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, 2007_____________________________
                                    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) 438-4700_____________

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 if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.     YES ______     NO ___X___

  Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.     YES ______    NO ___X___

  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-B 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-KSB or any
amendment to this Form 10-KSB.  __

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  Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of
the Exchange Act). Large accelerated filer ______ Accelerated filer ______
Non-accelerated filer ___X___.

  Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).

YES ____  NO__X__

  The aggregate market value of the voting stock held by non-affiliates of the
registrant, based on the closing price of the common stock on December 1,
2007, was approximately $2,060,000.

  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 December 1, 2007:   2,894,821

DOCUMENTS INCORPORATED BY REFERENCE
     Part III: Portions of the Definitive Proxy Statement to be filed with the
Securities and Exchange Commission in connection with the solicitation of
proxies for the Company's 2008 Annual Meeting of Shareholders  are
incorporated by reference into Part III. (With the exception of those portions
which are specifically incorporated by reference in this Form 10-KSB, the
Proxy Statement is not deemed to be filed or incorporated by reference as part
of this report.)

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                           PART I


ITEM 1. BUSINESS.

FORWARD-LOOKING CAUTIONARY STATEMENT
------------------------------------
  In an effort to provide investors a balanced view of the Company's current
condition and future growth opportunities, this Annual Report on Form 10-KSB
may include comments by the Company's management about future performance.
These statements which are not historical information are "forward-looking
statements" pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These, and other forward-looking statements,
are subject to business and economic risks and uncertainties that could cause
actual results to differ materially from those discussed. These risks and
uncertainties include, but are not limited to: risks associated with demand
for and market acceptance of existing and newly developed products as to which
the Company has made significant investments; general economic and industry
conditions; slower than anticipated penetration into the satellite
communications, mobile radio and commercial and defense electronics markets;
competitive products and pricing pressures; increased pricing pressure from
our customers; risks relating to governmental regulatory actions in broadcast,
communications and defense programs; as well as other risks and uncertainties,
including but not limited to those detailed from time to time in the Company's
Securities and Exchange Commission filings. These forward-looking statements
are made only as of the date hereof, and the Company undertakes no obligation
to update or revise the forward-looking statements, whether as a result of new
information, future events or otherwise. You are encouraged to review
Microwave Filter Company's 2007 Annual Report and Form 10-KSB for the fiscal
year ended September 30, 2007 and other Securities and Exchange Commission
filings. Forward-looking statements may be made directly in this document or
"incorporated by reference" from other documents. You can find many of these
statements by looking for words like "believes," "expects," "anticipates,"
"estimates," or similar expressions.


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."

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

  Established in 1967 in East Syracuse, New York, MFC occupies a modern 40,000
square foot facility with an impressive complement of analytical and design
software, test instrumentation, prototype and manufacturing equipment to
create passive filters, components and sub systems in the frequency range of
10 MHz to 50 GHz.

  MFC manufactures RF filters and related components for eliminating
interference and facilitating signal processing for such markets as Cable
Television, Broadcast, Commercial and Military Communications, Avionics,
Radar, Navigation and Defense. The Company designs waveguide, stripline/
microstrip, transmission line, miniature/subminiature and lumped constant
filters. Configurations include bandpass, highpass, lowpass, bandstop,
multiplexers, tunable notch, tunable bandpass, high power filters, amplitude
equalized, delay equalized and filter networks.  The Company actively produces
over 1,700 standard products and has designed more than 5,000 custom products
for specialized applications.

  The manufacturing facility includes a modern CAD system, a test department
with automated network analyzers to 50 GHz, a high capacity conveyor soldering
oven and a fully compliant finishing operation. The Company's Quality
Management System has been certified ISO 9001:2000 recognizing the Company as
a quality vendor.

  Efficient computer simulation, design and analysis software enhanced by
proprietary MFC developed software, allow rapid and accurate filter
development at reasonable cost. Automated network analyzers provide rigorous
product testing and performance data storage on a serial number basis in most
cases.

  A network based CAD system allows the transfer of data and programs to the
CNC turning and milling centers for fabrication of machined parts. Prototype
PC boards are similarly produced by computer controlled PC board mills.

  A Grieve high capacity conveyor soldering oven is used for production of
large quantity assemblies while smaller production quantities are assembled at
hand soldering or brazing stations.

  ISO 9001:2000 contract and design review procedures coupled with a QA
department that is compliant with MIL-I-45208 inspection systems and MIL-STD-
45622 calibration system standards assures process and product integrity. A
certified staff instructor regularly trains associates to MIL-STD-2000A (now
superceded by J-STD-001.)

  Other in-house testing facilities include three environmental chambers
capable of testing products for temperatures of -40 to 200 degrees Celsius and
humidity up to 100 percent. Several high power amplifiers are available for
power tests up to 2500 watts at 220 MHz and 100 watts at 1,000 MHz. An
automated in-house anechoic chamber provides antenna pattern measurement
capability in the 2 to 8 GHz frequency range. Facilities are also available
for salt spray, sand and dust, shock and vibration, RFI leakage and altitude
testing.

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

  NSI manufactures material handling equipment for suppliers of consumer
goods. Such suppliers would include food processors or any other manufacturer
of packaged consumer products that need to be moved into a corrugated shipping
case at a constant rate of speed.

  The Schroeder Machines Division (SMD), in existence for over 50 years, is a
division of Niagara Scientific. SMD manufactures a number of case packing
solutions but is most noted for its Quadnumatic. The Quadnumatic is an
automatic case packing machine that performs all the functions of collating,
case forming, loading and sealing products into their shipping cartons at
packing speeds ranging from 12 to 30 cases per minute depending upon model.

  Other products offered by Schroeder include a servo pick-and-place machine
for top loading packaging applications and a case erector/bottom taping
machine for customers who still hand pack or need to add a case former to an
existing case packing machine. Most revenue for NSI is derived from spare
parts and services for an installed base of Quadnumatic case packers
throughout the United States and Canada.


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

  Cable Television (CATV) - MFC serves this market principally 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 TV 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 cable operators initially receive programming via satellite,
products from our satellite market cross over into the cable television
market. C-band satellite receive systems are prone to various types of
terrestrial interference which are curable in many cases by applying MFC
bandpass filters.

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  The CATV marketplace is changing due to the transition from analog to
digital television. Digital Televison (DTV) is a new type of broadcasting
technology that will transform television viewing. DTV enables broadcasters to
offer television with movie-quality picture and sound. It also offers greater
multicasting and interactive capabilities. DTV is a more flexible and spectrum
efficient technology than the current NTSC "analog" broadcast system. Rather
than being limited to providing one analog programming channel, a broadcaster
will be able to provide a super sharp "high definition" (HDTV) program or
multiple "standard definition" DTV programs simultaneously using the RF
spectrum more efficiently. Providing several program streams on one broadcast
channel is called "multicasting." The number of programs a station can send on
one digital channel depends on the level of picture detail, also known as
"resolution." DTV can provide interactive video and data services that are not
possible with "analog" technology. Converting to DTV will eventually free up
parts of the scarce and valuable broadcast airwaves. Those portions of the
spectrum can then be used for other important services, such as advanced
wireless and public safety services (police, fire, rescue squads, etc.).
Televison stations serving all markets in the United States are currently
airing digital television programming, although they still must provide analog
programming until the target date set by Congress for completion of the
transition to DTV - February 17, 2009. That date may be extended, however,
until most homes (85%) in an area are able to watch the DTV programming. At
that point, broadcasting on the current (analog) channels will end and that
spectrum will be put to other uses reducing the need for analog filters which
MFC currently supplies. Until the transition to DTV is complete, television
stations will continue broadcasting on both their digital and analog channels.
MFC has developed and is supplying filters for digital television; however,
the demand for these filters is unknown at this time.

  Broadcast - Several areas of broadcast are served by Microwave Filter
Company with the most active being in the MDS/MMDS and UHF bands.

  Formally used for Wireless Cable, the MDS/MMDS bands are now becoming
popular for use by Internet Service Providers (ISP). Wireless Cable was a
video delivery service that attempted to compete with cable television with
limited success. This service delivered programming over-the-air using
microwave frequencies. Television programming is received via a small rooftop
antenna. The signals are then down converted for reception by the television
set. At the home, the equipment looks the same as that supplied by a cable
television company with the exception of the rooftop antenna. Currently the
trend is to use the same concept to provide internet service to the home
(receive only).

  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 site, additional expensive coaxial or waveguide runs up the
tower become unnecessary. It remains to be seen whether activity will be
popular in these bands.

  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.

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  Radio and Television Broadcast - MFC primarily serves these broadcast areas
with interference filters to reduce equipment harmonics and combiners for low
power UHF 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 - Microwave filters and IF filters 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.

  Mobile Radio and Data Links - 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. More recently there
has been demand for filters and diplexers for broadband microwave applications
for Voice Over Internet Protocol ("VOIP") With the number of services
increasing and ISP use. The advent of license exempt applications has
increased the need for interference filtering. With the number of services
increasing and our air waves becoming more congested, filters are increasingly
important to many transmit operations.

  RF and Microwave - 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. 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.

  There has been an increased demand for filters in the OEM (Original
Equipment Manufacturer) market. In response to this demand, MFC has purchased
new design, fabrication and test equipment to design filters up to 50 GHz. OEM
orders are larger than those received for other markets and facilities such as
a soldering oven have been added in the manufacturing area for large volume
production.

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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
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.

  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. Significant efforts
have been made over the last year to identify key international markets and to
establish distributors with appropriate technical backgrounds to represent our
interests in those regions.

  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 depends on outside suppliers for raw materials, components and
parts, and services. Although items are generally available from a number of
suppliers, the Company purchases certain raw materials and components from a
single supplier. If such a supplier should cease to supply an item, the
Company believes that new sources could be found to provide the raw materials
and components. However, manufacturing delays and added costs could result.
The Company has not experienced significant delays of this nature in the past,
but there can be no assurance that delays in delivery due to supply shortages
will not occur in the future. Substantial periods of lead time for delivery of
certain materials are sometimes experienced by the Company, making it
necessary to inventory varied quantities of materials.

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

 The Company has no 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.

BACKLOG
-------

  At September 30, 2007, the Company's total backlog of orders, which
represents firm orders from customers, was $502,760 compared to $731,941 at
September 30, 2006. The total Company backlog at September 30, 2007 is
scheduled to ship during fiscal 2008. However, backlog is not necessarily
indicative of future sales. Accordingly, the Company does not believe that its
backlog as of any particular date is representative of actual sales for any
succeeding period.

EMPLOYEES
---------

  At September 30, 2007, the Company employed 49 full-time and 2 part-time
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 $461,954, $420,570 and $373,080 for the fiscal years 2007,
2006 and 2005, respectively. Research and development costs are charged to
operations as incurred.

