SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C 20549

                                FORM 10-KSB 

(Mark one) 
_X_  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
     ACT OF 1934 (FEE REQUIRED) 

For the fiscal year ended________September 30, 1996_____________________________
                                    OR
__TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from____________to____________________________________

Commission file number__________________0-10976_________________________________

_______________________________Microwave Filter Company, Inc____________________
           (Exact name of registrant as specified in its charter)

__________New York__________________________16-0928443__________________________
(State or other jurisdiction of incorporation or organization)
                                            (I.R.S. Employer Identification No.)

_____6743 Kinne Street,  East Syracuse, NY________13057_________________________
(Address of principal executive offices)          (Zip code)

Registrant's telephone number including area code____(315) 437-3953_____________

Securities registered pursuant to Section 12(b) of the Act:_____None____________

Securities registered pursuant to Section 12(g) of the Act:

                           
_________________________Common stock, par value $.10 per share_________________
                              Title of class

  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 if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K.__ 

  The aggregate market value of the voting stock held by non-affiliates of the 
registrant at the close of business on  November 29, 1996  was $3,766,220. 

  Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practicable date. 

  Shares of common stock outstanding at November 29, 1996:   3,544,678

  Documents incorporated by reference: None.

   
<PAGE>

                           PART I 
                                
ITEM 1. BUSINESS.

GENERAL DEVELOPMENT OF BUSINESS
-------------------------------
  Microwave Filter Company, Inc. (hereinafter referred to as MFC) was 
incorporated in New York State on September 26, 1967.  MFC is the successor of 
Microwave Filter Company which was founded in April of 1967. 

  On July 1, 1990, MFC acquired Niagara Scientific, Inc. (hereinafter referred 
to as NSI.) 

  MFC and its subsidiaries are sometimes referred to collectively as the 
"Company."

NARRATIVE DESCRIPTION OF BUSINESS
----------------------------------
Microwave Filter Company, Inc. (MFC)

  MFC designs, develops, manufactures and sells passive 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. 

  The company actively produces over 1,700 standard products and has designed 
over 5,000 custom products for specialized applications. 

  Four basic filter types comprise the building blocks for interference 
filters. 

  Low Pass Filters - Low pass filters have a designed "cutoff" frequency: all 
lower frequencies pass through the filter undiminished while higher 
frequencies are blocked. These filters may be used to protect a receiver from 
a wide range of higher, interfering frequencies.  They may be used to block 
out higher order harmonics or simply preselect a band of desired frequencies. 

  High Pass Filters - High pass filters also have a designed "cutoff" 
frequency, but their pass and block functions are reversed; all lower 
frequencies are blocked while all higher frequencies pass through the filter 
undiminished.  These filters are often used to protect a receiver from a wide 
range of lower, interfering frequencies. 

  Bandpass Filters - Bandpass filters pass a "window" of frequencies - a 
continuous segment of the radio frequency spectrum.  They reject all 
frequencies outside this window. 

  Band Rejection Filters - Band rejection filters have the reverse function of 
a bandpass filter; they reject all frequencies in a continuous "window" of the 
radio frequency spectrum and pass all higher and lower frequencies.  They may 
be used to remove several interfering frequencies when these are grouped in a 
limited portion of the radio frequency spectrum.  A band reject filter also 
removes a band of frequencies for the reinsertion of new programming on the 
same band of frequencies. 

                              2
<PAGE>

  Filter Networks - The company is often called upon to design filter networks 
to meet complex interference problems.  Each filter network utilizes the basic 
filters described in the preceding paragraphs, connected according to certain 
mathematical equations, to solve complex interference problems. 

  MFC's reputation for product service and quality has encouraged customers to 
engage us for their custom filters and program requirements.  Utilizing a well 
equipped design test facility within a 40,000 square foot physical plant, MFC 
offers a full range of production capability for large and small orders.  We 
also provide military specifications and quality assurance programs. 

  MFC formed the Comband Division in January 1993 after it purchased the CT-
1000 addressable converter product line from Comband Technologies, Inc., 
Chesapeake, Va. to expand business in one of its growing markets, Wireless 
Cable.  The CT-1000 system encrypts and authorizes programming and pay-per-
view events to subscribers.  The product line is the culmination of many years 
of design initiated by General Electric, Portsmouth, Va.  It consists of four 
parts: 

  1.  A Management Computer System (MCS) packages combinations of channels and 
provides management report functions. 

  2.  A PC based system controller, installed at the transmission site, accepts 
information downloaded from the MCS and drives one or more encoder/modulators. 

  3.  The encoder/modulators scramble the programming for broadcast using 
combinations of six randomly selected modes. 

  4.  An addressable converter box in the subscriber's home, decodes the signal 
using the patented digital data, transmission standard and insures that the 
right programming is received. 

  Introduction of the CT-1000 is a departure from MFC's traditional style of 
manufacturing passive products, which require no electricity for operation, to 
active circuitry systems, which require power.  The purchase of the CT-1000 
product line was a natural move for MFC, which has developed products for the 
Wireless Cable industry since the mid 70's. 

  New products were added to the Comband product line in 1995.  The CT-1100 
Super Cypher Multi-tier Broadband System was developed as a low cost 
descrambling alternative to the CT-1000 Addressable Converter for receiving 
Wireless Cable programming.  Customers are afforded a system which descrambles 
programming for all televisions within a household.  The system is addressable 
but does not offer the pay-per-view feature of the CT-1000. 

Niagara Scientific, Inc. (NSI) 
------------------------------

  NSI also includes niche markets in its customer base: industrial customers 
not addressed by larger competitors and larger customers having special needs. 

  Schroeder Machine Division (SMD) - A leading activity is custom designing 
case packing machines to automatically pack products into shipping cases.  
Customers are processors of food and other commodity products with a need to 

                              3
<PAGE>

reduce labor cost with modest investment and quick payback. Operations are 
also characterized by repeat orders as customer production expands.  "Smart" 
machines range from video inspection machines to the Model 8000 automatic 
flexible bag packing machine. 

MARKETS 
-------
Microwave Filter Company, Inc. (MFC) 
------------------------------------

  Cable Television (CATV) - MFC serves this industry largely with three product 
groups.  One popular area includes standard and custom filters used at the 
headend to process signals and remove interference.  A very popular 
application involves removing or re-routing channels to organize programming 
line-ups. 

  A family of trap filters, "Fastrap," is used by cable operators to restrict 
or permit the viewing of pay per view or other premium programming.  The traps 
can be ordered in small and large quantities, are 100% inspected and delivered 
overnight.  Since all operators initially receive programming via satellite, 
products from our satellite market cross over into cable television.  C-band 
satellite receive systems are prone to various types of terrestrial 
interference which are curable in many cases by applying filters. 

  Cable television is a dynamic industry which has more than doubled in size 
over the last 10 years. The nature of cable television service is destined to 
change dramatically in 1997 and in future years ahead. Spurred by the passage 
of the Telecommunications Act of 1996, cable and other broadcast providers 
will have the opportunity to enter each other's markets and compete for 
customers. This means that telephone companies previously barred from offering 
video services now have the green light to venture into this market or into 
other services. 

  Over the last few years, cable systems have been preparing for the advent of 
increased competition and market opportunities by upgrading their 
infrastructure. Major cable systems have been laying miles of fiber optic 
cable which allows signals to travel greater distance without the need for 
amplification. In 1997, the main focus of the cable systems will be to foray 
into two-way communications by offering access to the Internet. The cable 
market is already referring to itself as cable communications instead of cable 
television. 

  Those additional market opportunities for cable will translate into equal 
benefits for the vendors who provide products to this market because the number 
of customers is expanding. 
 
  Competition for multichannel television service will increase from other 
sources as well.  This decade will continue to see the growth of other options 
such as Wireless Cable, Direct Broadcast Satellite and TVRO.  These changes 
also represent opportunities for Microwave Filter for new filter applications 
engendered by an atmosphere of healthy competition. 

                              4
<PAGE>

  Broadcast - There are several areas of broadcast served by MFC.  Wireless 
Cable represents the largest growth area.  

  Wireless Cable is a multichannel subscription television service that is a 
competitor to cable television.  This service delivers programming over-the-
air using microwave frequencies.  Television programming is received at 
customer sites via a small rooftop antenna.  The signals are then 
downconverted for reception at the viewers' television sets. There is no 
discernible difference between cable and wireless with respect to equipment 
installed in subscribers' homes.  This service differs from cable television 
by its delivery method and that it offers fewer channels. Currently, over 33 
channels can be delivered by Wireless Cable.  Digital compression techniques 
can increase these channels eight fold. 

  The most significant product sold to this market is our channel combiner used 
at the broadcast site to reduce tower costs.  By combining channels at the 
transmitter, additional expensive coaxial or waveguide runs up the tower 
become unnecessary. 

  MFC offers the widest selection of channel combiners to meet a variety of 
system specifications.  Combiners in different configurations and constructed 
of different materials offer the operator better or best options depending on 
budget or other system requirements. 

  Wireless cable is also expected to have an upbeat year in 1997 despite some 
minor setbacks in 1996. This market and cable television are endeavoring to 
continue moving towards the implementation of digital technology. Wireless 
cable, like cable television, is expected to offer services other than video 
programming. In fact, several systems expect to begin rolling out digital 
service early in 1997. Implementation of digital technology this year was 
forestalled due to technical problems. Several systems held back subscriber 
growth and waited patiently for the bugs to work themselves out. Pushing the 
growth of analog systems would only mean more subscribers that would later have 
to be converted to a digital system.  

