain how long thisThat demand will continuehas decreased resulting in the lower sales and what levels it will reach. There can be no assurance thatdue to the Company'scurrent economic climate, MFC has not seen an increase in sales levels or growth will remain at, reach or exceed historical levels in any future period. MFC continues to experience a decrease in demand in other product areas primarily due to the economy.areas. MFC's sales order backlog equaled $317,382$298,317 at June 30,December 31, 2002, a decrease of $82,386$101,323, when compared to sales order backlog of $399,768$399,640 at March 31,September 30, 2002. 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 85% ofThe total MFC's sales order backlog at June 30,December 31, 2002 is scheduled to ship by September 30, 2002.2003. 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. NSI sales for the three months ended June 30,December 31, 2002 equaled $128,302, a decrease$187,994, an increase of $408,535 or 76%$167,262 when compared to sales of $536,837$20,732 for the three months ended June 30,December 31, 2001. Despite the increase in sales, NSI's sales order levels have also been impacted negatively by the sluggish economy and reduced capital spending. Sales of NSI related equipment, on a quarter to quarter basis, can also be impacted by the timing of the shipment of the custom designed equipment and the customer's scheduled delivery dates. At June 30,December 31, 2002, NSI's sales order backlog equaled $138,600$394,600 compared to $245,600$305,938, at March 31,September 30, 2002. Approximately 65% of NSI's total backlog of orders is scheduled to ship during fiscalby September 30, 2003. The Company recorded a net loss of $80,194,$86,168, or a loss of $.03 per share, for the three months ended June 30,December 31, 2002 compared to a net lossincome of $24,696,$375,492, or a loss of $.01$.13 per share, for the three months ended June 30,December 31, 2001. The decrease in net income can primarily be attributed to the decrease in sales. Gross profit for the three months ended June 30,December 31, 2002 equaled $413,019,$449,686, a decrease of $82,814$720,405 or 16.7%61.6%, when compared to gross profit of $495,833$1,170,091 for the three months ended June 30,December 31, 2001. As a percentage of sales, gross profit equaled 27.2%30.2% for the three months ended June 30,December 31, 2002 compared to 27.8%48.9% for the three months ended June 30,December 31, 2001. The dollar decrease in gross profit can primarily be attributed to the decrease in sales. Selling, general and administrative (SGA) expenses for the three months ended June 30,December 31, 2002 equaled $544,440,$589,197, a decrease of $7,956$20,476 or 1.4%3.4%, when compared to SG&A expenses of $552,396$609,673 for the three months ended June 30,December 31, 2001. SGA expenses increased to 35.9%39.6% of sales for the three months ended June 30,December 31, 2002 when compared to 31.0%25.5% of sales for the three months ended June 30,December 31, 2001, primarily due to the decrease in sales this year when compared to the same period last year. Due to the uncertain economic climate, the Company is emphasizing cost controls and cost cutting measures to minimize operating expenses. On an industry segment basis, MFC recorded a loss from operations of $32,397$10,600 for the three months ended June 30,December 31, 2002 compared to a lossincome from operations of $41,668$614,418 for the three months ended June 30,December 31, 2001. The improvementdecrease can primarily be attributed to the increasedecrease in MFC's sales. NSI recorded a loss from operations of $99,024$128,911 for the three months ended June 30,December 31, 2002 compared to a loss from operations of $14,895$53,931 for the three months ended June 30,December 31, 2001. The increase in NSI's operating losslosses can primarily be attributed to the decreaselow sales volume, fixed overhead expenses and an increase in NSI salespromotional expenses this year when compared to the same period last year. NINE MONTHS ENDED JUNE 30, 2002 vs. NINE MONTHS ENDED JUNE 30, 2001. Net sales 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 nine months ended June 30, 2002 equaled $6,018,723, an increaseCompany. Primary areas where financial information of $627,619 or 11.6% when compared to net sales of $5,391,104 for the nine months ended June 30, 2001. MFC sales for the nine months ended June 30, 2002 equaled $5,480,330, an increase of $1,035,032 or 23.3% when compared to sales of $4,445,298 for the nine months ended June 30, 2001. The increase in MFC salesCompany is primarily duesubject to the increaseuse of estimates, assumptions and the application of judgment include revenues, receivables, inventories, and taxes. 