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.

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ITEM 1A. RISK FACTORS

  An investment in our common stock involves a high degree of risk. The risks
and uncertainties described below are not the only ones we face. Additional
risks and uncertainties that we are unaware of, or that we may currently deem
immaterial, may become important factors that harm our business, financial
condition or results of operations. If any of the following risks actually
occurs, our business, financial condition or results of operations could
suffer. In that case, the trading price of our common stock could decline, and
you may lose all or part of your investment.


     Our stock was removed from The Nasdaq Capital Market System.

  On May 3, 2007, Microwave Filter Company, Inc. (the "Company") received a
determination from the Listing Qualifications Panel of The Nasdaq Stock Market
indicating that the Panel has determined to delist the securities of Microwave
Filter Company, Inc. from the Nasdaq Stock Market, and will suspend trading in
the Company's shares effective with the open of business on Monday, May 7,
2007.

  The Company's securities are currently quoted on The Pink Sheets
(www.pinksheets.com), an electronic quotation service for securities traded
over-the-counter, and the OTCBB (www.otcbb.com).

  Demand for existing products may decline.

  Demand for our products depends upon, among other factors, the level of
capital expenditures by current and prospective customers, the rate of
economic growth in the markets in which we compete and the competitiveness of
our products. Changes in any of these factors could have an adverse effect on
our financial condition or results of operations.

  We must continue to assess and predict customer needs and evolving
technologies. We must develop new products, including enhancements to existing
products, and successfully manufacture, market and sell these products. If we
are unsuccessful in these areas, our financial condition or results of
operations could be adversely affected.

  Our inability to introduce new and enhanced products on a timely basis.

  Delays in development, testing, manufacture and/or release of new products
could adversely affect our sales and results of operations. In addition, there
can be no assurance that we will successfully identify new product
opportunities, develop and bring new products to market in a timely manner and
achieve market acceptance of our products, or that products and technologies
developed by others will not render our products or technologies obsolete or
noncompetitive.

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  Market acceptance of newly developed products may be slower than anticipated.

  The markets for our products are competitive and may be characterized by
rapid technological change, new product development and evolving industry
standards. If technologies supported by our products become obsolete or fail
to gain widespread acceptance, our business could be harmed. Current and
potential competitors may have substantially greater financial, technical,
marketing, distribution and other resources than us, and have greater name
recognition and market acceptance of their products and technologies. Our
competitors may develop new technologies or products that may offer superior
price or performance features and may render our products and technologies
obsolete and noncompetitive.


  Pricing pressures from our customers and/or market pressure from competitors
may reduce selling prices.

  Many of customers are under continuous pressure to reduce costs and,
therefore, we expect to continue to experience pressure from these customers
to reduce the prices of the products that we sell to them. To offset declining
average sales prices, we believe that we must achieve manufacturing cost
reductions and increase our sales volumes. If we are unable to offset
declining average selling prices, our gross margins will decline, and this
decline could materially harm our business, financial condition and operating
results. We also compete with companies which have substantially larger
operations and greater financial, engineering, marketing, production and other
resources than we have. These competitors may develop their products more
quickly, devote greater marketing and sales resources, or offer more
aggressive pricing, than we can. As a result, this could cause us to lose
orders or customers or force reductions in selling prices, all of which would
have a material adverse impact on our financial position and results of
operations.


  Difficulty in obtaining an adequate supply of raw materials or components at
reasonable prices.

  The Company depends on outside suppliers for raw materials, components and
parts, and services. Although items are generally available from a number of
suppliers, the Company purchases certain raw materials and components from a
single supplier. If such a supplier should cease to supply an item, the
Company believes that new sources could be found to provide the raw materials
and components. However, manufacturing delays and added costs could result.
The Company has not experienced significant delays of this nature in the past,
but there can be no assurance that delays in delivery due to supply shortages
will not occur in the future. Substantial periods of lead time for delivery of
certain materials are sometimes experienced by the Company, making it
necessary to inventory varied quantities of materials.


  Loss of key personnel or the inability to attract new employees.

  Our success depends in large part on the continued service of our key
technical and management personnel, and on our ability to attract and retain
qualified employees, particularly those involved in the development of new
products and processes and the manufacture of existing products. The
competition for these individuals is significant, and the loss of key
employees could harm our business.

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AVAILABLE INFORMATION
---------------------
  Our Internet address is www.microwavefilter.com. There we make available,
free of charge, our annual report on Form 10-KSB, quarterly reports on Form
10-QSB, current reports on Form 8-K and any amendments to those reports, as
soon as reasonably practicable after we electronically file such material
with, or furnish it to, the Securities and Exchange Commission (SEC). Our SEC
reports can be accessed through the investor relations link of our Web site.
The information found on our Web site is not part of this or any other report
we file with or furnish to the SEC.

  The public may read and copy any materials that we file with the SEC at
the SEC's Public Reference Room located at 450 Fifth Street NW, Washington, DC
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains
electronic versions of our reports on its website at www.sec.gov.

ITEM 1B. UNRESOLVED STAFF COMMENTS

  None.


ITEM 2. PROPERTIES.

  MFC's office and manufacturing facility is located at 6743 Kinne Street,
East Syracuse, New York.  This facility, which is owned by MFC, consists of
40,000 square feet of office and manufacturing space located on 3.7 acres.


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-KSB,
there were no matters submitted to a vote of security holders.

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                           PART II


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


  On May 3, 2007, Microwave Filter Company, Inc. (the "Company") received a
determination from the Listing Qualifications Panel of The Nasdaq Stock Market
indicating that the Panel has determined to delist the securities of Microwave
Filter Company, Inc. from the Nasdaq Stock Market, and will suspend trading in
the Company's shares effective with the open of business on Monday, May 7,
2007.

  The Company's securities are currently quoted on The Pink Sheets
(www.pinksheets.com), an electronic quotation service for securities traded
over-the-counter, and the OTCBB (www.otcbb.com).

  The following table shows the high and low closing sales prices for MFC's
common stock for each full quarterly period within the two most recent fiscal
years. The information set forth was obtained from statements provided by the
NASD and the OTCBB. 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 2007                        High      Low

Oct. 1, 2006 to Dec. 31, 2006   $  1.67   $  1.07
Jan. 1, 2007 to Mar. 31, 2007      1.25       .88
Apr. 1, 2007 to June 30, 2007      1.00       .73
July 1, 2007 to Sept. 30, 2007      .94       .76


Fiscal 2006                        High      Low

Oct. 1, 2005 to Dec. 31, 2005   $  2.26   $  1.30
Jan. 1, 2006 to Mar. 31, 2006      1.95      1.51
Apr. 1, 2006 to June 30, 2006      1.84      1.29
July 1, 2006 to Sept. 30, 2006     1.59      1.20


  The Company had approximately 650 holders of record of its common stock at
September 30, 2007.

  On November 9, 2005, the Board of Directors declared a ten cents per share
cash dividend to shareholders of record on December 9, 2005 to be distributed
on January 9, 2006.

  Payment of future dividends, if any, will be at the discretion of the Board
of Directors after taking into consideration various factors, including the
Company's financial condition, operating results and current and anticipated
cash needs.

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

  Additional information regarding our stock option plan and plan activity for
2007 is provided in our consolidated financial statements. See "Notes to
Consolidated Financial Statements, Note 9 - Stock options."



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
                                     2007         2006         2005          2004         2003
<S>                              <C>          <C>          <C>           <C>           <C>
Net Sales                        $ 4,634,233  $ 4,536,715  $ 5,533,398   $ 4,876,219   $ 5,059,520
Net (Loss) Income                $  (292,993) $  (411,349) $   312,211   $  (176,317)  $  (282,400)
Total Assets                     $ 2,826,042  $ 3,126,373  $ 3,983,652   $ 3,626,605   $ 3,901,545
Long Term Debt                   $         0  $         0  $         0   $         0   $         0
Basic Earnings (Loss)
 Per Share                       $      (.10) $      (.14) $       .11   $      (.06)  $      (.10)
Diluted Earnings (Loss)
 Per Share                       $      (.10) $      (.13) $       .10   $      (.06)  $      (.10)
Shares Used In Computing Net
 (Loss) Earnings Per Share:
 Basic                             2,899,660    2,905,355    2,908,503     2,904,669     2,904,781
 Diluted                           3,038,098    3,043,903    3,049,115     2,946,482     2,904,781
Cash ($) Dividends Paid Per
   Share                         $       .00  $       .10  $       .00   $       .00   $       .10



Net (loss) income as a percentage of:   2007         2006         2005         2004          2003
Net Sales..........................    (6.3%)       (9.1%)        5.6%        (3.6%)        (5.6%)
Assets   ..........................   (10.4%)      (13.2%)        7.8%        (4.9%)        (7.2%)
Equity.............................   (12.6%)      (15.7%)        9.4%        (5.9%)        (8.9%)

</TABLE>

14
<page>

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

  Microwave Filter Company, Inc. operates primarily in the United States and
principally in one industry. The Company extends credit to business customers,
including original equipment manufacturers (OEMs), distributors and other end
users, 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 and commercial and defense electronics. Niagara
Scientific, Inc., a wholly owned subsidiary, 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.


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

  The following table sets forth the Company's net sales by major product
groups for each of the fiscal years in the three year period ended September
30, 2007.


Product group (in thousands) Fiscal 2007    Fiscal 2006   Fiscal 2005

Microwave Filter:
  Cable TV                      $1,922         $1,882        $2,598
  RF/Microwave                   1,497          1,624         1,561
  Satellite                        989            893         1,020
  Broadcast TV                     191            116           166
Niagara Scientific                  35             21           188
                                ------         ------        ------
    Total                       $4,634         $4,536        $5,533
                                ======         ======        ======
Sales backlog at 9/30           $  503         $  732        $  693
                                ======         ======        ======

Fiscal 2007 compared to fiscal 2006

  Consolidated net sales for the fiscal year ended September 30, 2007 equaled
$4,634,233, an increase of $97,518 or 2.1%, when compared to consolidated net
sales of $4,536,715 during the fiscal year ended September 30, 2006.

  Microwave Filter Company, Inc. (MFC) sales increased $83,325 or 1.8% to
$4,598,827 during the fiscal year ended September 30, 2007 when compared to
sales of $4,515,502 during the fiscal year ended September 30, 2006.