  Another twist that slowed market growth in Wireless Cable in '96 was 
financing. Several phone companies became interested in forming partnerships 
with wireless systems yet many of these alliances never took hold. The phone 
companies presumably became impatient with the technical problems arising with 
digital broadcast and proceeded down other avenues that would provide them 
with the ability to deliver video and other interactive services. 

  Despite the roll-out of digital technology and the availability of 140 
channels becoming available to wireless subscribers early in '97, strong 
growth of analog wireless systems is expected worldwide this year. Much of 
that growth is expected in the Pacific Rim and other Asian countries such as 
China and the Phillipines. Strong growth is also predicted in such countries 
as Brazil, Canada, Africa and the Middle East.   

  The Comband CT-1000 Addressable Converter System is an analog scrambling 
system designed for wireless TV.  In 1994, an order, in excess of $1 million, 
to be shipped over a five year period, was received from Northwest Cable 
Network in Yakima, WA.  The CT-1000 has the capability to scramble a total of 
62 MMDS and UHF low power television channels.  

  Cellular Television - A new wireless service. Most people are familiar with 
cellular phones but here's a new twist - cellular television or (LMDS). This 
system operates like cellular phone in theory. An omni-directional transmitter 
at the center of a six mile cell sends out a video signal carrying 49 channels 
of programming. Subscribers at locations throughout that cell can receive the 
signal with small, square, flat antennas. One system, Cellular Vision USA 
already exists in New York City. Now the FCC is preparing to auction off 
additional frequencies (between 29 and 31 GHz) for similar services to 
establish themselves. However, the FCC has stalled the auctions because 
eligibility requirements for applicants is being challenged. Several groups 
favor a ban on telephone and cable television companies to bid on frequencies 
within their territories of operation.  

  LPTV - Low Power Television or LPTV is an option in the U.S. as a 
multichannel subscription television service.  A system similar to Wireless 
Cable can be configured that will deliver channels of programming to areas 
where off air signals cannot be received.  The only difference between both 

                              5
<PAGE>

services is broadcast frequency and the type of antenna located at the 
subscriber's home.  An LPTV receive antenna would look like any other off air 
broadcast antenna in contrast to the microwave antenna used for Wireless 
Cable. LPTV frequencies are easier to obtain and there are more LPTV than 
Wireless channels available. Channels of programming can be scrambled using 
the CT-1000 addressable converter in the same manner as for Wireless Cable.  
In fact, due to the limited number of Wireless Cable frequencies, Wireless 
Cable operators are using a combination of Wireless and LPTV frequencies to 
increase the number of channels offered to their subscribers.  As a 
broadcaster, LPTV differs from traditional television only in broadcast power.  
With lower broadcast power, the service has a smaller reception area than high 
power broadcast stations. LPTV is a small market and has always faced many 
regulatory and economical challenges. The market's current congressional 
battle is to retain areas of its spectrum that potentially can be reallocated 
to other markets.   

  Microwave Filter provides channel combiners and interference filters for 
this industry.  The channel combiners are used to group channels and eliminate 
additional coaxial runs to the broadcast tower.  Filters are also used in 
broadcast equipment to eliminate interference. As mentioned earlier, the CT-
1000 addressable converter system can now be used to organize subscription 
television services among LPTV or hybrid LPTV/MMDS television systems. 

  
  Radio and Television Broadcast - MFC primarily serves these broadcast areas 
with interference filters to reduce equipment harmonics.  An example is high 
power high Q cavity filters developed for interference applications. Other 
broadcast areas served also include AML, telemetry and STL/ENG relays. 

  Similar to cable television, the broadcast industry is also moving towards 
the digital delivery of both audio and video broadcast. 

  Satellite - Filters and traps for removing interference are provided to both 
commercial and home C-band TVRO antennas.  A variety of products are available 
that offer protection and or solutions to interference that affects the 
feedhorn, downconverter, and receiver. A variety of filters are also available 
for satellite services utilizing higher frequency bands such as 12, 13 and 18 
GHz.   

  Direct Broadcast Satellite or DBS is a version of home satellite programming 
delivered direct to the home.  It differs from C-band TVRO by the size of the 
receive antenna. DBS broadcasts at a higher frequency requiring a smaller 

                                      6
<PAGE>

satellite dish than C-band TVRO.  Both satellite dealers and cable television 
systems market the service to offer consumers television options. 
 

  Mobile Radio - MFC provides filters to a variety of mobile radio services 
such as cellular telephone, two way radio and paging to eliminate interference 
in transmit or receive equipment.   "High Q" filters have become widely 
accepted by the market.  With the number of services increasing and our air 
waves becoming more congested, filters increasingly are important to many 
transmit operations.  Cellular telephone has been the largest mobile radio 
growth market. The Cellular market is beginning to level off and now Personal 
Communications Services (PCS) is an area of mobile radio on the rise. MFC 
plans to design and to reintroduce a full line of products for PCS and other 
mobile radio services that will be used for transmit and receive operations. 

  Microwave and RF - This market encompasses both commercial and military 
applications.  Filters in defense applications are used for such purposes as 
air to ground communications, radar and land communications.  In commercial 
areas, filters are used to protect such equipment as receivers, transmitters, 
transceivers and any other electronics used for signal processing. MFC also 
has a line of couplers.  In addition to filters, this market is also served 
with MFC's Ferrosorb product line.  Ferrosorb is a microwave absorbing 
material available in sheets, loads and a variety of other shapes.  The 
product is used to offer protection by shielding signals or absorbing 
selective bands. 

  In 1992, MFC's acquisition of certain assets of Chesterfield Products added 
an expanded line of products to enhance the RF filter line.  Many of MFC's 
traditional filters are components added onto a system.  Chesterfield provided 
MFC with the capability to manufacture miniature and subminiature filters 
which are components built into electronic systems.  Another Chesterfield 
capability has provided us with the resources to expand our filter design 
range down to 5 KHz. 

  Although defense spending is expected to decline over the next several 
years, there appears to be a shifting from military into commercial markets 
which shows great promise for expansion in the years ahead. Many of the 
technological developments in our other markets such as cable television will 
also provide business opportunities for our Microwave & RF market. New 
communications means the manufacture of new equipment that require filters. 
This situation presents new potential for MFC to serve the original equipment 
manufacturers (OEM) with the development of new products for inherent 
interference problems. 


Niagara Scientific, Inc. (NSI)
------------------------------

  NSI - Like MFC, NSI and its divisions seek niche markets arising from 
certain demographic changes in the industrial work force which promotes 
acceptance of automation in both large and small factories.  NSI's typical 
product is customized to the purchaser's operation and is the result of system 
engineering.  The product makes tactical use of precision mechanical movements 
or sensors of physical characteristics under microprocessor control.  These 

                             7 
<PAGE> 

smart machines reduce labor costs through faster operation and increased 
quality. 

  Typical customers for case packing machines are food processors or makers of 
cosmetics, pharmaceuticals, candies or hardware whose product must be cased 
for shipping and storage.  Recent customers for typical machines include 
DuPont, Knorr and Planters-Lifesavers. 

  Other custom equipment is designed for inspection-rejection, counting, 
analyzing or otherwise monitoring, reporting or controlling a continuous 
manufacturing or industrial process. 

  Typical customers are commodity mass producers in the food, drug and paint 
industries. 

WORLD TRADE 
-----------

  Management believes that world marketing is a route to substantial expansion 
of sales for MFC/NSI. Export opportunities for MFC's communication related 
products are many - especially in areas of the world such as China, the 
Pacific Rim and South America. Marketing research reveals that the Company's 
products are in high demand in these areas of the world. 

  NSI products are less suitable for export for a number of reasons, including 
their large size and complexity, less demand in underdeveloped areas for 
automation and significant local competition.  However, NSI is well qualified 
to produce and or distribute complementary products under license. 

SUPPLIERS 
---------

  The Company purchases its raw materials and components from a variety of 
vendors.  Generally, there are multiple sources for such raw materials and 
components. 

PATENTS AND LICENSES 
--------------------

  In connection with its purchase of the Comband CT-1000 product line, MFC 
acquired, either exclusively or jointly with another party, five patents.  The 
patents relate to various segments of the CT-1000 system.  The issue dates of 
such patents range from 1985 to 1992.  The Company has no other patents, 
trademarks, copyrights, licenses or franchises of material importance. 

SEASONAL FLUCTUATIONS 
---------------------

  There are no significant seasonal fluctuations in the Company's business. 

GOVERNMENT CONTRACTS 
--------------------

  The Company is not dependent in any material respect on government 
contracts. 

                             8
<PAGE>

BACKLOG 
-------

  At September 30, 1996, the Company's total backlog of orders was $1,262,124 
compared to $1,693,786 at September 30, 1995.  At September 30, 1996,  MFC's 
backlog of orders was $921,598 compared to $1,275,285 at September 30, 1995.
At September 30, 1996, NSI's backlog of orders was $340,526 compared to 
$418,501 at September 30, 1995. Approximately 80% of the Company's backlog at 
September 30, 1996 is scheduled to ship during fiscal 1997. 

EMPLOYEES
---------

  At September 30, 1996, the Company employed 72 full-time permanent 
employees, 2 part-time permanent employees, and 9 full-time temporary 
employees. 

RESEARCH AND DEVELOPMENT 
------------------------

  The Company maintains and expects to continue to maintain an active research 
and development program.  The Company believes that such a program is needed 
to maintain its competitive position in existing markets and to provide 
products for emerging markets.  Costs in connection with research and 
development were $359,934, $408,425 and $442,228 for the fiscal years 1996, 
1995 and 1994, respectively. Research and development costs are charged to 
operations as incurred. 

