<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

    For the quarter ended March 31, 1997        Commission File No. 0-19944
    ------------------------------------        ---------------------------

                                  M~WAVE, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



           DELAWARE                                  36-3809819    
--------------------------------------------------------------------------------
(State or other jurisdiction of                   (I.R.S. Employer 
incorporation or organization)                  identification No.)

                              
                              
                              

216 Evergreen Street, Bensenville, Illinois               60106   
--------------------------------------------------------------------------------
 (Address of principal executive offices)               (Zip Code)

                                   
                                   

Registrant's telephone number including area code:            (630) 860-9542
                                                              --------------

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 and 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
   ---    ---
The registrant has 3,049,806 shares of common stock outstanding at May 9, 1997.




                                      1





<PAGE>   2

                        PART I - FINANCIAL INFORMATION
                         Item 1: Financial Statements
                                      
                                 M~WAVE, Inc.
                                      
                         CONSOLIDATED BALANCE SHEETS
                                 (Unaudited)

<TABLE>
<CAPTION>
                                                                      December 31,          March 31,
                                                                          1996                1997
                             ASSETS                                 ----------------    ----------------
<Y>                                                                 <C>                 <C>
CURRENT ASSETS:
    Cash and cash equivalents...................................        $ 1,216,859         $ 1,052,575
    Accounts receivable.........................................          1,725,340           1,914,568
    Inventories.................................................          1,349,645           1,030,484
    Refundable income taxes.....................................          2,426,081           2,271,356
    Deferred income taxes.......................................            804,088             804,088
    Prepaid expenses and other..................................            191,729             213,637
                                                                    ----------------    ----------------
        Total current assets....................................          7,713,742           7,286,708
PROPERTY, PLANT AND EQUIPMENT:
    Land, buildings and improvements............................          6,224,247           6,232,488
    Machinery and equipment.....................................          9,885,170          10,059,463
                                                                    ----------------    ----------------
        Total property, plant and equipment.....................         16,109,417          16,291,951
    Less accumulated depreciation...............................         (3,646,209)         (4,054,065)
                                                                    ----------------    ----------------
        Property, plant and equipment-net.......................         12,463,208          12,237,886
NOTE RECEIVABLE, net of valuation
      allowance of $250,000.....................................            871,718             871,718
GOODWILL........................................................            771,853             746,407
OTHER ASSETS....................................................             15,030              13,919
                                                                    ----------------    ----------------
TOTAL...........................................................        $21,835,551         $21,156,638
                                                                    ================    ================

  LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Accounts payable............................................        $ 1,549,997         $ 1,466,765
    Accrued expenses............................................          1,254,436           1,038,850
    Current portion of long-term debt...........................            307,606             307,606
                                                                    ----------------    ----------------
        Total current liabilities...............................          3,112,039           2,813,221

DEFERRED INCOME TAXES...........................................          1,106,786           1,143,238
LONG-TERM DEBT..................................................          2,604,464           2,501,587
STOCKHOLDERS' EQUITY:
    Preferred stock, $.01 par value; authorized, 1,000,000
      shares; no shares issued..................................
    Common stock, $.01 par value; authorized, 10,000,000 shares
      3,069,806 shares issued and 3,049,806 shares outstanding
      at March 31, 1997.........................................             30,416              30,698
    Additional paid-in capital..................................          7,492,472           7,574,688
    Retained earnings ..........................................          7,609,374           7,213,206
    Treasury stock:  20,000 shares, at cost.....................           (120,000)           (120,000)
                                                                    ----------------    ----------------
        Total stockholders' equity .............................         15,012,262          14,698,592
                                                                    ----------------    ----------------
TOTAL...........................................................        $21,835,551         $21,156,638
                                                                    ================    ================

                                          See notes to consolidated financial statements.
</TABLE>

                                       2
<PAGE>   3
                                 M~WAVE, Inc.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)


<TABLE>
<CAPTION>
                                                   Three months ended March 31,
                                                   ----------------------------
                                                     1996             1997
                                                   ----------      ----------
<S>                                                <C>             <C>
Net sales........................................  $6,256,558      $4,271,004
Cost of goods sold...............................   8,090,779       3,862,033
                                                   ----------      ----------
  Gross profit (loss) ...........................  (1,834,221)        408,971

Operating expenses:
  General and administrative.....................     736,692         738,002
  Selling and marketing..........................     483,403         299,741
  Research and development.......................     121,355               0
                                                   ----------      ----------
   Total operating expenses.....................    1,341,450       1,037,743
                                                   ----------      ----------
  Operating loss ................................  (3,175,671)       (628,772)

Other income (expense):
  Interest income................................      29,551          22,860
  Interest expense...............................     (58,004)        (63,078)
  Gain (loss) on disposal of assets..............    (149,751)         42,574
                                                   ----------      ----------
   Total other income (expense)..................    (178,204)          2,356
                                                   ----------      ----------
    Loss before income  taxes....................  (3,353,875)       (626,416)

Credit for income taxes..........................  (1,227,531)       (230,246)
                                                   ----------      ----------
Net  loss........................................ $(2,126,344)      $(396,170)
                                                   ==========      ==========
Net loss per share...............................      $(0.70)         $(0.13)


Weighted average shares..........................   3,020,375       3,027,433


               See notes to consolidated financial statements.