15
<page>

  MFC's Cable TV product sales increased $40,339 or 2.1% to $1,922,205 during
the fiscal year ended September 30, 2007 when compared to Cable TV product
sales of $1,881,866 during the fiscal year ended September 30, 2006. Despite
the increase in sales, management continues to project a decrease in demand
for Cable TV products due to the shift from analog to digital television.
Digital Televison (DTV) is a new type of broadcasting technology that will
transform television viewing. DTV enables broadcasters to offer television
with movie-quality picture and sound. It also offers greater multicasting and
interactive capabilities. DTV is a more flexible and efficient technology than
the current NTSC "analog" broadcast system. Rather than being limited to
providing one analog programming channel, a broadcaster will be able to
provide a super sharp "high definition" (HDTV) program or multiple "standard
definition" DTV programs simultaneously using the RF spectrum more
efficiently. Providing several program streams on one broadcast channel is
called "multicasting." The number of programs a station can send on one
digital channel depends on the level of picture detail, also known as
"resolution." DTV can provide interactive video and data services that are not
possible with "analog" technology. Converting to DTV will eventually free up
parts of the scarce and valuable broadcast airwaves. Those portions of the
spectrum can then be used for other important services, such as advanced
wireless and public safety services (police, fire, rescue squads, etc.).
Televison stations serving all markets in the United States are currently
airing digital television programming, although they still must provide analog
programming until the target date set by Congress for completion of the
transition to DTV - February 17, 2009. That date may be extended, however,
until most homes (85%) in an area are able to watch the DTV programming. At
that point, broadcasting on the current (analog) channels will end and that
spectrum will be put to other uses reducing the need for analog filters which
MFC currently supplies. Until the transition to DTV is complete, television
stations will continue broadcasting on both their digital and analog channels.
MFC has developed and is supplying filters for digital television; however,
the demand for these filters is unknown at this time.

  MFC's RF/Microwave product sales decreased $127,501 or 7.8% to $1,496,934
during the fiscal year ended September 30, 2007 when compared to sales of
$1,624,435 during the fiscal year ended September 30, 2006. The decrease can
be attributed to a decrease in sales to the U. S. Government. For the twelve
months ended September 30, 2007, sales to the U.S. Government equaled $200,681
compared to sales to the U.S. Government of $447,971 during the twelve months
ended September 30, 2006. The Company's RF/Microwave products are primarily
sold to original equipment manufacturers (OEMs) that serve the mobile radio
and commercial and defense electronics markets. Typical customers include the
U.S. Government, General Dynamics, Motorola, Rockwell Collins, Lockheed
Martin, Northrup Gruman and Raytheon. The Company continues to invest in
production engineering and infrastructure development to penetrate OEM market
segments as they become popular. MFC is concentrating its technical resources
and product development efforts toward potential high volume customers as part
of a concentrated effort to provide substantial long-term growth.

  MFC's Satellite product sales increased $95,811 or 10.7% to $988,528 during
the fiscal year ended September 30, 2007 when compared to sales of $892,717
during the fiscal year ended September 30, 2006. The increase can be
attributed to the introduction of new products and an increase in demand for
filters which suppress strong out-of-band interference caused by military and
civilian radar systems and other sources. Management expects demand for these
types of filters to continue with the proliferation of earth stations world
wide and increased sources of interference.

16
<page>

  MFC's Broadcast televison (BTV)/Wireless cable product sales increased
$74,676 or 64.1% to $191,160 for the fiscal year ended September 30, 2007 when
compared to sales of $116,484 for the fiscal year ended September 30, 2006
primarily due to an increase in demand for UHF Broadcast products.

  Niagara Scientific, Inc. (NSI) sales increased $14,193 or 66.9% to $35,406
for the fiscal year ended September 30, 2007 when compared to sales of $21,213
for the fiscal year ended September 30, 2006. NSI sales consisted primarily of
spare part orders during fiscal 2007. NSI has been concentrating on quoting
low risk jobs in an effort to maintain targeted profit margins. Although this
may impact sales levels, it should improve profit margins and also allow
engineering resources to focus on higher priorities. Based on backlog, recent
quote activity and the general economic climate, management is expecting
little, if any, growth in sales for NSI for fiscal 2008.

  At September 30, 2007, the Company's total backlog of orders, which
represents firm orders from customers, equaled $502,760 compared to $731,941
at September 30, 2006. The total Company backlog at September 30, 2007 is
scheduled to ship during fiscal 2008. However, backlog is not necessarily
indicative of future sales. Accordingly, the Company does not believe that its
backlog as of any particular date is representative of actual sales for any
succeeding period.

  Gross profit increased $105,753 or %7.1 to $1,598,748 during the fiscal year
ended September 30, 2007 when compared to gross profit of $1,492,995 during
the fiscal year ended September 30, 2006. As a percentage of sales, gross
profit increased to 34.5% during the fiscal year ended September 30, 2007
compared to 32.9% during the fiscal year ended September 30, 2006. The
increases in gross profit can be attributed to the higher sales volume, lower
direct labor costs due to efficiency and lower depreciation expense this year
when compared to last year.

  Selling, general and administrative (SG&A) expenses decreased $66,474 or
3.3% to $1,956,011 during the fiscal year ended September 30, 2007 when
compared to SG&A expenses of $2,022,485 during the fiscal year ended September
30, 2006. The decrease can primarily be attributed to lower printing and
mailing costs this year when compared to the same period last year. As a
percentage of sales, SGA expenses decreased to 42.2% during fiscal 2007 when
compared to 44.6% during fiscal 2006 due to both the higher sales volume and
the lower expenses.

  Income from operations improved $172,227 to a loss of $357,263 during the
fiscal year ended September 30, 2007 when compared to a loss from operations
of $529,490 during the fiscal year ended September 30, 2006. The improvement
can primarily be attributed to the higher sales volume and lower SGA expenses
this year when compared to last year.

  Other income decreased $15,689 to $64,920 for the twelve months ended
September 30, 2007 compared to other income of $80,609 for the twelve months
ended September 30, 2006. Other income is primarily interest income earned on
invested cash balances. The decrease in other income can primarily be
attributed to lower invested cash balances when compared to the same period
last year. Other income may fluctuate based on market interest rates and
levels of invested cash balances.

17
<page>

  The Company recorded a provision for income taxes of $650 for the fiscal
year ended September 30, 2007 compared to a benefit for income taxes of
$37,532, or an effective rate of (8.4%)%, for the fiscal year ended September
30, 2006. As required by Statement of Financial Accounting Standards No. 109,
the Company has evaluated the positive and negative evidence bearing upon the
realization of its deferred tax assets. The Company has determined that, at
this time, it is more likely than not that the Company will not realize all of
the benefits of federal and state deferred tax assets, and, as a result, a
valuation allowance was established.


Fiscal 2006 compared to fiscal 2005

  Consolidated net sales for the fiscal year ended September 30, 2006 equaled
$4,536,715, a decrease of $996,683 or 18%, when compared to consolidated net
sales of $5,533,398 during the fiscal year ended September 30, 2005.

  Microwave Filter Company, Inc. (MFC) sales decreased $829,927 or 15.5% to
$4,515,502 during the fiscal year ended September 30, 2006 when compared to
sales of $5,345,429 during the fiscal year ended September 30, 2005.

  The decrease in MFC sales can primarily be attributed to the decrease in the
sales of the Company's standard Cable TV products.

  MFC's Cable TV product sales decreased $715,890 or 27.6% to $1,881,866
during the fiscal year ended September 30, 2006 when compared to Cable TV
product sales of $2,597,756 during the fiscal year ended September 30, 2005.
The decrease in sales can be attributed to the transition from analog to
digital television. Digital Televison (DTV) is a new type of broadcasting
technology that will transform television viewing. DTV enables broadcasters to
offer television with movie-quality picture and sound. It also offers greater
multicasting and interactive capabilities. DTV is a more flexible and
efficient technology than the current NTSC "analog" broadcast system. Rather
than being limited to providing one analog programming channel, a broadcaster
will be able to provide a super sharp "high definition" (HDTV) program or
multiple "standard definition" DTV programs simultaneously using the RF
spectrum more efficiently. Providing several program streams on one broadcast
channel is called "multicasting." The number of programs a station can send on
one digital channel depends on the level of picture detail, also known as
"resolution." DTV can provide interactive video and data services that are not
possible with "analog" technology. Converting to DTV will eventually free up
parts of the scarce and valuable broadcast airwaves. Those portions of the
spectrum can then be used for other important services, such as advanced
wireless and public safety services (police, fire, rescue squads, etc.).
Televison stations serving all markets in the United States are currently
airing digital television programming, although they still must provide analog
programming until the target date set by Congress for completion of the
transition to DTV - April 7, 2009. That date may be extended, however, until
most homes (85%) in an area are able to watch the DTV programming. At that
point, broadcasting on the current (analog) channels will end and that
spectrum will be put to other uses reducing the need for analog filters which
MFC currently supplies. Until the transition to DTV is complete, television
stations will continue broadcasting on both their digital and analog channels.
MFC has developed and is supplying filters for digital television; however,
the demand for these filters is unknown at this time.

18
<page>

  MFC's RF/Microwave product sales increased $62,794 or 4% to $1,624,435
during the fiscal year ended September 30, 2006 when compared to sales of
$1,561,641 during the fiscal year ended September 30, 2005. These products are
primarily sold to original equipment manufacturers (OEMs) that serve the
mobile radio and commercial and defense electronics markets. Typical customers
include the U.S. Government, General Dynamics, Motorola, Rockwell Collins,
Lockheed Martin, Northrup Gruman and Raytheon. The Company continues to invest
in production engineering and infrastructure development to penetrate OEM
market segments as they become popular. MFC is concentrating its technical
resources and product development efforts toward potential high volume
customers as part of a concentrated effort to provide substantial long-term
growth.

  MFC's Satellite product sales decreased $127,729 or 12.5% to $892,717 during
the fiscal year ended September 30, 2006 when compared to $1,020,446 during
the fiscal year ended September 30, 2005. The decrease can be attributed to a
decrease in demand for the Company's filters which suppress strong out-of-band
interference caused by military and civilian radar systems and other sources.
Despite the decrease in sales, management expects demand for these types of
filters to continue with the proliferation of earth stations world wide and
increased sources of interference.

  MFC's BTV/Wireless cable sales decreased $49,102 or 29.7% to $116,484 for
the fiscal year ended September 30,2006 when compared to sales of $165,586 for
the fiscal year ended September 30, 2005 primarily due to a decrease in demand
for UHF Broadcast products.

  Niagara Scientific, Inc. (NSI) sales decreased $166,756 or 88.7% to $21,213
for the fiscal year ended September 30, 2006 when compared to sales of
$187,969 for the fiscal year ended September 30, 2005. NSI sales consisted
primarily of spare part orders during fiscal 2006. NSI has been concentrating
on quoting low risk jobs in an effort to maintain targeted profit margins.
Although this may impact sales levels, it should improve profit margins and
also allow engineering resources to focus on higher priorities. Based on
backlog, recent quote activity and the general economic climate, management is
expecting little, if any, growth in sales for NSI for fiscal 2007.