MANUFACTURING 
-------------

  Products are produced by small teams specializing in product or customer 
type.  A full range of internal core facilities support the work of these 
teams to minimize dependence on outside facilities and to minimize customer 
order delivery time.  These consist of machine, metal forming and brazing 
shops, engraving and label making, electrical test and mechanical inspection 
facilities, product finishing and packing and a documentation center for 
export shipping. 

ENGINEERING 
-----------

  Combined MFC/NSI engineering facilities require few outside services which 
minimizes new product development cycles.  Facilities include computer-aided 
circuit design capable of product performance simulation.  It is used for both 
physical product development and for customer quotation preparation.  
Engineering work stations and AutoCad drafting terminals are linked by a 
plant-wide Local Area Network. Extensive electrical test equipment includes 
modern recording network analyzers with provisions for microprocessor control 
to collect extensive test data automatically, when desired.  A specially 
staffed computer programming center provides systems of programs for various 
business and technical functions.  A high power Radio Frequency test lab and 
environmental test chamber permit product testing under realistic conditions.  
Equipment for mechanical stress testing is also included.  An anechoic test 
chamber facilitates antenna measurement tests on relay antennas developed for 
the Wireless Cable market. Additionally, extensive nearby university and 
industrial facilities provide service for a spectrum of additional types of 
testing. 

COMPETITION
-----------

  The principal competitive factors facing both MFC and NSI are price, 
technical performance, service and the ability to produce in quantity to 
specific delivery schedules. Based on these factors, the Company believes it 
competes favorably in its markets. 




ITEM 2. PROPERTIES. 

  MFC's office and manufacturing facility is located at 6743 Kinne Street, 
East Syracuse, New York.  This facility, which is beneficially owned by MFC, 
consists of 40,000 square feet of office and manufacturing space located on 

                             9
<PAGE>

3.7 acres.  MFC presently occupies approximately 35,000 square feet with the 
balance (approximately 5,000 square feet) occupied by NSI. 

  MFC's purchase of the facility was financed through the issuance of Onondaga 
County Industrial Revenue Bonds. Because of the manner in which the 
transaction was structured and in order to afford MFC certain sales and real 
property tax abatements, record title to the facility is held by the Onondaga 
County Industrial Development Agency (OCIDA).  MFC leases the facility from 
OCIDA for nominal rent and, upon repayment of the bonds, is required to 
purchase the facility from OCIDA for $1.00. 

ITEM 3. LEGAL PROCEEDINGS. 

  There are currently no material pending legal proceedings against the company 
or its subsidiaries. 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 

  During the fourth quarter of the fiscal year covered by this Form 10-K, there 
were no matters submitted to a vote of security holders. 

                             10
<PAGE>

                           PART II 
                                 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.

  MFC's common stock is traded on the NASDAQ over-the-counter market under the 
symbol MFCO.  The information set forth was obtained from statements provided 
by the NASD. The following table shows the high and low sales prices for MFC's 
common stock for each full quarterly period within the two most recent fiscal 
years. The quotations represent prices in the over-the-counter market between 
dealers in securities.  They do not include retail mark-ups, mark-downs or 
commissions. 


                                         
Fiscal 1996                        High      Low 

Oct. 1, 1995 to Dec. 31, 1995   $  1.61   $ 1.08     
Jan. 1, 1996 to Mar. 31, 1996      1.50     1.13 
Apr. 1, 1996 to June 30, 1996      2.25     1.25 
July 1, 1996 to Sept. 30, 1996     2.00     1.13 


Fiscal 1995                        High      Low 

Oct. 1, 1994 to Dec. 31, 1994   $  1.25   $  .80 
Jan. 1, 1995 to Mar. 31, 1995      1.31      .95 
Apr. 1, 1995 to June 30, 1995      1.55     1.08 
July 1, 1995 to Sept. 30, 1995     1.90     1.19 

Adjusted for all stock dividends. 

  The approximate number of stockholders on September 30, 1996 was 1,700. 

  On January 18,1996, the Board of Directors declared a five cents per share 
cash dividend and a 5% per share stock dividend to shareholders of record on
February 1, 1996, to be distributed on February 15, 1996. Fractional shares 
were paid in cash.

  On January 11, 1995, the Board of Directors declared a 5% per share stock 
dividend to shareholders of record on February 1, 1995, to be distributed on 
February 14, 1995. Fractional shares were paid in cash. 




                             11
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

  The following selected financial information is derived from and should be 
read in conjunction with the financial statements, including the notes 
thereto, appearing in Item 8. - "Financial Statements and Supplemental Data." 


Five Year Summary Of Financial Data
<TABLE>
<CAPTION>
                                                           September 30
                                     1996         1995         1994          1993         1992
<S>                              <C>          <C>          <C>           <C>           <C>
Net Sales                        $ 7,532,710  $ 7,655,198  $ 8,616,861   $ 6,814,329   $ 7,254,364
Net Income (loss)(1)             $   504,295  $    19,164  $   117,529   $  (118,330)  $   107,881
Earnings (loss) Per Share        $       .14  $       .01  $       .03   $      (.03)          .03
Weighted Average Number of
Common Shares Outstanding*(2)      3,525,362    3,478,451    3,508,923     3,573,067     3,948,885
Stock (%) Dividends                       5%           5%           5%            5%
Cash ($) Dividends Declared      $       .05                                           $       .04
Total Assets(2)                  $ 5,410,266  $ 5,273,931  $ 5,597,991   $ 4,761,044   $ 5,250,619
Long Term Debt                   $   102,774  $   439,545  $   583,354   $   251,298   $   316,032
*Adjusted for all stock dividends.


Net income (loss) as a percentage of:   1996         1995         1994          1993           1992
Sales.............................       6.7          0.3          1.4         (1.7)            1.5
Assets............................       9.3          0.4          2.1         (2.5)            2.1
Equity............................      12.7          0.5          3.3         (3.4)            2.7

</TABLE>

(1) In the fourth quarter of 1993, the Company recorded an expense of
approximately $336,000 consisting principally of the writedown of certain
inventory items and a receivable.

(2) On February 26, 1993 the Company purchased 505,598 shares of stock at $1.055
per share in settlement of a $72,000 note receivable and paying cash in the
amount of $461,409.

                            12
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS
---------------------

  The following table sets forth the Company's net sales by product group for
each of the fiscal years in the three year period ended September 30, 1996.

Product group  (in thousands)  Fiscal 1996    Fiscal 1995   Fiscal 1994
Niagara Scientific                 $  609        $  826        $1,120
Microwave Filter:
  Cable TV                          3,951         3,223         3,672
  Broadcast TV                      1,707         1,959         2,087
  RF/Microwave                      1,074         1,226         1,336
  Satellite Communications            111           103           137
  Comband                              81           318           265
  Total                            $7,533        $7,655        $8,617

Sales backlog at 9/30              $1,262        $1,694        $1,823



Fiscal 1996 compared to Fiscal 1995

  Fiscal 1996 was a very profitable year for Microwave Filter Company, Inc., 
the second highest in Company history. Net income increased $485,131 to 
$504,295 or $.14 per share during the fiscal year ended September 30, 1996 
when compared to net income of $19,164 or $.01 per share during the same 
period last year. The increase in earnings can primarily be attributed to the 
improvement in gross profit and the reduction in selling, general and 
administrative expenses during fiscal 1996 when compared to last year. 

  Consolidated net sales for the fiscal year ended September 30, 1996 totaled 
$7,532,710, a decrease of $122,488 or 1.6%, when compared to sales of 
$7,655,198 during the fiscal year ended September 30, 1995. 

  Microwave Filter Company (MFC) sales increased $94,557 to $6,923,506 during 
fiscal 1996 when compared to sales of $6,828,949 during fiscal 1995. The 
increase in MFC's sales can primarily be attributed to the increase in MFC's 
Cable TV product sales. 
 
  MFC's Cable TV product sales increased $727,933 or 22.6% to $3,951,354 
during the fiscal year ended September 30, 1996 when compared to sales of 
$3,223,421 during fiscal 1995. Management believes the increase is primarily 
due to Cable Systems upgrading their equipment and services in order to better 
compete against both Direct Broadcast Satellite (DBS) and Multichannel 
Multipoint Distribution Service (MMDS), commonly called wireless cable. 
  
  MFC's Broadcast TV product sales, which includes wireless cable products, 
decreased $251,753 or 12.9% to $1,707,018 during fiscal 1996 when compared to 
sales of $1,958,771 during fiscal 1995. The decrease in sales can primarily be 
attributed to market conditions and competition. As the Company experienced in 
fiscal 1995, many wireless cable system operators have restricted expansion 
and delayed purchasing in anticipation of digital compression becoming 
available for the wireless cable industry. Digital compression will provide 
wireless cable with the ability to offer as many channels as conventional 
cable at reduced or at least competitive prices. The Company is also 
experiencing increased competition in this product area; however, management 
believes its emphasis on technical superiority and customer service will keep 
it competitive. 

  MFC's RF/Microwave product sales decreased $181,799 or 14.5% to $1,073,651 
during fiscal 1996 when compared to sales of $1,255,450 during fiscal 1995. 
The decrease can primarily be attributed to the completion of a large order in 
February 1996, for which twelve months of shipments were recorded in fiscal 
1995.  

  Niagara Scientific Inc. (NSI), a wholly owned subsidiary, sales decreased 
$217,045 to $609,204 during fiscal 1996 when compared to sales of $826,249 
during fiscal 1995. The decrease in sales can primarily be attributed to 
competition.  

                            13 
                           
<PAGE>

  As a percentage of sales, gross profit increased to 42.6% during fiscal 1996 
when compared to 35.5% during fiscal 1995. This substantial improvement can 
primarily be attributed to product sales mix and the reduction in the 
manufacturing costs which were associated with new product development in 
fiscal 1995.   