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 salesaccompanying consolidated balance sheet. Allowances for doubtful accounts are based on estimates of losses related to customer receivable balances. The establishment of reserves requires the company's standard cable/satellite TV products, which management attributesuse of judgment and assumptions regarding the potential for losses on receivable balances. The Company's inventories are valued at the lower of cost or market. The Company uses certain estimates and judgments and considers several factors including product demand and changes in technology to the increase in demandprovide for the company's filters which suppress strong out-of-band interference causedexcess and obsolescence reserves to properly value inventory. The Company has deferred tax assets that are reviewed for recoverability and valued accordingly. These assets are evaluated by militaryusing estimates of future taxable income streams. Valuations related to tax accruals and civilian radar systems. NSI sales for the nine months ended June 30, 2002 equaled $538,393, a decrease of $407,413 when compared to sales of $945,806 for the nine months ended June 30, 2001. Sales of NSI related equipment, on a quarter to quarter basis,assets can be impacted by the timing of the shipment of the custom designed equipmentchanges to tax codes, changes in statutory tax rates and the customer's scheduled delivery dates. NSI sales have also been impacted by the unfavorable economic climate and reduced capital spending. NetCompany's future taxable income for the nine months ended June 30, 2002 equaled $454,078, or $.16 per share, an increase of $392,108 or 633% when compared to net income of $61,970, or $.02 per share, for the nine months ended June 30, 2001. The increase in net income is primarily due to the higher sales volume and improved profit margins when compared to the same period last year. Gross profit for the nine months ended June 30, 2002 equaled $2,376,716 or 39.5% of sales, an increase of $639,217 or 36.8%, when compared to gross profit of $1,737,499 or 32.2% of sales for the nine months ended June 30, 2001. The improvements can primarily be attributed to the increase in sales, product sales mix, operational efficiencies and economies of scale due to the higher sales volume. SG&A expenses for the nine months ended June 30, 2002 equaled $1,716,102, an increase of $7,780 or 0.5% when compared to SG&A expenses of $1,708,322 for the nine months ended June 30, 2001. Due to the uncertain economic climate, the Company is emphasizing cost controls and cost cutting measures to minimize operating expenses. levels. LIQUIDITY and CAPITAL RESOURCES Cash and cash equivalents increased $234,400decreased $378,898 to $607,542$270,298 at June 30, 2002December 31,2002 when compared to $373,142$649,196 at September 30, 2001.2002. The increasedecrease was a result of $1,133,811$374,425, in net cash provided byused in operating activities $696,077and $4,473 in net cash used in investing activities and $203,334 in net cash used in financing activities. The decreaseincrease of $82,781$166,511 in accounts receivable at June 30,December 31, 2002, when compared to September 30, 2001, is2002, can primarily be attributable to the decreaseincrease in shipments during the month ended June 30,December 31, 2002 when compared to the month ended September 30, 2001.2002. The increasedecrease of $122,366$157,359 in customer depositsinventories at June 30,December 31, 2002, when compared to September 30, 2001,2002, can primarily be attributable to the increasedecrease in MFC's sales orders and the scheduled delivery of NSI's sales order backlog at June 30, 2002 when compared to September 30, 2001.backlog. The increasedecrease in accrued federal and state income taxes payable of $236,791$233,846 at June 30,December 31, 2002, when compared to September 30, 2001,2002, can primarily be attributed to the increasedecrease in pre-tax income. The decrease in other current liabilities of $99,287 at December 31, 2002, when compared to September 30, 2002, can primarily be attributed to the payment of the Company's fiscal 2002 discretionary profit sharing contribution during the quarter ended December 31, 2002. Cash used in investing activities during the ninethree months ended June 30,December 31, 2002 consisted of funds used to purchaseprovided by the sale of investments ($482,769)10,147) and funds used for capital expenditures ($213,308)14,620). Capital expenditures consisted primarily of test equipment and engineering design software. Cash used in financing activities during the nine months ended June 30, 2002 consisted of funds used to pay a cash dividend ($203,334) on March 13, 2002. At June 30,December 31, 2002, the Company had unused aggregate lines of credit totaling $600,000. Of these lines, $100,000 is for the purchase of equipment and is collateralized by equipment and $500,000 is for working capital and is collateralized by accounts receivable, inventories and equipment. 