  At September 30, 2006, the Company's total backlog of orders, which
represents firm orders from customers, equaled $731,941 compared to $692,595
at September 30, 2005. Approximately 76% of the total Company backlog at
September 30, 2006 is scheduled to ship during fiscal 2007. However, backlog
is not necessarily indicative of future sales. Accordingly, the Company does
not believe that its backlog as of any particular date is representative of
actual sales for any succeeding period.

  Gross profit decreased $702,192 or 32% to $1,492,995 during the fiscal year
ended September 30, 2006 when compared to gross profit of $2,195,187 during
the fiscal year ended September 30, 2005. The dollar decrease can primarily be
attributed to the lower sales volume. As a percentage of sales, gross profit
decreased to 32.9% during the fiscal year ended September 30, 2006 compared to
39.7% during the fiscal year ended September 30, 2005. The decrease in gross
profit as a percentage of sales can also be attributed to the lower sales
volume, resulting in a lower base to absorb fixed expenses.

  Selling, general and administrative (SG&A) expenses increased $111,534 or
5.8% to $2,022,485 during the fiscal year ended September 30, 2006 when
compared to SG&A expenses of $1,910,951 during the fiscal year ended September
30, 2005. The increase is primarily due to planned increases in promotional
expenses and higher payroll and payroll related expenses when compared to last
year.

19
<page>

  Income from operations decreased $813,726 to a loss of $529,490 during the
fiscal year ended September 30, 2006 when compared to income from operations
of $284,236 during the fiscal year ended September 30, 2005. The decrease can
primarily be attributed to the lower sales volume this year when compared to
last year.

  Other income increased $12,879 to $80,609 for the twelve months ended
September 30, 2006 compared to other income of $67,730 for the twelve months
ended September 30, 2005. Other income is primarily interest income earned on
invested cash balances. The increase in other income can primarily be
attributed to the rise in market interest rates during this fiscal year when
compared to the same period last year. Other income may fluctuate based on
market interest rates and levels of invested cash balances.

  The Company recorded a benefit for income taxes of $37,532, an effective
rate of (8.4%), for the fiscal year ended September 30, 2006 compared to a
provision for income taxes of $39,755, or an effective rate of 11.3%, for the
fiscal year ended September 30, 2005. The benefit for the current year is
primarily due to the Company's ability to carry back it's operating loss to
fiscal 2005 and an increase in deferred tax assets offset by an increase in
the valuation allowance since the realization of the deferred tax benefit is
not considered more likely than not.


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
                                 2007        2006         2005
Cash & cash equivalents      $1,266 979    $705,646  $1,251,594
Investments                          $0    $798,544    $822,651
Working capital              $1,876,767   $2,063,269  $2,622,768
Current ratio                 4.69 to 1    5.05 to 1   5.02 to 1
Long-term debt                  $     0      $     0     $     0


  Cash and cash equivalents increased $561,333 to $1,266,979 at September 30,
2007 when compared to $705,646 at September 30, 2006. The increase was a
result of $229,751 in net cash used in operating activities, $797,646 in net
cash used in investing activities and $6,562 in net cash used in financing
activities.

  The net increase of $169,516 in inventories at September 30, 2007, when
compared to September 30, 2006, can primarily be attributed to the Company's
sales order backlog and our customer's scheduled delivery dates.

  The Company provides for a valuation reserve for certain inventory that is
deemed to be obsolete, of excess quantity or otherwise impaired. The Company's
inventory valuation reserves equaled $389,726 at September 30, 2007 compared
to $389,200 at September 30, 2006. Based on current and expected inventory
levels, management believes any change to the inventory valuation reserves
will not have a material impact on future results of operations, capital
resources or liquidity. All such inventory items are written down to their
estimated net realizable value.

20
<page>

  Cash used in investing activities during fiscal 2007 consisted of funds
provided by the sale of investments of $798,544 and funds used for capital
expenditures of $898.

  Cash used in financing activities during fiscal 2007 consisted of funds used
to purchase treasury stock of $6,562.

  At September 30, 2007, the Company had unused aggregate lines of credit
totaling $750,000 collateralized by all inventory, equipment and accounts
receivable.

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

21
<page>

FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, FINANCIAL CONDITON OR
BUSINESS
---------------------------------------------------------------------------

  An investment in our common stock involves a high degree of risk. The risks
and uncertainties described below are not the only ones we face. Additional
risks and uncertainties that we are unaware of, or that we may currently deem
immaterial, may become important factors that harm our business, financial
condition or results of operations. If any of the following risks actually
occurs, our business, financial condition or results of operations could
suffer. In that case, the trading price of our common stock could decline, and
you may lose all or part of your investment.


  Our stock was removed from The Nasdaq Capital Market System.

  On May 3, 2007, Microwave Filter Company, Inc. (the "Company") received a
determination from the Listing Qualifications Panel of The Nasdaq Stock Market
indicating that the Panel has determined to delist the securities of Microwave
Filter Company, Inc. from the Nasdaq Stock Market, and will suspend trading in
the Company's shares effective with the open of business on Monday, May 7,
2007.

  The Company's securities are currently quoted on The Pink Sheets
(www.pinksheets.com), an electronic quotation service for securities traded
over-the-counter, and the OTCBB (www.otcbb.com).

  Demand for existing products may decline.

  Demand for our products depends upon, among other factors, the level of
capital expenditures by current and prospective customers, the rate of
economic growth in the markets in which we compete and the competitiveness of
our products. Changes in any of these factors could have an adverse effect on
our financial condition or results of operations.

  We must continue to assess and predict customer needs and evolving
technologies. We must develop new products, including enhancements to existing
products, and successfully manufacture, market and sell these products. If we
are unsuccessful in these areas, our financial condition or results of
operations could be adversely affected.

  Our inability to introduce new and enhanced products on a timely basis.

  Delays in development, testing, manufacture and/or release of new products
could adversely affect our sales and results of operations. In addition, there
can be no assurance that we will successfully identify new product
opportunities, develop and bring new products to market in a timely manner and
achieve market acceptance of our products, or that products and technologies
developed by others will not render our products or technologies obsolete or
noncompetitive.

22
<page>

  Market acceptance of newly developed products may be slower than anticipated.

  The markets for our products are competitive and may be characterized by
rapid technological change, new product development and evolving industry
standards. If technologies supported by our products become obsolete or fail
to gain widespread acceptance, our business could be harmed. Current and
potential competitors may have substantially greater financial, technical,
marketing, distribution and other resources than us, and have greater name
recognition and market acceptance of their products and technologies. Our
competitors may develop new technologies or products that may offer superior
price or performance features and may render our products and technologies
obsolete and noncompetitive.


  Pricing pressures from our customers and/or market pressure from competitors
may reduce selling prices.

  Many of customers are under continuous pressure to reduce costs and,
therefore, we expect to continue to experience pressure from these customers
to reduce the prices of the products that we sell to them. To offset declining
average sales prices, we believe that we must achieve manufacturing cost
reductions and increase our sales volumes. If we are unable to offset
declining average selling prices, our gross margins will decline, and this
decline could materially harm our business, financial condition and operating
results. We also compete with companies which have substantially larger
operations and greater financial, engineering, marketing, production and other
resources than we have. These competitors may develop their products more
quickly, devote greater marketing and sales resources, or offer more
aggressive pricing, than we can. As a result, this could cause us to lose
orders or customers or force reductions in selling prices, all of which would
have a material adverse impact on our financial position and results of
operations.


  Difficulty in obtaining an adequate supply of raw materials or components at
reasonable prices.

  The Company depends on outside suppliers for raw materials, components and
parts, and services. Although items are generally available from a number of
suppliers, the Company purchases certain raw materials and components from a
single supplier. If such a supplier should cease to supply an item, the
Company believes that new sources could be found to provide the raw materials
and components. However, manufacturing delays and added costs could result.
The Company has not experienced significant delays of this nature in the past,
but there can be no assurance that delays in delivery due to supply shortages
will not occur in the future. Substantial periods of lead time for delivery of
certain materials are sometimes experienced by the Company, making it
necessary to inventory varied quantities of materials.


  Loss of key personnel or the inability to attract new employees.

  Our success depends in large part on the continued service of our key
technical and management personnel, and on our ability to attract and retain
qualified employees, particularly those involved in the development of new
products and processes and the manufacture of existing products. The
competition for these individuals is significant, and the loss of key
employees could harm our business.

23
<page>

Off-Balance Sheet Arrangements

  At September 30, 2007 and 2006, the Company did not have any unconsolidated
entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities, which might have been
established for the purpose of facilitating off-balance sheet arrangements.


Critical Accounting Policies

  The Company's consolidated financial statements are based on the application
of accounting principles generally accepted in the United States of America
(GAAP). GAAP requires the use of estimates, assumptions, judgments and
subjective interpretations of accounting  principles that have an impact on
the assets, liabilities, revenue and expense  amounts  reported.  The Company
believes its use of estimates and underlying  accounting assumptions adhere to
GAAP and are consistently applied. Valuations based on estimates are reviewed
for reasonableness and adequacy on a consistent  basis  throughout  the
Company. Primary areas where financial information of the Company is subject
to the use of estimates, assumptions and the application  of judgment include
revenues, receivables, inventories, and taxes.

  Revenues from product sales are recorded as the products are shipped and
title and risk of loss have passed to the customer, provided that no
significant vendor or post-contract support obligations remain and the
collection of the related receivable is probable. Billings in advance of the
Company's performance of such work are reflected as customer deposits in the
accompanying consolidated balance sheet.

  Allowances for doubtful accounts are based on estimates of losses related to
customer receivable balances.  The establishment of reserves requires the use
of judgment and assumptions regarding the potential for losses on receivable
balances.

  The Company's inventories are valued at the lower of cost or market.  The
Company uses certain estimates and judgments and considers several factors
including product demand and changes in technology to provide for excess and
obsolescence reserves to properly value inventory.

  The Company established a warranty reserve which provides for the estimated
cost of product returns based upon historical experience and any known
conditions or circumstances. Our warranty obligation is affected by product
that does not meet specifications and performance requirements and any related
costs of addressing such matters.

  The Company has deferred tax assets that are reviewed for recoverability and
valued accordingly. These assets are evaluated by using estimates of future
taxable income streams and the impact of tax planning strategies. Valuations
related to tax accruals and assets can be impacted by changes to tax codes,
changes in statutory tax rates and the Company's future taxable income levels.
The Company has provided a full valuation allowance against its deferred tax
assets.