  Selling, general and administrative (SG&A) expenses decreased $126,568 or 
4.7% to $2,560,692 during fiscal 1996 when compared to $2,687,260 during 
fiscal 1995. The decrease can primarily be attributed to the decrease in legal 
costs during fiscal 1996 when compared to fiscal 1995. As a percentage of 
sales, SG&A expenses decreased to 34.0% of sales when compared to 35.1% of 
sales during fiscal 1995.  

  Interest income increased $26,730 to $44,292 during fiscal 1996 when 
compared to $17,562 during fiscal 1995. The increase is primarily due to 
higher average invested cash balances during fiscal 1996 when compared to 
fiscal 1995. Interest expense decreased $13,202 to $29,143 during fiscal 1996 
when compared to $42,345 during fiscal 1995. The decrease is primarily due to 
lower borrowing levels during fiscal 1996 when compared to fiscal 1995. 

  The Company's effective income tax rate decreased to 25.9% during fiscal 
1996 primarily as a result of the utilization of a research and 
experimentation tax credit carry forward. In 1996, no valuation allowance was 
recognized since sufficient taxable income is available in prior carryback 
years to realize a future tax benefit for deductible temporary differences. In 
1995, a valuation allowance had been recognized to offset the deferred tax 
asset related to the research and experimentation tax credit.  


Fiscal 1995 compared to Fiscal 1994

  The company's net sales decreased $961,663 or 11.2% to $7,655,198 during 
fiscal 1995 when compared to fiscal 1994. 

  The company's net income decreased $98,365 or 83.7% to $19,164 during fiscal 
1995 when compared to fiscal 1994. The decrease in net income can primarily be 
attributed to the decrease in sales. 

  Microwave Filter Company (MFC) sales decreased $667,679 or 8.9% to 
$6,828,949 during fiscal 1995 when compared to sales of $7,496,628 during 
fiscal 1994.  The decrease in sales can primarily be attributed to the 
downturn in both the cable TV market and the wireless cable TV market during 
1995 and to (a lesser extent) competition. 

  MFC's Cable TV product sales decreased $448,681 or 12.2% to $3,223,421 
during fiscal 1995 when compared to sales of $3,672,102 during fiscal 1994.  
The decrease in sales can be attributed to market conditions and competition.  
A dip in sales rather than projected growth greeted equipment manufacturers 
and suppliers to the Cable Television Industry in 1995.  Plans in the 
Telephone industry to install broadband networks for future delivery of video 
were stalled.  Cable systems went through a period of reorganization.  Many 
mid sized cable systems were sold to large operators who consolidated staffs.  
Large operators were also busy this year streamlining their organizations to 
increase the bottom line.  The trend towards digital delivery of television 
also caused many cable systems to wait and see what new equipment will enter 
the market instead of investing in equipment that may soon be obsolete. 

  MFC's Broadcast TV product sales decreased $128,089 or 6.1% to $1,958,771 
during fiscal 1995 when compared to sales of $2,086,860 during fiscal 1994.  
The decrease in sales can be attributed to market conditions and competition. 
Consolidation was also a trend in the Wireless Cable industry during 1995.  
Many systems were bought and sold stalling the purchase of new equipment.  
Industry experts expect that the situation is short term and that operators 
will move forward in building their systems once the acquisitions are complete.
In general the Wireless Cable industry is robust because financing has 

                             14
<PAGE>

become available and Baby Bells have been investing in systems.  The new year 
is expected to be a healthy one for the industry. 

  MFC's RF/Microwave product sales decreased $80,433 or 6% to $1,255,450 
during fiscal 1995 when compared to sales of $1,335,883 during fiscal 1994.  
The decrease in sales can primarily be attributed to competition. 

  MFC's Comband product sales increased $52,713 or 19.9% to $318,025 during 
fiscal 1995 when compared to sales of $265,312 during fiscal 1994.  The 
increase in sales can be attributed to a new installation during fiscal 1995. 

  Niagara Scientific Inc. (NSI), a wholly owned subsidiary, sales decreased 
$293,984 or 26.2% to $826,249 during fiscal 1995 when compared to sales of 
$1,120,233 during fiscal 1994.  The decrease in sales can primarily be 
attributed to competition. 

  As a percentage of sales, the Company's cost of goods sold was 64.5% in 
fiscal 1995 compared to 63.2% in fiscal 1994. Cost of goods sold decreased 
$508,904 or 9.3% to $4,936,219 during fiscal 1995 when compared to fiscal 1994. 
The increase in cost of goods sold as a percentage of sales can primarily be 
attributed to lower average selling prices due primarily to competition and an 
increase in the manufacturing costs associated with new product development 
during fiscal 1995. The dollar decrease in cost of goods can primarily be 
attributed to the decrease in sales. 

  Selling, general and administrative expenses decreased $302,350 or 10.1% To 
$2,687,260 during fiscal 1995 when compared to fiscal 1994.  The decrease in 
S,G & A expenses during fiscal 1995 can be attributed to planned expense 
reductions.  As a percentage of sales, selling, general and administrative 
expenses increased to 35.1% in fiscal 1995 when compared to 34.7% in fiscal 
1994 due primarily to the decrease in sales. 

 

                             15
<PAGE>

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. 

                                            September 30
                                   1996          1995        1994
Cash & cash equivalents        $1,280,999      $520,676     $656,561
Working capital                $2,579,910    $2,392,325   $2,295,468
Current ratio                   3.07 to 1     3.01 to 1    2.75 to 1
Long-term debt                   $102,774      $439,545     $583,354

  Cash and cash equivalents increased $760,323 to $1,280,999 at September 30, 
1996 when compared to $520,676 at September 30, 1995. The increase was a 
result of $1,651,430 in net cash provided by operating activities, $291,633 in 
net cash used for capital expenditures and $599,474 in net cash used in 
financing activities. 

  At September 30, 1996, the company had 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.  In addition, 
the company has a letter of credit facility, for up to $500,000, which is 
collateralized by specified inventory to be purchased.   

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

OTHER 
-----

  In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment 
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". This 
statement requires the recognition of both economic and permanent impairment 
losses on long-lived assets. The Company is adopting this statement in the 
first quarter of fiscal 1997. The adoption of this statement is not expected 
to have a material adverse affect on the Company's financial position or 
results of operations.  

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

  The Financial Statements and Financial Statement Schedules called for by this 
item are submitted as a separate section of this report. 

                             16
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL  DISCLOSURE. 

  None.

                             17
<PAGE>

                          PART III 
                                 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

  The names of, and certain information with respect to, the directors of MFC 
is set forth below: 

                                                         Common Shares 
                                                          Actually or   Percent 
                                                         Beneficially     of 
Director             Principal occupation               Owned 11/29/96   Class 


TRUDI B. ARTINI       Mrs. Artini is an independent         107,885       3.0%
(a)(b)(e)             investor in MFC and various other
Age 74                business enterprises in Syracuse,
Director since 1974   New York.                         
                                                        
DAVID B. ROBINSON MD  Dr. Robinson is Emeritus Professor    116,332       3.3%
(a)(b)(e)             of Psychiatry at the Health Science   
Age 72                Center, State University of New York  
Director since 1977   at Syracuse. He was a faculty member  
                      from 1958 until his retirement in     
                      1985 and served as Acting Chairman    
                      of the Dept. of Psychiatry for six    
                      of those years. Since 1989, he has    
                      served as a Skaneateles Town          
                      Councilman and in 1980 was a                             
                      founding Board Member of the                         
                      Skaneateles Festival of Chamber 
                      Music.                                 
                                                                               
LOUIS MISENTI         President and Principal               358,655      10.1% 
Age 69                shareholder of SCI Corp.,                                
Director since 1976   Syracuse, New York since 1984.                           
                      SCI manufactures polishing                               
                      compounds for the automobile and                         
                      silverware industries.  Mr.                              
                      Misenti is also the managing 
                      partner of Northern Pines Golf      
                      Course, Cicero, New York which was  
                      founded in 1970.  He was elected                         
                      Chairman of the Board of                                 
                      Directors of MFC on March 27,                            
                      1993.                                                    
                                                                               
CARL F. FAHRENKRUG PE Mr. Fahrenkrug was appointed          368,004      10.4%
(a)(d)(e)             President and Chief Executive                            
Age 54                Officer of MFC on October 7,                             
Director since 1984   1992.  He has also served as                             
                      President and Chief Executive                            
                      Officer of NSI since prior to                            
                      1986.  He served as Vice                                 
                      President of Engineering at                              
                      Microwave Systems, Inc.,                                 
                      Syracuse, N.Y. from 1972-1976.                           
                      Mr. Fahrenkrug has a B.S. and                            
                      M.S. in Engineering and an MBA                           
                      from Syracuse University.                                