</TABLE>


                                      3

<PAGE>   4

                                 M~WAVE, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Unaudited)
                                      

<TABLE>
<CAPTION>
                                                                              Three months ended March 31,
                                                                              ----------------------------
                                                                                  1996            1997
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
OPERATING ACTIVITIES:
  Net income (loss)...................................................        $(2,126,344)      $(396,169)
  Adjustments to reconcile net loss to net cash flows                       
    from operating activities:                                              
      Gain on disposal of property, plant and equipment...............                  0         (42,574)
      Depreciation and amortization...................................            369,729         399,827 
      Deferred income taxes...........................................           (552,691)         36,452
    Changes in assets and liabilities:
      Accounts receivable-trade.......................................             (2,161)       (189,228)
      Inventories.....................................................            866,609         319,161
      Income taxes....................................................           (262,812)        154,725
      Prepaid expenses and other assets...............................            109,171         (20,796)
      Accounts payable................................................            579,266         (83,232)
      Accrued expenses................................................            313,284        (215,586)
                                                                               ----------       ----------
         Net cash flows from operating activities.....................           (705,949)        (37,420)
                                                                               ----------       ----------
INVESTING ACTIVITIES:
  Purchase of property, plant and equipment...........................         (4,279,905)       (128,585)
  Proceeds from sale of property, plant and equipment.................                             22,100
  Redemption of marketable securities.................................            312,743               0
                                                                               ----------       ----------
         Net cash flows from investing activities.....................         (3,967,162)       (106,485) 
                                                               

FINANCING ACTIVITIES:
  Common stock issued upon exercise of stock options..................                  0          32,500
  Common stock issued for cash........................................                  0          49,998
  Payments on long term debt..........................................             (4,241)       (102,877)
  Mortgage debt incurred..............................................          2,496,007               0
                                                                               ----------       ---------- 
         Net cash flows from financing activities.....................          2,491,766         (20,379)
                                                                               ----------       ----------

NET DECREASE IN CASH AND CASH EQUIVALENTS.............................         (2,181,345)       (164,284)

CASH AND CASH EQUIVALENTS - Beginning of period.......................          2,403,747       1,216,859
                                                                               ----------       ----------
CASH AND CASH EQUIVALENTS - End of period.............................         $  222,402      $1,052,575
                                                                               ==========      ===========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

    Cash paid during the period for interest..........................         $   58,004      $   63,078


</TABLE>

                See notes to consolidated financial statements.



                                      4
<PAGE>   5



                                  M~WAVE, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1.   BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements have been     
  prepared in accordance with generally accepted accounting principles for
  interim financial information and with the instructions to Form 10-Q.
  Accordingly, they do not include all of the information and footnotes 
  required by generally accepted accounting principles for complete financial 
  statements. In the opinion of management, all adjustments necessary for a
  fair presentation have been included. For further information, refer to the
  consolidated financial statements contained in the Annual Report on Form 10-K
  for the year ended December 31, 1996 filed March 31, 1997.

2.   BUSINESS

     M~Wave, through its wholly-owned subsidiaries, Poly Circuits Inc. and P C  
  Dynamics Corporation (collectively, the "Company"), manufactures microwave
  frequency components and high frequency circuit boards on Teflon-based
  laminates for commercial and military wireless communication applications.

4.   INVENTORIES

     Substantially all the Company's inventories are in work in process.

5.   DEBT

     The Company has a mortgage loan on $2,803,000 for the facility at P C      
  Dynamics Corporation in Frisco, Texas. Interest on this mortgage loan is at 
  1/2% over prime rate. The loan is payable in monthly installments of principal
  and interest and is due in October 2001.

     The Company has a $2,000,000 line of credit available based on 80% of      
  eligible accounts receivable to fund the working capital needs of the
  Company. The agreement expires May 31, 1997 and is renewable semi-annually at
  the mutual consent of the Company and the lender. No balance was outstanding
  under the line at March 31, 1997.

6.   LITIGATION

     The Company is a party to various actions and proceedings related to its
  normal business operations. The Company believes that the outcome of this     
  litigation will not have a material adverse effect on the financial position
  or results of operations of the Company.


                                       5



<PAGE>   6




     The Company and Joseph Turek have been named as defendants in Lionheart
Partners, Inc., as general partner of Lionheart USA Micro Cap Value. L.P. v.
M~Wave, Inc. and Joseph Turek, which was filed on or about November 17, 1995 in
the United States District Court for the Northern District of Illinois.
The case was filed as a purported class action on behalf of all persons who
purchased common stock of the Company between August 8, 1995 and October 18,
1995. The complaint alleges that the defendants made materially false and
misleading statements and failed to correct public representations which had
become materially false and misleading regarding the Company's revenues and
earnings. The complaint asserts claims under Sections 10(b) and 20 of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seeks
compensatory damages in an unspecified amount.