24
<page>

NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------

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

  FASB Interpretation 48 was issued in July 2006 to clarify the criteria for
recognizing tax benefits under FASB Statement No. 109, Accounting for Income
Taxes. The Interpretation defines the threshold for recognizing the benefits
of tax-return positions in the financial statements as "more-likely-than-not"
to be sustained by the taxing authority and will affect many companies'
reported results and their disclosures of uncertain tax positions. The
Interpretation does not prescribe the type of evidence required to support
meeting the more-likely-than-not threshold, stating that it depends on the
individual facts and circumstances. The benefit recognized for a tax position
meeting the more-likely-than-not criterion is measured based on the largest
benefit that is more than 50 percent likely to be realized. The measurement of
the related benefit is determined by considering the probabilities of the
amounts that could be realized upon ultimate settlement, assuming the taxing
authority has full knowledge of all relevant facts and including expected
negotiated settlements with the taxing authority. Interpretation 48 is
effective as of the beginning of the first fiscal year beginning after
December 15, 2006 (the Company's 2008 fiscal year). The company is currently
analyzing the financial statement impact of adopting this pronouncement.

  Accounting for Pension and Other Postretirement Benefits -- In September
2006, the FASB published Statement of Financial Accounting No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans. This
statement requires companies to report on their balance sheets the funded
status of pension and other post retirement benefit plans. The proposal would
also require companies to measure plan assets and obligations as of the
employer's balance-sheet date. As a result, companies would recognize on their
balance sheets actuarial gains and losses and prior service cost that have not
yet been included in income. This could significantly increase reported
liabilities for many companies with a corresponding reduction in equity
reported as accumulated other comprehensive income. The provisions for the
statement are effective for fiscal years ending after December 15, 2006, (the
Company's 2007 fiscal year) with earlier application encouraged. The Company
does not expect the adoption of SFAS No. 158 in fiscal 2008 to have an impact
on its results of operations or financial position.

25
<page>

  In September 2006, SEC Staff Accounting Bulletin No. 108 was issued to
provide guidance on Quantifying Financial Statement Misstatements. Staff
Accounting Bulletin No. 108 addresses how the effects of prior-year
uncorrected misstatements should be considered when quantifying misstatements
in current-year financial statements. The SAB requires registrants to quantify
misstatements using both the balance sheet and income-statement approaches and
to evaluate whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative factors. The SAB
does not change the staff's previous guidance in SAB 99 on evaluating the
materiality of misstatements. When the effect of initial adoption is
determined to be material, the SAB allows registrants to record that effect as
a cumulative-effect adjustment to beginning-of-year retained earnings. The
requirements are effective for annual financial statements covering the first
fiscal year ending after November 15, 2006 (the Company's fiscal 2007).

  Fair Value Measurements. In September 2006, the FASB published Statement of
Financial Accounting No. 157, Fair Value Measurements. This Statement
establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value, and requires additional disclosures about
fair-value measurements. The Statement applies only to fair-value measurements
that are already required or permitted by other accounting standards and is
expected to increase the consistency of those measurements. It will also
affect current practices by nullifying the Emerging Issues Task Force (EITF)
guidance that prohibited recognition of gains or losses at the inception of
derivative transactions whose fair value is estimated by applying a model and
by eliminating the use of "blockage" factors by brokers, dealers, and
investment companies that have been applying AICPA Guides. The Statement is
effective for fair-value measures already required or permitted by other
standards for financial statements issued for fiscal years beginning after
November 15, 2007 (the Company's fiscal 2009) and interim periods within those
fiscal years. Early application is permissible only if no annual or interim
financial statements have been issued for the earlier periods. The
requirements of the Statement are applied prospectively, except for changes in
fair value related to estimating he fair value of a large block position and
instruments measured at fair value at initial recognition based on transaction
price in accordance with EITF 02-3 or Statement 155.

26
<page>

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
--------------------------------------------------------------------------------

  In an effort to provide investors a balanced view of the Company's current
condition and future growth opportunities, this Annual Report on Form 10-K may
include comments by the Company's management about future performance. These
statements which are not historical information are "forward-looking
statements" pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These, and other forward-looking statements,
are subject to business and economic risks and uncertainties that could cause
actual results to differ materially from those  discussed. These risks and
uncertainties include, but are not limited to: risks associated with demand
for and market acceptance of existing and newly developed products as to which
the Company has made significant investments; general economic and industry
conditions; slower than anticipated penetration into the satellite
communications, mobile radio and commercial and defense electronics markets;
competitive products and pricing pressures; increased pricing pressure from
our customers; risks relating to governmental regulatory actions in broadcast,
communications and defense programs; as well as other risks and uncertainties,
including but not limited to those detailed from time to time in the Company's
Securities and Exchange Commission filings. These forward-looking statements
are made only as of the date hereof, and the Company undertakes no obligation
to update or revise the forward-looking statements, whether as a result of new
information, future events or otherwise. You are encouraged to review
Microwave Filter Company's 2007 Annual Report and Form 10-KSB for the fiscal
year ended September 30, 2007 and other Securities and Exchange Commission
filings. Forward looking statements may be made directly in this document or
"incorporated by reference" from other documents. You can find many of these
statements by looking for words like "believes," "expects," "anticipates,"
"estimates," or similar expressions.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

  The Company has limited exposure to market risk as the Company has no long
term debt as of September 30, 2007. The Company's available line of credit is
based on a factor of the prime rate; however, there are no outstanding
borrowings under the line of credit. The Company does not trade in derivative
financial instruments. Investments generally consist of commercial paper,
government backed obligations and other guaranteed commercial debt that have
an original maturity of more than three months and a remaining maturity of
less than one year. Investments are carried at cost which approximates market.
The Company's policy is to hold investments until maturity. The Company's
practice is to invest cash with financial institutions that have acceptable
credit ratings.



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

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



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

  None.

27
<page>

ITEM 9A.   CONTROLS AND PROCEDURES

1. Evaluation of disclosure controls and procedures. Based on their
   evaluation of the Company's disclosure controls and procedures (as
   defined in Rule 13a-15(e) and 15d-15(e) under the Securities
   Exchange Act of 1934) as of the end of the period covered by this
   Annual Report on Form 10-KSB, the Company's chief executive officer
   and chief financial officer have concluded that the Company's
   disclosure controls and procedures are effective.

2. Changes in internal control over financial reporting. During the
   quarter ended September 30, 2007, there were no changes in the
   Company's internal control over financial reporting (as defined
   in Rule 13a-15(f)) that have materially affected, or are reasonably
   likely to materially affect, the Company's internal control over
   financial reporting.



ITEM 9B. OTHER INFORMATION

  None.

28
<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 12/1/07   Class


ROBERT R. ANDREWS     Mr. Andrews is the President and        1,214        *
(a)(c)                Principal shareholder of Morse
Age 66                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. Mr. Andrews was elected
                      Chairman of the Board of Directors
                      of Microwave Filter Company, Inc. on
                      November 17, 2004.


TRUDI B. ARTINI       Mrs. Artini is an independent          32,435       1.1%
(a)(b)(d)             investor in MFC and various other
Age 85                business enterprises in Syracuse,
Director since 1974   New York.


SIDNEY CHONG          Mr. Chong is a corporate                  335        *
(a)(b)(c)             accountant for Carrols Corp. in
Age 66                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.

29
<page>

                                                            Common Shares
                                                         Actually or    Percent
                                                        Beneficially      of
Director             Principal occupation               Owned 12/1/07    Class


CARL F. FAHRENKRUG PE Mr. Fahrenkrug was appointed           72,298       2.5%
(a)                   President and Chief Executive
Age 65                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.


DANIEL GALBALLY       Mr. Galbally is an accountant               0
(b)(c)(d)             for Nucor Steel Auburn, Inc.
Age 60                in Auburn, New York. Prior to
Director since 1995   joining Nucor Steel Auburn, he
                      was the controller of Diamond Card
                      Exchange, Inc. in Syracuse, New
                      York. He was the controller of
                      Evaporated Metal 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.


PERRY A. HARVEY       Mr. Harvey is a consultant in global        0
Age 55                strategic business planning and
Director since 2007   productivity and process improvement.
                      He holds a Master of Science in
                      Metallurgical Engineering and a
                      Metallurgical Engineering Degree from
                      the University of Wisconsin. He served
                      as President of ESCO Turbine Technologies
                      Group (TTG), Syracuse, New York from
                      2000-2007. He has served as a board member
                      and president of the Investment Casting
                      Institute and a board member of the
                      Manufacturers of Central New York and
                      the Foundry Educational Foundation Board.

30
<page>

                                                             Common Shares
                                                          Actually or   Percent
                                                         Beneficially     of
Director             Principal occupation                Owned 12/1/07   Class


RICHARD L. JONES      Mr. Jones was appointed a Director          0
Age 59                of Microwave Filter Company, Inc. on
Director since 2004   September 7, 2004. Mr. Jones has
                      served as a Vice President and the
                      Chief Financial Officer of Microwave
                      Filter Company, Inc. since October 7,
                      1992. He has a Bachelor of Science
                      degree in accounting from Syracuse
                      University.

FRANK S. MARKOVICH    Mr. Markovich is a consultant in        4,340        *
(c)(d)                the manufacturing operations
Age 62                and training field. Prior to that
Director since 1992   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.

MILO PETERSON         Mr. Peterson has served as             42,250       1.5%
(a)                   Executive Vice President and
Age 67                Corporate Secretary of NSI since
Director since 1990   January 1, 1992. 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 Vice President
                      And Corporate Secretary of MFC
                      On March 27, 1993.


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

*  Denotes less than one percent of class.

31
<page>

The Directors listed above and executive officers as a group own 152,872
shares or approximately 5% of the outstanding common shares of the Company.

The Board of Directors of Microwave Filter Company, Inc. has determined that
Mr. Chong and Mr. Galbally, both members of the Audit Committee, are "audit
committee financial experts" as defined by the SEC's regulations.



IDENTIFICATION OF EXECUTIVE OFFICERS

        Name                   Age      Position

        Carl F. Fahrenkrug      65      President and Chief Executive Officer

        Richard L. Jones        59      Vice President, Chief Financial
                                        Officer and Corporate Secretary

        Paul W. Mears           48      Vice President of Engineering

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 controller. 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.

Paul W. Mears began his association with MFC as a Co-op while attending RIT in
1981. He became a full time employee in 1984 when he began his duties as an
Electrical Engineer in Research and Development. In 1988 he became a Senior
Design and Quotation Engineer and in 1989, he was promoted to Assistant Chief
Engineer, Manager of Engineering of the Filter Division and in April of 1998,
was appointed Vice President of Engineering.