                             18
<PAGE>
                                                                               

                                                         Common Shares 
                                                          Actually or   Percent 
                                                         Beneficially     of 
Director             Principal occupation               Owned 11/29/96   Class 

MILO PETERSON         Mr. Peterson has served as            168,570       4.8%  
(a)(d)(e)             Executive Vice President and       
Age 56                Corporate Secretary of NSI since   
Director since 1990   January 1, 1992. Since January  
                      1, 1992, he has also served as   
                      Production Consultant to the     
                      President.  Prior to January 1,  
                      1992, he served as Executive Vice
                      President of NSI.  Mr. Peterson  
                      graduated from programs at Yale  
                      University and Syracuse          
                      University.  He served as Vice   
                      President of Manufacturing of    
                      Microwave Systems, Inc.,         
                      Syracuse, N.Y. from 1970-1976.   
                      He was elected Corporate         
                      Secretary of MFC on March 27,    
                      1993.                            
                      
FRANK S. MARKOVICH    Mr. Markovich is a self-employed        3,475        *
(b)(c)(e)             consultant in the manufacturing  
Age 51                operations and training field.  
Director since 1992   Prior to that he was the Director 
                      of the Manufacturing Extension          
                      Partnership at UNIPEG Binghamton.
                      He held various high level       
                      positions in operations, quality 
                      and product management in a 20   
                      year career with BF Goodrich     
                      Aerospace, Simmonds Precision    
                      Engine Systems of Norwich, New   
                      York.  He completed US Navy      
                      Electronics and Communications   
                      Schools and received an MBA from 
                      Syracuse University.             
                      
ROBERT R. ANDREWS     Mr. Andrews is the President and        1,214        *
(b)(c)(d)             Principal shareholder of Morse   
Age 55                Manufacturing Co., Inc., East    
Director since 1992   Syracuse, N.Y. which produces    
                      specialized material handling    
                      equipment and has served in that 
                      capacity since prior to 1985.  He
                      received a B.A degree from       
                      Arkansas University and has      
                      served as Vice President and a   
                      director of the Manufacturers'   
                      Association of Central New York, 
                      President of the Citizens        
                      Foundation, a Trustee of Dewitt  
                      Community Church, director of the
                      Salvation Army and Chairman of   
                      the Business and Industry        
                      Council of Onondaga Community    
                      College.                         
                      
SIDNEY CHONG          Mr. Chong is Manager of Financial       4,518        *
(a)(c)(d)             Reports for Carrols Corp. in 
Age 55                Syracuse. Prior to joining Carrols         
Director since 1995   Corp., he was a Senior Accountant       
                      with Price Waterhouse and Co. in 
                      New York City.  Mr. Chong has a 
                      Bachelor of Science degree in 
                      accounting from California State     
                      University.                      

                             19
<PAGE>


                                                         Common Shares 
                                                          Actually or   Percent 
                                                         Beneficially     of 
Director             Principal occupation               Owned 11/29/96   Class 

Daniel Galbally       Mr. Galbally is a self-employed         1,489        *
(b)(c)(d)             financial consultant. He was the  
Age 49                controller of Evaporated Metal 
Director since 1995   Films (EMF) in Ithaca, N.Y. Before      
                      joining EMF, he worked as controller
                      and acting vice president of finance 
                      at Philips Display Components Co.
                      He has a bachelor's degree in    
                      accounting and an MBA from       
                      Syracuse University.             

(a)Member of Executive Committee 
(b)Member of Compensation Committee 
(c)Member of Finance and Audit Committee 
(d)Member of Operations Committee 
(e)Member of Nominating Committee 

*  Denotes less than one percent of class.

The Directors listed above and executive officers as a group own 1,161,050   
shares or approximately 33% of the outstanding common shares of the Company. 


IDENTIFICATION OF EXECUTIVE OFFICERS 

        Name                   Age      Position 

        Carl F. Fahrenkrug      54      President and Chief Executive Officer 

        Richard L. Jones        48      Vice President and Chief Financial 
                                        Officer 

        Milo J. Peterson        56      Corporate Secretary 

All of the officers serve at the pleasure of the Board of Directors. 

Carl F. Fahrenkrug was elected President and Chief Executive Officer of MFC on 
October 7, 1992.  Prior to that date, he had been Executive Vice President and 
Chief Operating Officer of MFC.  Prior to January 1, 1992, he was President and 
CEO of NSI and Vice President of Corporate Development for MFC. 

Richard L. Jones joined MFC in August 1983 as comptroller. In February 1985, he 
was appointed Vice President and Treasurer of MFC.  On October 7, 1992, he was 
appointed Vice President and Chief Financial Officer. 

Milo J. Peterson was elected Corporate Secretary of MFC on March 27, 1993.  
Mr. Peterson has served as Executive Vice President and Corporate Secretary of 
NSI. Since January 1, 1992, he has also served as Production Consultant to the 
President.  Prior to January 1, 1992, he served as Executive Vice President of 
NSI. 



                             20
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION.

  The following table sets forth for the fiscal years ended September 30, 1996, 
1995 and 1994, compensation paid by MFC to the named executive officers in all 
capacities in which they served. 

                            SUMMARY COMPENSATION TABLE
                                Annual Compensation
                                            Salary    Bonus
   Name and principal position     Year    ___$___   ___$___

   Carl F. Fahrenkrug              1996    104,229    10,000
   President and CEO (1)           1995     91,775       -
                                   1994     95,522       -

(1) Mr. Fahrenkrug was elected President and CEO on October 7, 1992. 

PROFIT SHARING 
--------------

  MFC has a profit sharing plan for all employees over the age of 21 with one 
year of service.  Annual contributions are determined by the Board of 
Directors and are made from current or accumulated net income.  Allocation of 
contributions to plan participants are based upon annual compensation.  
Participants vest on the basis of 20% after 3 years of service, 40% at 4 
years, 60% at 5 years, 80% at 6 years and 100% at 7 years. 
  
  MFC also has a voluntary 401-K plan.  Eligibility is the same as the Profit 
Sharing Plan. Contributions to the 401-K plan are matched at a rate of 40%    
of employee contributions limited to 2.0% of compensation. 

  MFC's contributions to the plans for the years ended September 30, 1996, 1995 
and 1994 amounted to $81,470, $28,167 and $27,935, respectively. 

STOCK OPTIONS
-------------

  The Company had two (2) stock option plans which were administered by the 
Board of Directors on advice from the Compensation Committee. Both plans have 
expired. The Employee Incentive Stock Option (E.I.S.O.) Plan was adopted in 
February, 1983.  Under this E.I.S.O. Plan, 50,000 authorized but unissued 
shares were set aside for key employees. Options were granted at fair market 
value and had to be exercised within ten (10) years of the date of the grant.  
Shares issued may be repurchased by the Company if an employee leaves the 
Company within 2 years from the date of the grant.  On  February 15, 1986, the 
Board of Directors approved a revised Employee Stock Purchase (E.S.P.) Plan to 
replace the former stock purchase plan.  Under the E.S.P. Plan, employees 
purchase shares according to a formula which provides for an option of twenty 
(20) shares for each $1,000 of annual compensation.  Options were granted for 
a period of one year. The E.S.P. Plan utilized the IRS code provision 
authorizing corporations to sell shares of their stock to employees at a 
discount up to 15% of fair market value without immediate income tax 
consequences to the employee. Officers of the Company were not eligible to 
participate in the E.S.P. Plan. There were no E.I.S.O. Plan options or E.S.P. 
Plan options outstanding at September 30, 1996. 

                             21
<PAGE>

COMPENSATION OF DIRECTORS 
-------------------------

  Non-officer directors receive fees of $300.00 per board meeting and $200.00 
per committee meeting, with the exception of the executive committee which 
receives $300.00 per committee meeting. MFC also reimburses directors for 
reasonable expenses incurred in attending meetings.  Officer members receive 
no compensation for their attendance at meetings. The Company also pays Louis 
S. Misenti $20,000 per year for his services as Chairman of the Board of 
Directors. In addition, the Company paid Louis S. Misenti $3,333 during fiscal 
1996 for consulting services. Non-officer directors have the option of 
receiving their compensation for meetings in the form of investment letter 
stock.  The number of shares received will be based upon a value of 85% of the 
mean value between the bid and ask price of the stock at the beginning of each 
quarter. 

ITEM 12.  SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 
AND MANAGEMENT. 

  The following table sets forth information as to the only persons known by 
the Company to own beneficially more than 5% of the Common Stock of the Company 
on November 30, 1996. 

                                                                       % of
                                                                  Outstanding
                                                                Number of Shares
                                                                     Common
Name of Beneficial Owner   Address           Beneficially Owned  _____Stock_____

Frederick A. Dix &         209 Watson Rd.          243,798             6.9%
Marjorie Dix               N. Syracuse, NY 13212

Carl F. Fahrenkrug &       Indian Hill Rd.         368,004            10.4% 
Rita Fahrenkrug            Manlius, NY 13104

Louis S. Misenti           140 Clearview Rd.       358,655            10.1% 
                           Dewitt, NY 13214

  The information relating to the ownership of common stock held by the 
directors and executive officers of the corporation is set forth in item 10 of 
this report. 

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. 

  None 
                             22
<PAGE>

                           PART IV 
                                 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. 

(a)    1. and 2.   Financial Statements and Schedules: 
         
                   Reference is made to the list of Financial Statements and
                   Financial Statement Schedule submitted as a separate
                   section of this report.

(b)    Reports On Form 8-K:

       There are no reports on Form 8-K for the three months ended 
       September 30, 1996.

(C)    Exhibits:

       Reference is made to the List of Exhibits submitted as a separate 
       section of this report. 

                             23
<PAGE>

SIGNATURES
  Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, Microwave Filter Company, Inc. has duly caused this 
report to be signed on its behalf by the undersigned, thereunto duly 
authorized. 