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. RECENT ACCOUNTING PRONOUNCEMENTS In- ---------------------- SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," was issued June 2001, the Financial Accounting Standards Board ("FASB") approved Statements of Financial Accounting Standards2002 and is effective for exit or disposal activities initiated after December 31, 2002. SFAS No. 141 "Business Combinations" ("SFAS 141")146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 142 "Goodwill94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Intangible Assets" ("SFAS 142") which are effective July 1, 2001 and October 1, 2002, respectively, for the Corporation. SFAS 141 requires that the purchase methodCosts to Exit an Activity Including Certain Costs Incurred in a Restructuring." The adoption of accounting be used for all business combinations initiated after June 30, 2001. Thisthis standard has no material impact on the financial statements of the Company. Under SFAS 142, amortization of goodwill, including goodwill recorded in past business combinations, will discontinue upon adoption of this standard. The Company has no goodwill or other intangibles as of June 30, 2002 or September 30, 2001. In October 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 provides guidance on the accounting for long-lived assets to be held and used and for assets to be disposed of through sale or other means. SFAS 144 is effective for fiscal years beginning after December 15, 2001. The Company does not expect the adoption of SFAS 144 to have a material impact on its financial statements. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Any statements contained in this report which are not historical facts are forward looking statements; and, therefore, many important factors could cause actual results to differ materially from those in the forward looking statements. Such factors include, but are not limited to, changes (legislative, regulatory and otherwise) in the MMDS, LPTV or Cable industry, demand for the Company's products (both domestically and internationally), the development of competitive products, competitive pricing, market acceptance of new product introductions, technological changes, general economic conditions, litigation and other factors, risks and uncertainties which may be identified in the Company's Securities and Exchange Commission filings. ITEM 4. CONTROLS AND PROCEDURES During the 90-day period prior to the filing date of this report, management, including the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon, and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date the Company carried out its evaluation. There were no significant deficiencies or material weaknesses identified in the evaluation and, therefore, no corrective actions were taken. PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is unaware of any material threatened or pending litigation against the Company. 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 None during this reporting period. Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 b. Reports on Form 8-K None. 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 14, 2002February 13, 2003 Carl F. Fahrenkrug (Date) -------------------------- Carl F. Fahrenkrug Chief Executive Officer August 14, 2002February 13, 2003 Richard L. Jones (Date) -------------------------- Richard L. Jones Chief Financial Officer CERTIFICATION I, Carl F. Fahrenkrug, Chief Executive Officer of Microwave Filter Company, Inc. ("Company"), certify that: 1. I have reviewed this Form 10-Q of the Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the Company, including it's consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the Company's auditors and the audit committee of Company's board of directors ( or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weakness in internal controls, and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and 6. The Company's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: February 13, 2003 /s/ Carl F. Fahrenkrug Carl F. Fahrenkrug CERTIFICATION I, Richard L. Jones, Chief Financial Officer of Microwave Filter Company, Inc. ("Company"), certify that: 1. I have reviewed this Form 10-Q of the Company; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the Company, including it's consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure of the disclosure controls and procedures based on our evaluation as of the Evaluation Date: 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of Company's board of directors ( or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weakness in internal controls, and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and 6. The Company's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: February 13, 2003 /s/ Richard L. Jones Richard L. Jones Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C SECTION1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Microwave Filter Company, Inc. (the Company) on Form 10-Q for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Carl F. Fahrenkrug, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/Carl F. Fahrenkrug Carl F. Fahrenkrug Chief Executive Officer February 13, 2003 Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C SECTION1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Microwave Filter Company, Inc. (the Company) on Form 10-Q for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Richard L. Jones, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/Richard L. Jones Richard L. Jones Chief Financial Officer February 13, 2003