The Company has adopted a Code of Ethics and Business Conduct for all of our
employees and directors, including our Chief Executive Officer and Chief
Financial Officer. A copy of our Code of Ethics and Business Conduct is
available free of charge on our Company web site at www.microwavefilter.com.

32
<page>

ITEM 11. EXECUTIVE COMPENSATION.

  The following table sets forth for the fiscal years ended September 30, 2007,
2006 and 2005, 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              2007    122,534       -
   President and CEO               2006    116,188       -
                                   2005    122,687       -

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 were matched at a rate of 100%
of an employee's first 6% of contributions during fiscal 2007. The maximum
corporate match was 6% of an employee's compensation during fiscal 2006.

  MFC's contributions to the plans for the years ended September 30, 2007,
2006 and 2005 amounted to $103,171, $97,748 and $134,126, respectively.


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

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

33
<page>

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

<TABLE>
<CAPTION>
                                        2007
                                      --------
                          ISOs                     NQSOs
                        --------                  --------
                     Exercise   Shares         Exercise   Shares
                      Price                     Price
                     --------  --------        --------  --------
<S>                  <C>       <C>             <C>       <C>
Outstanding at
 beginning of year   $1.47     108,548         $1.47     30,000
Granted                  -           0             -          0
Exercised                -           0             -          0
Cancelled                -           0             -          0
                     ------   --------         ------  --------
Outstanding at
  end of year        $1.47     108,548         $1.47     30,000
                     ------   --------         ------  --------

Exercisable at
  end of year        $1.47     108,548         $1.47     30,000
                     ------   --------        -------  --------


                                        2006
                                      --------
                          ISOs                     NQSOs
                        --------                  --------
                     Exercise   Shares         Exercise   Shares
                      Price                     Price
                     --------  --------        --------  --------
<S>                  <C>       <C>             <C>       <C>
Outstanding at
 beginning of year   $1.47     108,548         $1.47     30,000
Granted                  -           0             -          0
Exercised                -           0             -          0
Cancelled                -           0             -          0
                     ------   --------         ------  --------
Outstanding at
  end of year        $1.47     108,548         $1.47     30,000
                     ------   --------         ------  --------
Exercisable at
  end of year        $1.47     108,548         $1.47     30,000
                     ------   --------        -------  --------

</TABLE>

34
<page>

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

  Non-officer directors currently receive fees of $300.00 per board and
committee meetings. MFC also reimburses directors for reasonable expenses
incurred in attending meetings. The Chairman of the Board receives $500.00 per
board and committee meetings. Officer members receive no compensation for
their attendance at meetings.


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 December 1, 2007.

                                                                    % of
                                                                   Outstanding
                                                                Number of shares
                                                                     Common
Name of Beneficial Owner   Address             Beneficially Owned ____Stock____

Frederick A. Dix &         209 Watson Rd.            244,007           8.4%
Marjorie Dix               N. Syracuse, NY 13212



  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


ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

  Information required by this Item is contained in the Company's proxy
statement filed with respect to the 2007 Annual Meeting of Shareholders and is
incorporated by reference herein.

35
<page>

                         PART IV

ITEM 15.  FINANCIAL STATEMENT SCHEDULES AND EXHIBITS.

(a)    1. and 2.   Financial Statements and Schedules:

                   Reference is made to the list of Financial Statements and
                   the Financial Statement Schedule submitted as a separate
                   section of this report.

(b)    Exhibits:

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

36
<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:  December 21, 2007

  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| Robert R. Andrews         |S| Carl F. Fahrenkrug
------------------------      --------------------------
Robert R. Andrews             Carl F. Fahrenkrug
(Director)                    (Director)

|S| Milo J. Peterson          |S| Richard L. Jones
------------------------      -----------------------
Milo J. Peterson              Richard L. Jones
(Director)                    (Director)

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

Dated:  December 21, 2007

37
<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 15(a)(1) and (2)

CONSOLIDATED FINANCIAL STATEMENTS:                              Page

Reports of Independent Registered Public Accounting Firms........39
Consolidated Balance Sheets as of September 30, 2007 and 2006....40
Consolidated Statements of Operations for the Years
  Ended September 30, 2007, 2006 and 2005 .......................41
Consolidated Statements of Stockholders' Equity for the Years
  Ended September 30, 2007, 2006 and 2005 .......................42
Consolidated Statements of Cash Flows for the Years
  Ended September 30, 2007, 2006 and 2005 .......................43
Notes to Consolidated Financial Statements.......................44-55



SCHEDULE FOR THE YEARS ENDED SEPTEMBER 30, 2007, 2006 AND 2005:

II-Valuation and Qualifying Accounts.............................57

  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.

38
<page>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



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

  We have audited the accompanying consolidated balance sheets of Microwave
Filter Company, Inc. and Subsidiary as of September 30, 2007 and 2006, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 2007.
These consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as of September 30, 2007 and 2006, and the results of its operations
and its cash flows for each of the three years in the period ended September
30, 2007, in conformity with accounting principles generally accepted in the
United States of America.




/s/ Rotenberg & Co., LLP

Rotenberg & Co., LLP
Rochester, New York
 December 11, 2007

39
<page>


         Microwave Filter Company and Subsidiaries
                 Consolidated Balance Sheets

                                                              September 30
Assets                                                       2007       2006
------                                                       ----       ----
Current assets:
  Cash and cash equivalents                              $1,266,979  $  705,646
  Investments                                                     0     798,544
  Accounts receivable-trade, net of allowance for
    doubtful accounts of $12,000 and $12,000                370,742     344,134
  Accrued federal and state income tax recoverable                0     137,986
  Inventories                                               660,651     491,135
  Prepaid expenses and other current assets                  86,661      94,826
                                                          ---------   ---------
    Total current assets                                  2,385,033   2,572,271

Property, plant and equipment, net                          441,009     554,102
                                                          ---------  ----------

      Total Assets                                       $2,826,042  $3,126,373
                                                         ==========  ==========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
  Accounts payable                                       $  163,042  $  179,800
  Customer deposits                                          47,488      20,298
  Accrued federal and state income taxes                        650           0
  Accrued payroll and related expenses                       58,049      61,028
  Accrued compensated absences                              208,868     210,825
  Other current liabilities                                  30,129      37,051
                                                          ---------   ---------
    Total current liabilities                               508,266     509,002
                                                          ---------   ---------
    Total liabilities                                       508,266     509,002
                                                          ---------   ---------
Commitments (Note 6)

Stockholders' equity:
  Common stock, $.10 par value. Authorized 5,000,000 shares
    Issued 4,324,140 in 2007 and 2006, Outstanding
    2,895,917 in 2007 and 2,902,352 in 2006                 432,414     432,414
  Additional paid-in capital                              3,248,706   3,248,706
  Retained earnings                                         163,190     456,183

  Common stock in treasury, at cost, 1,428,223
  shares in 2007 and 1,421,788 shares in 2006            (1,526,494) (1,519,932)
                                                          ---------   ---------
    Total stockholders' equity                            2,317,816   2,617,371
                                                          ---------   ---------
    Total Liabilities and Stockholders' Equity           $2,826,042  $3,126,373
                                                         ==========  ==========

The accompanying notes are an integral part of the consolidated financial
statements.
40
<page>
                   Microwave Filter Company and Subsidiaries
                     Consolidated Statements of Operations

                                         For the Years Ended September 30
                                       2007             2006            2005
                                       ----             ----            ----

Net sales                           $4,634,233       $4,536,715      $5,533,398

Cost of goods sold                   3,035,485        3,043,720       3,338,211
                                     ---------        ---------       ---------

    Gross profit                     1,598,748        1,492,995       2,195,187

Selling, general
  and administrative expenses        1,956,011        2,022,485       1,910,951
                                     ---------        ---------       ---------

 (Loss) income from operations        (357,263)        (529,490)        284,236


Non-operating Income
    Interest income                     59,132           71,297          41,862
    Miscellaneous                        5,788            9,312          25,868
                                       -------          -------         -------

    (Loss) income before
       income taxes                   (292,343)        (448,881)        351,966


Provision (benefit) for
  income taxes                             650          (37,532)         39,755
                                      --------        ---------       ---------

NET (LOSS) INCOME                    ($292,993)       ($411,349)       $312,211
                                      ========        =========       =========

Per share data:
Basic (Loss) Earnings Per
  Common Share                         ($0.10)           ($0.14)          $0.11
                                     =========        =========       =========
Diluted (Loss) Earnings per
  Common Share                         ($0.10)           ($0.13)          $0.10
                                     =========        =========       =========
Shares used in computing net
  (loss) earnings per common share:
  Basic                              2,899,660        2,905,355       2,908,503
  Diluted                            3,038,098        3,043,903       3,049,115




The accompanying notes are an integral part of the consolidated financial
statements.

41
<page>
                   Microwave Filter Company and Subsidiaries
                Consolidated Statements of Stockholders' Equity
            For the Years Ended September 30, 2007, 2006 and 2005

            -----------------------------------------------------



<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, 2004          4,317,688   $431,769   $3,239,867     $846,237 1,413,260 ($1,506,244)   $3,011,629

Net income                                                         312,211                             312,211
Stock options exercised         6,452        645        8,839                                            9,484
Purchase of treasury stock                                                     1,580      (2,411)       (2,411)
                            ---------   --------   ----------     --------   -------   ---------     ---------

Balance,
September 30, 2005          4,324,140    432,414    3,248,706    1,158,448 1,414,840  (1,508,655)    3,330,913

Net (loss)                                                        (411,349)                           (411,349)
Purchase of treasury stock                                                     6,948     (11,277)      (11,277)
Cash dividend paid
  ($.10) per share                                                (290,916)                           (290,916)
                           ----------  ---------   ----------   ----------   -------   ---------     ---------
Balance
September 30, 2006          4,324,140    432,414    3,248,706      456,183 1,421,788  (1,519,932)    2,617,371

Net (loss)                                                        (292,993)                           (292,993)
Purchase of treasury stock                                                     6,435      (6,562)       (6,562)
                           ----------  ---------   ----------   ----------   -------   ---------     ---------
Balance
September 30, 2007          4,324,140   $432,414   $3,248,706     $163,190 1,428,223 ($1,526,494)   $2,317,816
                           ==========   ========   ==========   ========== =========  ==========    ==========


</TABLE>





The accompanying notes are an integral part of the consolidated financial
statements.