MICROWAVE FILTER COMPANY, INC.

| S |   Carl F. Fahrenkrug
--------------------------
By:  Carl F. Fahrenkrug   
(President and Chief Executive Officer)

| S |    Richard Jones    
----------------------                  
By:  Richard Jones                          
(Vice President and Chief Financial Officer)

Dated:  January 9, 1997

  Pursuant to the requirements Of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
Registrant and in the capacities and on the date indicated: 

| S |   Louis S. Misenti      | S |   Carl F. Fahrenkrug
------------------------      --------------------------
Louis S. Misenti              Carl F. Fahrenkrug
(Director)                    (Director)

| S |   Milo J. Peterson      | S |   Trudi B. Artini
------------------------      -----------------------
Milo J. Peterson              Trudi B. Artini
(Director)                    (Director)

| S |   Sidney Chong
--------------------
Sidney Chong
(Director)

Dated:  January 9, 1997

                             24
<PAGE>

                 ANNUAL REPORT ON FORM 10-KSB

               MICROWAVE FILTER COMPANY, INC.
                      AND SUBSIDIARIES

         INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
              AND FINANCIAL STATEMENT SCHEDULE

                 ITEM 8, ITEM 14(a)(1) and 2

CONSOLIDATED FINANCIAL STATEMENTS:                              Page

Independent Auditors' Report.....................................26
Consolidated Balance Sheets as of September 30, 1996 and 1995....27
Consolidated Statements of Operations for the Years
  Ended September 30, 1996, 1995 and 1994 .......................28
Consolidated Statements of Stockholders' Equity for the Years
  Ended September 30, 1996, 1995 and 1994 .......................29
Consolidated Statements of Cash Flows for the Years
  Ended September 30, 1996, 1995 and 1994 .......................30
Notes to Consolidated Financial Statements.......................31-38



SCHEDULE FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994:

Independent Auditors' Report on Schedules........................40
II-Valuation and Qualifying Accounts.............................41

  All other schedules for which provision is made in the applicable accounting 
regulation of the Securities and Exchange Commission are not required under the 
related instructions or are inapplicable and therefore have been omitted. 


                             25
<PAGE>

INDEPENDENT AUDITORS' REPORT



Board of Directors and Stockholders
Microwave Filter Company, Inc.
East Syracuse, New York

We have audited the accompanying consolidated balance sheets of MICROWAVE 
FILTER COMPANY, INC., AND SUBSIDIARIES as of September 30, 1996 and 1995, and 
the related consolidated statements of operations, stockholders' equity and 
cash flows for each of the three years in the period ended September 30, 1996.  
These financial statements are the responsibility of the Company's management.  
Our responsibility is to express an opinion on these financial statements based 
on our audits. 

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free of 
material misstatement.  An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statements.  An audit 
also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial 
statement  presentation.  We believe that our audits provide a reasonable basis 
for our opinion. 

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the consolidated financial position of Microwave Filter 
Company, Inc., and subsidiaries as of September 30, 1996 and 1995, and the 
consolidated results of their operations and their cash flows for each of the 
three years in the period ended September 30, 1996 in conformity with generally 
accepted accounting principles. 

 



Coopers & Lybrand L.L.P.


Syracuse, New York
November 27, 1996
                             26
<PAGE>

          Microwave Filter Company and Subsidiaries
                 Consolidated Balance Sheets

                                                              September 30
Assets                                                       1996       1995
------                                                       ----       ----
Current assets:
  Cash and cash equivalents                              $1,280,999    $520,676
  Accounts receivable-trade, net of allowance for 
    doubtful accounts of $75,000 and $50,000                723,855     879,160
  Inventories                                             1,498,978   1,968,510
  Prepaid expenses and other current assets                 323,144     215,300
                                                          ---------   ---------
      Total current assets                                3,826,976   3,583,646
                                                         

Property, plant and equipment, net                        1,583,290   1,624,762
Other assets                                                      0      65,523
                                                          ---------   ---------
      Total Assets                                       $5,410,266  $5,273,931
                                                         ==========  ==========
    
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
  Current portion of long term debt                         $52,670    $146,556
  Accounts payable                                          299,859     362,436
  Customer deposits                                         198,694     281,918
  Accrued federal and state income taxes                    289,616      42,808
  Accrued payroll and related expenses                      127,692      90,915
  Accrued compensated absences                              197,835     183,544
  Other current liabilities                                  80,700      83,144
                                                          ---------   ---------
    Total current liabilities                             1,247,066   1,191,321
                                                          
                                                                     
Long term debt, less current portion                        102,774     439,545
Deferred compensation and other liabilities                  82,128      59,428 
                                                          ---------   ---------

  Total liabilities                                       1,431,968   1,690,294
                                                          ---------   ---------
Commitments

Stockholders' equity:
  Common stock, $.10 par value. Authorized 5,000,000 shares
    Issued 4,259,446 in 1996 and 4,003,733 in 1995          425,945     400,373
  Additional paid-in capital                              3,192,641   2,880,992
  Retained earnings                                         997,439     939,377
                                                          
  Common stock in treasury, at cost,
  714,768 shares in 1996 and 680,301 shares in 1995        (637,727)   (637,105)
                                                          ---------   ---------

  Total stockholders' equity                              3,978,298   3,583,637
                                                          ---------   ---------
  Total Liabilities and Stockholders' Equity             $5,410,266  $5,273,931
                                                         ==========  ==========
                                                      
                                            
The accompanying notes are an integral part of the consolidated financial 
statements. 
                             27
<PAGE>


                   Microwave Filter Company and Subsidiaries
                     Consolidated Statements of Operations

                                         For the Years Ended September 30
                                       1996             1995            1994
                                       ----             ----            ----

Net sales                           $7,532,710       $7,655,198      $8,616,861

Cost of goods sold                   4,321,091        4,936,219       5,445,123
                                     ---------        ---------       ---------

    Gross profit                     3,211,619        2,718,979       3,171,738

Selling, general 
  and administrative expenses        2,560,692        2,687,260       2,989,610
                                     ---------        ---------       ---------

    Income from operations             650,927           31,719         182,128

Other Income (Expense)
    Interest income                     44,292           17,562           8,203
    Interest expense                   (29,143)         (42,345)        (29,494)
    Miscellaneous                       14,171           20,454          15,245
                                     ---------        ---------       ---------

    Income before income taxes         680,247           27,390         176,082


Provision for income taxes             175,952            8,226          58,553
                                     ---------        ---------       ---------

NET INCOME                            $504,295          $19,164        $117,529
                                     ---------        ---------       ---------
                                                          
Earnings Per Share                       $0.14            $0.01           $0.03
                                     ---------        ---------       ---------

Weighted average number of shares
and common stock equivalents         3,525,362        3,478,451       3,508,923
                                     =========        =========       =========
                                        
                                                
                                                         
The accompanying notes are an integral part of the consolidated financial 
statements. 
                             28
<PAGE>

                   Microwave Filter Company and Subsidiaries  
                Consolidated Statements of Stockholders' Equity 
            For the Years Ended September 30, 1996, 1995 and 1994 
            -----------------------------------------------------
<TABLE>
<CAPTION>
                                                  Additional                                          Total
                               Common Stock        Paid-in       Retained      Treasury Stock      Stockholders'
                              Shares      Amt      Capital       Earnings      Shares     Amt         Equity
                              ------      ---      -------       --------      ------     ---         ------
<S>                         <C>         <C>        <C>          <C>          <C>      <C>          <C>
Balance,
September 30, 1993          3,701,165   $370,117   $2,597,577   $1,023,322   560,987  ($539,397)   $3,451,619

Net income                                                         117,529                            117,529
Stock issued to employees
        and officers           48,106      4,811       26,415                                          31,226
Stock issued to directors      13,704      1,370       12,429                                          13,799
Purchase of treasury stock                                                       483       (423)         (423)
Other                             207         20          161         (181)
                            ---------   --------   ----------     --------   -------  ----------   ----------

Balance,
September 30, 1994          3,763,182    376,318    2,636,582    1,140,670   561,470   (539,820)    3,613,750

Net income                                                          19,164                             19,164
Stock issued to employees
        and officers           35,866      3,586       28,821                                          32,407
Stock issued to directors      14,636      1,464       14,137                                          15,601
Purchase of treasury stock                                                    86,461    (97,285)      (97,285)
5% stock dividend             190,049     19,005      201,452     (220,457)   32,370
                            ---------   --------   ----------     --------   -------  ----------   ----------

Balance,
September 30, 1995          4,003,733    400,373    2,880,992      939,377   680,301   (637,105)    3,583,637

Net income                                                         504,295                            504,295
Stock issued to employees
        and officers           37,161      3,716       35,700                                          39,416
Stock issued to directors      16,342      1,635       18,132                                          19,767
Purchase of treasury stock                                                       452       (622)         (622)
Cash dividend paid
        ($.05 per share)                                          (168,195)                          (168,195)
5% stock dividend             202,210     20,221      257,817     (278,038)   34,015
                            ---------   --------   ----------     --------   -------  ----------   ----------

Balance,
September 30, 1996          4,259,446   $425,945   $3,192,641     $997,439   714,768  ($637,727)   $3,978,298
                            =========   ========   ==========     ========   =======  ==========   ==========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
                             29
<PAGE>

                   Microwave Filter Company and Subsidiaries
                     Consolidated Statements of Cash Flows
                Increase (Decrease) in Cash and Cash Equivalents
                ------------------------------------------------

                                              For the Years Ended September 30
                                              --------------------------------
                                                   1996      1995       1994
                                                   ----      ----       ----

Cash flows from operating activities:
       Net income                                $504,295    $19,164   $117,529