42
<page>

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

                                              For the Years Ended September 30
                                              --------------------------------
                                                  2007      2006       2005
                                                  ----      ----       ----

Cash flows from operating activities:
       Net (loss) income                      ($292,993) ($411,349)  $312,211

Adjustments to reconcile net (loss) income to
  net cash (used in) provided by operating
  activities:
    Depreciation                                113,991    163,400    198,476
    Provision for doubtful accounts                 550     (4,853)    (8,473)
    Inventory obsolescence provision                527    (27,061)   (24,610)
    Deferred income taxes                             0     32,395    (32,395)
  Changes in assets and liabilities:
    Accounts receivable-trade                   (27,158)   155,901    (32,865)
    Federal and state income taxes              138,636   (161,085)    22,673
    Inventories                                (170,043)    91,816    106,890
    Other assets                                  8,165     55,364    (82,568)
    Accounts payable and customer deposits       10,432       (148)   (46,468)
    Accrued payroll, compensated absences and
      related expenses                           (4,936)   (15,296)   (47,526)
    Other current liabilities                    (6,922)   (88,342)    92,232
                                              ---------   --------    -------
    Net cash (used in) provided by
      operating activities                     (229,751)  (209,258)   457,577
                                              ---------   --------  ---------
Cash flows from investing activities:
  Investments                                   798,544     24,107     28,506
  Capital expenditures                             (898)   (58,604)   (58,900)
                                               --------   --------   --------
    Net cash provided by (used in)
      investing activities                      797,646    (34,497)   (30,394)
                                               --------   --------   --------
Cash flows from financing activities:
  Purchase of treasury stock                     (6,562)   (11,277)    (2,411)
  Stock options exercised                             0          0      9,484
  Cash dividend paid                                  0   (290,916)         0
                                               --------   --------   --------
    Net cash (used in) provided by
      financing activities                       (6,562)  (302,193)     7,073
                                               --------   --------   --------
    Net increase (decrease)
        in cash and cash equivalents            561,333   (545,948)   434,256

Cash and cash equivalents at
  beginning of year                             705,646  1,251,594    817,338
                                              ---------  ---------   --------

CASH AND CASH EQUIVALENTS AT END OF YEAR     $1,266,979   $705,646 $1,251,594
                                             ==========  ========= ==========




Supplemental disclosures of cash flows:
  Cash paid (refunded) during the year
   for (approximately):
    Interest                                         $0         $0         $0
    Income taxes                              ($141,000)   $91,000    $50,000



  The accompanying notes are an integral part of the consolidated financial
statements.

43
<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 one industry. The Company extends credit to business customers
based upon ongoing credit evaluations. Microwave Filter Company, Inc. (MFC)
designs, develops, manufactures and sells electronic filters, both for radio
and microwave frequencies, to help process signal distribution and to prevent
unwanted signals from disrupting transmit or receive operations. Markets
served include cable television, television and radio broadcast, satellite
broadcast, mobile radio, commercial communications and defense electronics.
Niagara Scientific, Inc. (NSI), a wholly owned subsidiary, custom designs case
packing machines to automatically pack products into shipping cases. Customers
are typically processors of food and other commodity products with a need to
reduce labor cost with a modest investment and quick payback.

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)
(dormant); located in Syracuse, New York. All significant intercompany
balances and transactions have been eliminated in consolidation.

c.  Revenue Recognition

  The Company recognizes revenue at the time products are shipped to customers
and title and risk of loss have passed to the customer. The Company is not
required to install any of its products. Payments received from customers in
advance of products shipped are recorded as customer advance payments until
earned.

d. Cash and Cash Equivalents

  The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash and accounts receivable.  The Company's
cash is held at federally insured institutions and balances may periodically
exceed insured limits. The Company has not experienced any losses in such
accounts and believes it is not exposed to any significant credit risk with
respect to cash.  The Company also routinely assesses the financial strength
of its customers and, as a consequence, believes that its trade accounts
receivable credit risk exposure is limited.

e. Investments

  Investments generally consist of commercial paper, government backed
obligations and other guaranteed commercial debt that have an original
maturity of more than three months and a remaining maturity of less than one
year. Investments are carried at cost which approximates market. The Company's
policy is to hold investments until maturity. The Company's practice is to
invest cash with financial institutions that have acceptable credit ratings.

44
<page>

f. Trade Accounts Receivable and Allowance for Doubtful Accounts

  Trade accounts receivable are recorded at the invoiced amount and do not
bear  interest. The allowance for doubtful accounts is the Company's best
estimate of the amount of probable credit losses in the Company's existing
accounts receivable.  The Company reviews its allowance for doubtful accounts
monthly. Past due balances over 90 days are reviewed individually for
collectibility. Account balances are charged off against the allowance after
all means of collection have been exhausted and the potential for recovery is
considered remote. The Company does not have  any off-balance-sheet credit
exposure related to its customers.

g. Inventories and Reserve for Obsolescence

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

  The Company records a reserve for obsolete or excess inventory.  The Company
considers inventory quantities greater than a one-year supply based on current
year activity as well as any additional specifically identified inventory to
be excess. The Company also provides for the total value of inventories that
are determined to be obsolete based on criteria such as customer demand and
changing technologies.

h.  Research and Development

  Costs in connection with research and development, which amount to $461,954,
$420,570 and $373,080 for the fiscal years 2007, 2006 and 2005, respectively,
are charged to operations as incurred.

i. 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. Buildings and building improvements are depreciated over an
estimated service life of 20 to 30 years. Machinery and equipment are
depreciated over an estimated useful life of 3 to 10 years. Office equipment
and fixtures are depreciated over an estimated useful life of 3 to 10 years.
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.

j. 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. The Company has
provided a full valuation allowance against its deferred tax assets.

45
<page>

k. Earnings Per Share

  The Company presents basic earnings per share ("EPS"), computed based on the
weighted average number of common shares outstanding for the period, and when
applicable diluted EPS, which gives the effect to all dilutive potential
shares outstanding (i.e. options) during the period after restatement for any
stock dividends. Income used in the EPS calculation is net income for each
year.

l. Fair Value of Financial Instruments

  The carrying values of the Company cash and cash equivalents, accounts
receivable and accounts payable approximate fair value because of the short
maturity of those instruments.

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

m. Miscellaneous Non-operating Income

  Miscellaneous non-operating income generally consists of sales of scrap
material, stock transfer fees, the forfeiture of non-refundable deposits and
other incidental items.

n. 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.

o. Warranty Costs

  The Company established a warranty reserve which provides for the estimated
cost of product returns based upon historical experience and any known
conditions or circumstances. Our warranty obligation is affected by product
that does not meet specifications and performance requirements and any related
costs of addressing such matters. Warranty costs were approximately $5,000,
$3,000 and $7,000 for the fiscal years 2007, 2006 and 2005, respectively.

p. Impairment of Long-Lived Assets

  The carrying values of long-lived assets other than goodwill are generally
evaluated for impairment only if events or changes in facts and circumstances
indicate that carrying values may not be recoverable. Any impairment
determined would be recorded in the current period and would be measured by
comparing the fair value of the related asset to its carrying value. Fair
value is generally determined by identifying estimated undiscounted cash flows
to be generated by those assets.  No impairments have been recorded for the
years ended September 30, 2007, 2006, and 2005.

46
<page>

q. New Accounting Pronouncements

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

  FASB Interpretation 48 was issued in July 2006 to clarify the criteria for
recognizing tax benefits under FASB Statement No. 109, Accounting for Income
Taxes. The Interpretation defines the threshold for recognizing the benefits
of tax-return positions in the financial statements as "more-likely-than-not"
to be sustained by the taxing authority and will affect many companies'
reported results and their disclosures of uncertain tax positions. The
Interpretation does not prescribe the type of evidence required to support
meeting the more-likely-than-not threshold, stating that it depends on the
individual facts and circumstances. The benefit recognized for a tax position
meeting the more-likely-than-not criterion is measured based on the largest
benefit that is more than 50 percent likely to be realized. The measurement of
the related benefit is determined by considering the probabilities of the
amounts that could be realized upon ultimate settlement, assuming the taxing
authority has full knowledge of all relevant facts and including expected
negotiated settlements with the taxing authority. Interpretation 48 is
effective as of the beginning of the first fiscal year beginning after
December 15, 2006 (the Company's 2008 fiscal year). The company is currently
analyzing the financial statement impact of adopting this pronouncement.

  Accounting for Pension and Other Postretirement Benefits -- In September
2006, the FASB published Statement of Financial Accounting No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans. This
statement requires companies to report on their balance sheets the funded
status of pension and other post retirement benefit plans. The proposal would
also require companies to measure plan assets and obligations as of the
employer's balance-sheet date. As a result, companies would recognize on their
balance sheets actuarial gains and losses and prior service cost that have not
yet been included in income. This could significantly increase reported
liabilities for many companies with a corresponding reduction in equity
reported as accumulated other comprehensive income. The provisions for the
statement are effective for fiscal years ending after December 15, 2006, (the
Company's 2007 fiscal year) with earlier application encouraged. The Company
does not expect the adoption of SFAS No. 158 in fiscal 2008 to have an impact
on its results of operations or financial position.

47
<page>

  In September 2006, SEC Staff Accounting Bulletin No. 108 was issued to
provide guidance on Quantifying Financial Statement Misstatements. Staff
Accounting Bulletin No. 108 addresses how the effects of prior-year
uncorrected misstatements should be considered when quantifying misstatements
in current-year financial statements. The SAB requires registrants to quantify
misstatements using both the balance sheet and income-statement approaches and
to evaluate whether either approach results in quantifying an error that is
material in light of relevant quantitative and qualitative factors. The SAB
does not change the staff's previous guidance in SAB 99 on evaluating the
materiality of misstatements. When the effect of initial adoption is
determined to be material, the SAB allows registrants to record that effect as
a cumulative-effect adjustment to beginning-of-year retained earnings. The
requirements are effective for annual financial statements covering the first
fiscal year ending after November 15, 2006 (the Company's fiscal 2007).


  Fair Value Measurements. In September 2006, the FASB published Statement of
Financial Accounting No. 157, Fair Value Measurements. This Statement
establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value, and requires additional disclosures about
fair-value measurements. The Statement applies only to fair-value measurements
that are already required or permitted by other accounting standards and is
expected to increase the consistency of those measurements. It will also
affect current practices by nullifying the Emerging Issues Task Force (EITF)
guidance that prohibited recognition of gains or losses at the inception of
derivative transactions whose fair value is estimated by applying a model and
by eliminating the use of "blockage" factors by brokers, dealers, and
investment companies that have been applying AICPA Guides. The Statement is
effective for fair-value measures already required or permitted by other
standards for financial statements issued for fiscal years beginning after
November 15, 2007 (the Company's fiscal 2009) and interim periods within those
fiscal years. Early application is permissible only if no annual or interim
financial statements have been issued for the earlier periods. The
requirements of the Statement are applied prospectively, except for changes in
fair value related to estimating the fair value of a large block position and
instruments measured at fair value at initial recognition based on transaction
price in accordance with EITF 02-3 or Statement 155.


2. INVENTORIES

Inventories net of provision for obsolescence consisted of the following:

                                                September 30
                                          2007                 2006
                                          ----                 ----
  Raw materials and stock parts         $517,029             $411,885
  Work-in-process                         54,938               20,437
  Finished goods                          88,684               58,813
                                        --------            ---------
                                        $660,651             $491,135
                                        ========           ==========

  The Company's reserve for obsolescence equaled $389,726 at September 30,
2007 and $389,200 at September 30, 2006.

48
<page>

3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:

                                                 September 30
                                          2007                 2006
                                          ----                 ----

  Land                                  $143,000             $143,000
  Building and improvements            1,818,633            1,818,633
  Machinery and equipment              3,106,412            3,106,412
  Office equipment and fixtures        1,645,098            1,644,200
                                       ---------            ---------
                                       6,713,143            6,712,245
  Less: Accumulated depreciation       6,272,134            6,158,143
                                       ---------            ---------
                                        $441,009             $554,102
                                      ==========           ==========


4. CREDIT FACILITIES

  The Company has unused aggregate lines of credit totaling $750,000
collateralized by inventory, equipment and accounts receivable.


5. 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 determined by
the Board of Directors and are made from current or accumulated earnings,
while contributions to the 401-K plan were matched at a rate of 100% of an
employee's first 6% of contributions during fiscal 2007. The maximum corporate
match was 6% of an employee's compensation during fiscal 2007.

  The Company's matching contributions to the 401-K plan for the years ended
September 30, 2007, 2006 and 2005 were $103,171, $97,748 and $72,126,
respectively. Additionally, the Company may make discretionary contributions
to the non-contributory profit sharing plan. These contributions were $0, $0
and $62,000 in 2007, 2006 and 2005, respectively.

49
<page>

6. OBLIGATIONS UNDER OPERATING LEASES

  The Company leases equipment under operating lease agreements expiring at
various dates through September 30, 2009. Rental expense under these leases
for the years ended September 30, 2007, 2006 and 2005 amounted to $11,159,
$11,159 and $11,180, respectively.

  Minimum rental commitments at September 30, 2007 for these leases are:

        Year Ended      Lease
       September 30    Payments
       ------------    --------

           2008           9,587
           2009           2,436
           2010               0
           2011               0
           2012               0
                        -------
                        $12,023
                        =======

7. INCOME TAXES

  The provision for income taxes consisted of the following:

                             Year Ended September 30
                           2007        2006        2005
Currently payable:
  Federal               ($149,935)  ($128,967)     71,500
  State                       650         650         650
Deferred (credit)         149,935      90,785     (32,395)
                          -------     -------     -------
                             $650    ($37,532)    $39,755
                          =======     =======     =======

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

                                         Year ended September 30
                          ______2007______   ______2006______   ______2005______
                           Amount     %       Amount     %       Amount     %
Statutory tax rate        ($99,397)(34.0%)  ($152,620)(34.0%)   $119,668   34.0%
Surtax exemption
State income tax net of:
 Federal benefit               429   0.1%         429   0.1%        429    0.1%
Research and experimentation
 tax credits                     0   0.0%           0   0.0%    (26,431)  (7.5%)
Valuation allowance         99,397  34.0%      90,785  20.2%          0    0.0%
Federal AMT rate
 differential                    0   0.0%           0   0.0%    (54,255) (15.4%)
Other                          221   0.1%      23,874   5.3%        344    0.1%
                           -------  ----      -------  ----    --------  -----
                              $650   0.2%    ($37,532) (8.4%)   $39,755   11.3%
                           =======  ====      =======  ====     =======   ====
50
<page>

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

                                            2007          2006
                                            ----          ----
  Inventory                              $139,821       $138,789
  Accrued warranty                          4,250          4,250
  Accrued vacation                         60,892         61,242
  Accounts receivable                       4,110          3,923
  Valuation allowance                    (209,073)      (208,204)
                                          -------        -------
  Net deferred tax assets
   (liabilities) - current                     $0             $0
                                         --------        -------

  Accelerated depreciation                 $7,659       ($11,983)
  Research and experimentation
   tax credit carry forward               173,485        143,458
  AMT credit carry forward                 39,399         39,399
  NOL carryforward                         99,397              0
  Valuation allowance                    (319,940)      (170,874)
                                          -------        -------
  Net deferred tax assets
   (liabilities) - noncurrent                  $0             $0
                                          -------        -------
  Net deferred tax assets                      $0             $0
                                         ========        =======

  As required by Statement of Financial Accounting Standards No. 109, the
Company has evaluated the positive and negative evidence bearing upon the
realization of its deferred tax assets. The Company has determined that, at
this time, it is more likely than not that the Company will not realize all of
the benefits of federal and state deferred tax assets, and, as a result, a
valuation allowance was established. The research and experimentation tax
credit carry forwards expire in 2025. At September 30, 2007, the Company's
federal AMT credit can be carried forward indefinitely.

51
<page>

8. 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)
                                     2007        2006       2005
Net Sales (Unaffiliated):
  MFC                               $4,599      $4,516     $5,345
  NSI                                   35          21        188
  Total                             $4,634      $4,537     $5,533

Operating Profit (Loss): (a)
  MFC                                ($347)     ($476)      $297
  NSI                                  (10)       (53)       (13)
  Total                              ($357)     ($529)      $284

Identifiable Assets: (b)
  MFC                               $1,524      $2,386     $2,680
  NSI                                   35          35         52
  Subtotal                           1,559       2,421      2,732
  Corporate Assets-Cash and
  Cash Equivalents                   1,267         706      1,252
  Total                             $2,826      $3,127     $3,984

Depreciation Expense:
  MFC                                 $114        $163       $196
  NSI                                    0           0          2
  Total                               $114        $163       $198

Capital Expenditures:
  MFC                                 $  1        $ 59       $ 59
  NSI                                    0           0          0
  Total                               $  1        $ 59       $ 59

Significant Export Sales:
  MFC                                 $419        $279       $355

Customers:

  In 2005, sales to one MFC customer totaled approximately $624,000 and
exceeded 10% of consolidated net sales.

(a) Operating profit (loss) is total revenue less operating expenses. In
computing operating profit, none of the following items have been added or
deducted: interest income, 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.

52
<page>

9. STOCK OPTIONS

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

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

<TABLE>
<CAPTION>

                                        2007
                                      --------
                          ISOs                     NQSOs
                        --------                  --------
                     Exercise   Shares         Exercise   Shares
                      Price                     Price
                     --------  --------        --------  --------
<S>                  <C>       <C>             <C>       <C>
Outstanding at
 beginning of year   $1.47     108,548         $1.47     30,000
Granted                  -           0             -          0
Exercised                -           0             -          0
Cancelled                -           0             -          0
                     ------   --------         ------  --------
Outstanding at
  end of year        $1.47     108,548         $1.47     30,000
                     ------   --------         ------  --------

Exercisable at
  end of year        $1.47     108,548         $1.47     30,000
                     ------   --------        -------  --------
</TABLE>


53
<page>

<TABLE>
<CAPTION>
                                        2006
                                      --------
                          ISOs                     NQSOs
                        --------                  --------
                     Exercise   Shares         Exercise   Shares
                      Price                     Price
                     --------  --------        --------  --------
<S>                  <C>       <C>             <C>       <C>
Outstanding at
 beginning of year   $1.47     108,548         $1.47     30,000
Granted                  -           0             -          0
Exercised                -           0             -          0
Cancelled                -           0             -          0
                     ------   --------         ------  --------
Outstanding at
  end of year        $1.47     108,548         $1.47     30,000
                     ------   --------         ------  --------
Exercisable at
  end of year        $1.47     108,548         $1.47     30,000
                     ------   --------        -------  --------


</TABLE>

54
<page>

10. LEGAL MATTERS

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


11. SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

  The following table sets forth certain unaudited quarterly financial
information For the years ended September 30, 2007 and 2006:

<TABLE>
<CAPTION>
                                        2007 Quarter Ended
                       -----------------------------------------------------
                         Dec. 31      March 31      June 30       Sept. 30
                       ----------    ----------    ----------    ----------
<S>                    <C>           <C>           <C>           <C>
Net sales              $1,045,073    $1,276,391    $1,122,960    $1,189,809

Cost of sales          $  708,973    $  792,194    $  766,586    $  767,732

Net (loss) income      $ (130,564)   $   24,792    $ (149,075)   $  (38,146)

(Loss) earnings
 per common share:     $     (.04)   $      .01   $      (.05)   $     (.01)



                                        2006 Quarter Ended
                       -----------------------------------------------------
                         Dec. 31      March 31      June 30       Sept. 30
                       ----------    ----------    ----------    ----------
<S>                    <C>           <C>           <C>           <C>
Net sales              $1,080,836    $1,292,429    $1,098,395    $1,065,055

Cost of sales          $  720,495    $  810,946    $  785,610    $  726,669

Net (loss) income      $ (121,407)   $  (42,289)   $ (178,515)   $  (69,138)

(Loss) earnings
 per common share:     $     (.04)   $     (.01)   $     (.06)   $     (.03)

</TABLE>

55
<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.

31.1	Section 13a-14(a)/15d-14(a) Certification of Carl F. Fahrenkrug

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

32.1     Section 1350 Certification of Carl F. Fahrenkrug

32.2     Section 1350 Certification of Richard L. Jones


*  Previously filed

56
<page>

Microwave Filter Company and Subsidiaries

Schedule II - VALUATION AND QUALIFYING ACCOUNTS

SEPTEMBER 30, 2007, 2006 and 2005


<TABLE>
<CAPTION>



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

<S>                                            <C>                  <C>           <C>          <C>         <C>
Year ended September 30, 2007
Allowance for doubtful accounts                 $11,537                  $0         $550            $0      $12,087
Inventory valuation reserves                    389,200                 526                                 389,726
                                               --------             -------       ------       -------     --------
                                               $400,737                $526         $550            $0     $401,813
                                               ========             =======       ======       =======     ========


Year ended September 30, 2006
Allowance for doubtful accounts                 $16,390                  $0                     $4,853      $11,537
Inventory valuation reserves                    362,139              27,061                                 389,200
                                               --------             -------       ------       -------     --------
                                               $378,529             $27,061           $0        $4,853     $400,737
                                               ========             =======       ======       =======     ========


Year ended September 30, 2005
Allowance for doubtful accounts                 $24,863                                         $8,473      $16,390
Inventory valuation reserves                    386,749                                         24,610      362,139
                                               --------             -------       ------       -------     --------
                                               $411,612                  $0           $0       $33,083     $378,529
                                               ========             =======       ======       =======     ========





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