Adjustments to reconcile net income to net cash
  provided by operating activities:
    Depreciation                                  333,105    360,124    380,849
    Amortization of intangible assets              63,772     39,006     44,686
    Inventory obsolescence provision               48,744    103,643    207,291 
    Bad debt provision                             53,011     18,025     45,829 
    Stock compensation                             59,183     48,008     45,025
    Deferred income taxes                         (95,748)   (51,921)    11,567
  Changes in assets and liabilities:
    Accounts receivable-trade, net                102,294    180,266   (362,894)
    Accrued federal and state income taxes        246,808     37,831    (26,975)
    Inventories                                   420,788   (442,460)  (323,747)
    Other assets                                   17,249     17,328     31,122
    Accounts payable and customer deposits       (145,801)    60,790    106,343
    Accrued payroll, compensated absences and
      related expenses                             51,068    (28,159)    25,945
    Other current liabilities                      (2,444)  (122,725)    98,065
    Deferred compensation                          (4,894)    (4,010)    (7,860)
                                                ---------   --------    -------
    Net cash provided by operating activities   1,651,430    234,910    392,775
                                                ---------   --------    -------
Cash flows from investing activities:
  Capital expenditures                           (291,633)  (134,456)  (249,997)
                                                 --------   --------    -------
      Net cash used in investing activities      (291,633)  (134,456)  (249,997)
                                                 --------   --------    -------
Cash flows from financing activities:
  Principal payments on long-term debt           (430,657)  (139,054)  ( 75,484)
  Proceeds from term loan                                               500,000
  Purchase of treasury stock                         (622)   (97,285)      (423)
  Cash dividend paid                             (168,195)                      
                                                 --------   --------    -------
    Net cash provided by (used in) 
         financing activities                    (599,474)  (236,339)   424,093
                                                 --------   --------    -------
    Net increase (decrease) 
         in cash and cash equivalents             760,323   (135,885)   566,871

Cash and cash equivalents at beginning of year    520,676    656,561     89,690
                                                 --------   --------    -------
CASH AND CASH EQUIVALENTS AT END OF YEAR       $1,280,999   $520,676   $656,561
                                               ==========   ========   ========
                                                    
                                                                
                                                                
Supplemental disclosures of cash flows:
  Cash paid during the year for (approximately):
    Interest                                      $29,000    $39,000    $28,000
    Income taxes                                  $32,000    $22,000    $73,000

Supplemental disclosure of non-cash investing and financing activities:

  Year Ended September 30, 1994
  -----------------------------

  During the first quarter of fiscal 1994, the Company transferred $93,507 of 
items previously held in inventory to rental equipment. 



  The accompanying notes are an integral part of the consolidated financial 
statements. 
                                 30
<PAGE>

                   Microwave Filter Company and Subsidiaries
                   Notes to Consolidated Financial Statements
                   ------------------------------------------

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


a. Nature of Business

 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. 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. custom designs case packing machines to automatically pack 
products into shipping cases. Customers are processors of food and other 
commodity products with a need to reduce labor cost with a modest investment 
and quick payback. 

b.  Basis of Consolidation

  The consolidated financial statements include the accounts of Microwave 
Filter Company, Inc. (MFC) and its wholly-owned subsidiaries, Niagara 
Scientific, Inc. (NSI) and Microwave Filter International, LTD. (MFI); located 
in Syracuse, New York. All significant intercompany balances and transactions 
have been eliminated in consolidation. 

c. Cash Equivalents 

 The Company considers all highly liquid investments purchased with an original 
maturity of 90 days or less to be cash equivalents. The carrying value at 
September 30, 1996 and September 30, 1995 approximates fair value. Substantially
all cash balances were on deposit at one financial institution at September 30, 
1996 and 1995. 

d. Inventories

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

e.  Research and Development

 Costs in connection with research and development, which amount to $359,934,
$408,425 and $442,228 for the fiscal years 1996, 1995 and 1994, respectively,
are charged to operations as incurred.   

f. Property, Plant and Equipment

 Property, plant and equipment are recorded at cost. Depreciation is provided 
using the straight-line method over the estimated useful lives of the 
respective assets.  At the time of sale or retirement, the cost and 
accumulated depreciation are removed from the respective accounts and the 
resulting gain or loss is recognized in income. 

g. Income Taxes

 The Company accounts for income taxes under Statement of Financial Accounting 
Standards (SFAS) No. 109.  Deferred tax assets and liabilities are based on 
the difference between the financial statement and tax basis of assets and 
liabilities as measured by the enacted tax rates which are anticipated to be 
in effect when these differences reverse. The deferred tax provision is the 
result of the net change in the deferred tax assets and liabilities.  A 
valuation allowance is established when it is necessary to reduce deferred tax 
assets to amounts expected to be realized.   

                             31
<PAGE>

h. Earnings Per Share

 Earnings per common share are calculated based upon the weighted average 
number of shares of common stock outstanding during the periods including, 
when significant, any common stock equivalents and after restatement of any 
stock dividends. 

i. Use of Estimates
  
 The preparation of financial statements in conformity with generally accepted 
accounting principles requires management to make estimates and assumptions 
that affect the reported amounts of assets and liabilities and disclosure of 
contingent assets and liabilities at the date of the financial statements. 
Estimates also affect the reported amounts of revenues and expenses during the 
reporting period. Actual results could differ from those estimates.   

j. Reclassifications

 Certain reclassifications have been made to conform prior year financial 
statements with the current year presentations.   


2. INVENTORIES

Inventories net of provision for obsolescence          
consisted of the following:                     September 30
                                          1996                 1995
                                          ----                 ----
  Raw materials and stock parts         $958,040           $1,106,636
  Work-in-process                        299,131              393,972
  Finished goods                         241,807              467,902
                                        --------            ---------
                                      $1,498,978           $1,968,510
                                      ==========           ==========
                                               
                                               
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:

                                                 September 30
                                          1996                 1995
                                          ----                 ----  

  Land                                  $143,000             $143,000
  Building and improvements            1,734,814            1,642,103
  Machinery and equipment              2,065,615            1,973,227
  Office equipment and fixtures        1,128,960            1,022,426
  Other                                   93,507               93,507
                                       ---------            ---------
                                       5,165,896            4,874,263
  Less: Accumulated depreciation       3,582,606            3,249,501
                                       ---------            ---------
                                      $1,583,290           $1,624,762
                                      ==========           ==========
                                    
                                               
                                               
                             32
<PAGE>

4. LONG-TERM DEBT

Long-term debt consisted of the following:                 September 30
                                                      1996             1995
  Term loan, payable to a bank over 60 months through
  fiscal 1999, with interest at 6.0% for the first
  two years and 8.0% for the final three years. Paid 
  in full in fiscal 1996.                                  $0        $379,795

 Capitalized lease obligation (a)                     155,444         206,306
                                                      -------         -------
                                                      155,444         586,101

  Less: current portion                                52,670         146,556
                                                      -------         -------
                                                     $102,774        $439,545
                                                      =======         =======
                                    
                                               
                                               
 

 (a) The capitalized lease obligation is comprised of the Company's obligation 
to the Onondaga County Industrial Agency (OCIDA) which the Company used to 
finance the purchase of its primary manufacturing facility, which serves as 
collateral for the debt.  The Company financed its purchase of the facilities 
through an Industrial Development Revenue Bond issued by OCIDA and purchased 
by a bank.  The Company has guaranteed the payment on the bonds to the bank on 
behalf of OCIDA.  Payments are scheduled to be made quarterly, through April 
1999, in an amount which would fully amortize the unpaid principal of the 
bonds.  The interest rate is adjusted quarterly and is equal to 2.5% plus 65% 
of the thirteen week average rate of interest for Treasury Bills (5.60% and 
5.60% at September 30, 1996 and 1995, respectively). 

 The following is a schedule of annual principal requirements on long-term 
debt: 

        Year Ended     Principal
       September 30     Payments
       ------------    ---------
           1997       $ 52,670
           1998         57,025
           1999         45,749
           
                       -------
                      $155,444
                       =======
                              
                             
 The terms of the agreement contains certain covenants which limit both 
capital expenditures and the ability to obtain additional bank debt. In 
addition, the maintenance of certain financial ratios including current ratio 
and debt to net worth, as defined, are also required by the agreement. 

5. CREDIT FACILITIES

 The Company has 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. The equipment line of credit 
provides for interest at the prime rate plus one percent (1%). The working 
capital line of credit provides for interest at the prime rate plus three 
quarters percent (3/4%). In addition, the Company has a Letter of Credit 
Facility, for up to $500,000, which is collateralized by specified inventory 
to be purchased. There were no amounts outstanding at September 30, 1996. 

6. PROFIT SHARING AND 401-K PLANS

 The Company maintains both a non-contributory profit sharing plan and a 
contributory 401-K plan for all employees over the age of 21 with one year of 
service.  Annual contributions to the profit sharing plan are

                             33
<PAGE>

determined by the Board of Directors and are made from current or accumulated 
earnings, while contributions to the 401-K plan are matched at a rate of 40% of 
employee contributions limited to 2.0% of compensation. 

 The Company's matching contributions to the 401-K plan for the years ended 
September 30, 1996, 1995 and 1994 were $31,470, $28,167 and $27,935 , 
respectively. Additionally, the Company may make discretionary contributions 
to the non-contributory profit sharing plan. These contributions were $50,000 
in 1996. No discretionary contributions were made in 1995 or 1994. 

7. OBLIGATIONS UNDER OPERATING LEASES

 The Company leases a motor vehicle and equipment under operating lease 
agreements expiring at various dates through September 30, 2001. Rental 
expenses under these leases for the years ended September 30, 1996, 1995 and 
1994 amounted to $97,739, $94,686 and $67,975, respectively. 

 Minimum rental commitments at September 30, 1996 for these leases are: 

        Year Ended     Principal
       September 30     Payments
       ------------     --------
           1997        $97,680
           1998         90,738
           1999         52,611
           2000         51,914
           2001         95,335
                        ------
                      $388,278
                       =======       
                             
8. INCOME TAXES

 The provision for income taxes consisted of the following: 

                             Year Ended September 30
                          1996         1995         1993
Currently payable:
  Federal               $250,700      $50,147      $38,586
  State                   21,000       10,000        8,400
Deferred (credit)        (95,748)     (51,921)      11,567 
                         -------      -------      -------
                        $175,952       $8,226      $58,553
                        ========      =======      =======
                                     
                                                 
                                                 
                             34
<PAGE>

 A reconciliation of the statutory federal income tax rate and the Company's 
effective income tax rate is as follows: 

                                         Year ended September 30
                          ______1996______   ______1995______  ______1994______
                           Amount     %       Amount     %      Amount     %
Statutory tax rate       $231,284    34.0%    $9,312    34.0%   $59,868   34.0%
Surtax exemption                0     0       (5,204)  (19.0%)   (7,958)  (4.5%)
State income tax net of:
 Federal benefit           13,860     2.0%     6,600    24.1%     5,544    3.1%
 Foreign sales corp benefit(6,854)   (1.0%)   (4,579)  (16.7%)   (4,756)  (2.7%)
 Research and experimentation
   tax credits            (54,344)   (8.0%)        0       0          0      0 
Other                      (7,994)   (1.1%)    2,097     7.6%     5,855    3.3%
                           ------   ------   -------    ------ --------- -----
                         $175,952    25.9%    $8,226    30.0%   $58,553   33.2%
                         ========   ======   =======    =====  ========= ======
                        

 The temporary differences which give rise to deferred tax assets and 
liabilities at September 30 are as follows: 

                                            1996          1995
                                            ----          ----

  Inventory                              $182,716       $126,305
  Accrued vacation                         52,350          7,544
  Other                                    22,125              0 
  Research and experimentation
   tax credits                                  0         58,700
                                          -------       --------
                                          257,191        192,549
  Valuation allowance                      (    0)       (58,700)
                                          -------        -------

  Net deferred tax assets - current      $257,191       $133,849
                                          =======        =======

  Accelerated depreciation                (71,971)       (40,807)
  Other                                    13,215          9,645
                                          --------      --------
  Net deferred tax liabilities - 
   noncurrent                             $58,756        $31,162
                                          =======        =======

                                
 In 1996, no valuation allowance was recognized since sufficient taxable 
income is available in prior carryback years to realize a future tax benefit 
for deductible temporary differences. In 1995, a valuation allowance has been 
recognized to offset the deferred tax asset related to the research and 
experimentation tax credit.                                     

                                      
                                      
                             35
<PAGE>

9. INDUSTRY SEGMENT DATA

  The Company's primary business segments involve (1) operations of Microwave 
Filter Company, Inc. (MFC) which manufactures electronic filters used for 
preventing interference or signal processing in cable television, satellite, 
broadcast, aerospace and government markets; and (2) operations of Niagara 
Scientific, Inc. (NSI) which manufactures industrial automation equipment. 

 Information by industry segment is as follows: (thousands of dollars) 
                                     1996          1995       1994
Net Sales (Unaffiliated):
  MFC                               $6,924        $6,829     $7,497
  NSI                                  609           826      1,120
  Total                             $7,533        $7,655     $8,617

Operating Profit (Loss): (a)
  MFC                                 $987          $200       $426
  NSI                                 (222)          (70)       (83)
  Corporate                           (114)          (98)      (161)
  Total                               $651           $32       $182

Identifiable Assets: (b)
  MFC                               $3,812        $4,189     $4,334
  NSI                                  317           564        532
  Subtotal                           4,129         4,753      4,866
  Corporate Assets-Cash and
  Cash Equivalents                   1,281           521        657
  Total                             $5,410        $5,274     $5,523

Depreciation & Amortization Expense:
  MFC                                 $275          $324       $349
  NSI                                  122            75         76
  Total                               $397          $399       $425

Capital Expenditures:
  MFC                                 $291          $129       $244
  NSI                                    1             5          6
                                      $292          $134       $250 

Significant Export Sales:
  MFC                                 $558          $508       $517

Sales to Significant Customers:
  MFC:                  
  Communication Microwave Corp.        -          $1,103     $1,118     


                                                       

                             36
<PAGE>

(a) Operating profit (loss) is total revenue less operating expenses. In 
computing operating profit, none of the following items have been added or 
deducted: general corporate expenses, 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 
Company's operations in each industry. 

10. STOCK OPTIONS

  Both the Company's stock option plan and stock purchase plan, which were 
administered by the Compensation Committee, expired in February of 1996. 

  The Employee Incentive Stock Option Plan (E.I.S.O. Plan) provided for the 
issuance of options to key employees at fair market value which had to be 
exercised within ten years from the date of the grant.  Shares issued may be 
repurchased by the Company if an employee leaves the Company within two years 
from the date of grant. This plan had no activity since September 30, 1993.

  The Employee Stock Purchase Plan (E.S.P. Plan) granted all employees options 
to purchase 20 shares for each $1,000 of the employee's annual compensation.  
The E.S.P. Plan utilized the IRS code provision authorizing corporations to 
sell shares of their stock to employees at 85% of the fair market value on the 
date the right to purchase is granted.  Officers of the Company were not 
eligible to participate in the E.S.P. Plan. A summary of the E.S.P. Plan's 
activities through September 30, 1996 is as follows:

                                           EMPLOYEE
                                        STOCK PURCHASE
                                            PLAN
                                            ----
                                        Shares  Avg. price
                                        ------   ----------   
Outstanding, September 30, 1993              0
Granted                                 47,040
Exercised                               (2,106)     $.99
Forfeited                              (44,934)

Outstanding, September 30, 1994              0
Granted                                 46,534
Exercised                               (1,407)     $.99
Forfeited                              (44,934)

Outstanding, September 30, 1995              0
Granted                                 44,146
Exercised                                 (839)    $1.09
Forfeited                               43,307

Outstanding, September 30, 1996              0


                             37
<PAGE>

11. LEGAL MATTERS 

  There are currently no material pending legal proceedings against the 
Company or its subsidiaries. 


12. FOURTH QUARTER ADJUSTMENTS

  In the fourth quarter of fiscal 1996, management revised certain inventory 
reserve estimates which resulted in approximately $150,000 of pre-tax income.

 
                             38
<PAGE>

                        EXHIBIT INDEX
                                                                           Page
Exhibit No.   Description                                                 Number

3.1      MFC Certificate of Corporation, as amended.                           *

3.2      MFC Amended and Restated Bylaws.                                      *

10.1     Bond Purchase Agreement dated as of February 22,1984                  *
         among MFC, Onondaga County Industrial Development Agency
         ("OCIDA") and Key Bank of Central New York ("Bondholder").

10.2     Lease Agreement dated as of February 22, 1984 between MFC and OCIDA.  *

10.3     Mortgage and Security Agreement dated as of February 22, 1984 from    *
         MFC and OCIDA to the Bondholder.

10.4     Guaranty Agreement dated as of February 22, 1984 from MFC to OCIDA    *
         and the Bondholder.

10.5     Application by Debtor in Possession for Authority to Sell General     *
         Intangible Assets and Order (MFC's acquisition of CT-1000 System).

10.6     Stock Purchase Agreement dated February 8, 1993 between Glyn and      *
         Emily Bostick and MFC.

 * Previously filed
                             39
<PAGE>

INDEPENDENT AUDITORS' REPORT ON SCHEDULES





Board of Directors and Stockholders
Microwave Filter Company, Inc.
East Syracuse, New York

Our report on the consolidated financial statements of MICROWAVE FILTER 
COMPANY, INC., AND SUBSIDIARIES is on page 26 of this Form 10-K.  In connection 
with our audits of such financial statements, we have also audited the related 
financial statement schedule listed in the index on page 25 of this Form 10-K. 

In our opinion, the financial statement schedule referred to above, when 
considered in relation to the basic financial statements taken as a whole, 
present fairly, in all material respects, the information required to be 
included therein. 



Coopers & Lybrand L.L.P.


Syracuse, New York
November 27, 1996
                             40
<PAGE>
Microwave Filter Company and Subsidiaries

Schedule II - VALUATION AND QUALIFYING ACCOUNTS

SEPTEMBER 30, 1996, 1995 and 1994

<TABLE>
<CAPTION>



Col. A                                         Col. B               Col. C                    Col. D        Col. E
                                                                                             Additions
                                               Balance at           Charged to     Charged to
                                               Beginning            Costs and      Other                    Balance at
Description                                    of Period            Expenses       Accounts   Deductions    End of
Period
-----------                                    ---------            -----------------------   ----------    -------------

<S>                                            <C>                  <C>           <C>          <C>            <C>
Year ended September 30, 1996

Allowance for doubtful accounts                 $50,000              $53,011                    $28,011        $75,000
Inventory valuation reserves                    545,306               48,744                          0        594,050
                                               --------             --------      -------       -------       --------
                                               $595,306             $101,755           $0       $28,011       $669,050
                                               ========             ========      =======       =======       ========


Year ended September 30, 1995

Allowance for doubtful accounts                 $75,000              $18,025                    $43,025        $50,000
Inventory valuation reserves                    441,663              103,643                          0        545,306
                                               --------             --------      -------       -------       --------
                                               $516,663             $121,668           $0       $43,025       $595,306
                                               ========             ========      =======       =======       ========


Year ended September 30, 1994

Allowance for doubtful accounts                $100,000              $45,829                    $70,829        $75,000
Inventory valuation reserves                    449,973              207,291                    215,601        441,663
                                               --------             --------      -------       -------       --------
                                               $549,973             $253,120           $0      $286,430       $516,663
                                               ========             ========      =======       =======       ========


</TABLE>
                                                                          41
<PAGE>