     The Company believes that this action is without merit.  On April 25,
1997, the plaintiffs and the defendants entered into a settlement agreement
which, subject to court approval, would resolve all of the claims arising out
of this action, except as to claims of class members who opt out of the
settlement.  The settlement provides for a $150,000 payment to the plaintiff
class plus administrative fees not to exceed $20,000.  The Company's
contribution to the settlement would be approximately $85,000.

















                                      6



<PAGE>   7



Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

RESULTS FOR THE QUARTER ENDED MARCH 31, 1997 COMPARED TO THE QUARTER ENDED
MARCH 31, 1996

NET SALES

     Net sales for the first quarter ended March 31, 1997 decreased 32% to
$4,271,000 from $6,257,000 in the first quarter of 1996. The Company has been
seriously affected by the slowing of the rapid growth in the domestic cellular
telephone industry. Net sales to Motorola decreased by $1,063,000 or 53% to
$945,000. Net sales to L K Products decreased by $525,000 or 56% to $407,000.
Net sales to Hewlett Packard decreased by $246,000 or 78% to $70,000.

     The foregoing decreases in net sales were partially offset by an increase
in net sales to Spectrian and Lockheed Martin, two of the Company's larger
customers, of $406,000.

     The Company's three largest customers accounted for 52% of the Company's
net sales for the first quarter ended March 31, 1997 compared to 57% in the
first quarter of 1996.

GROSS PROFIT (LOSS) AND COST OF GOODS SOLD

     Gross profit increased by $2,243,000 to $409,000 in the first quarter of
1997 from negative $1,834,000 in 1996. In February 1997, as a result of lower
than anticipated volume, the Company reduced its employees and moved to a
one-shift operation at its Bensenville facility. The first quarter of 1996
included sales adjustments for pricing and returns of $721,000 and inventory
write-downs of $1,295,000 and $665,000 relating to manufacturing scrap and
rework and inventory obsolescence, respectively. The Company has also made
operational changes to enhance its quality control and ability to manufacture
highly complex products; however, there can be no assurance as to when, or if,
these changes will result in improved manufacturing process. Future production
problems would continue to adversely impact the Company's gross margins and
profitability, which would also result in decreased liquidity and adversely
affect the Company's financial position.

OPERATING EXPENSES

     General and administrative expenses were $738,000 or 17.3% of net sales in
the first quarter of 1997 compared to $737,000 or 11.8% of net sales in the
first quarter of 1996. On April 15, 1996 the Company engaged a consulting firm
to provide consulting services with respect to the Company's operations, which
services resulted in additional expenses of $110,000 in the first quarter of
1997. The consultants completed their work with the Company in February 1997.
General and administrative expenses consist primarily of salaries and benefits,
professional services,

                                      7



<PAGE>   8




depreciation of office equipment, computer systems and occupancy expenses.

     Selling and marketing expenses were $300,000 or 7.0% of net sales in the
first quarter of 1997 compared to $483,000 or 7.7% of net sales in the first
quarter of 1996. Sales commission expense was 3.4% of net sales in the first
quarter of 1997 compared to 3.2% of net sales in the first quarter of 1996. The
Company also reduced its staff in February 1997. Selling and marketing expenses
include the cost of salaries, advertising and promoting the Company's products,
and commissions paid to independent sales organizations.

     Research and development expenses which related primarily to the assembly
division were $121,000 or 1.9% of net sales in the first quarter of 1996. The
Company sold the Assembly Division in December 1996.

OPERATING LOSS

     Operating loss was $629,000 in the first quarter of 1997 compared to an
operating loss of $3,176,000 in the first quarter of 1996, a decrease in the
operating loss of $2,547,000. The change in operating loss reflects primarily
the changes in net sales, gross profit and cost of goods sold and operating
expenses as discussed above. The change in operating loss can be summarized as
follows:

Decrease in net sales             $   582,000
Increase in gross margin            1,661,000
Decrease in operating expenses        304,000
                                  -----------
Decrease in operating loss        $ 2,547,000 


     On March 31, 1997, the Company had 115 employees compared to 175 on March
31, 1996.

INTEREST INCOME

     Interest income from the notes receivable, recorded with the sale of the
Assembly Division in 1996, was $23,000 in the first quarter of 1997. Interest
income from short-term investments was $30,000 in the first quarter of 1996.

INTEREST EXPENSE

     Interest expense, primarily related to the Company's mortgage obligation
on its P C Dynamics facility, was $63,000 in the first quarter of 1997 compared
to $58,000 in 1996.

GAIN ON DISPOSAL OF FIXED ASSETS

     The Company recorded a gain of $43,000 on the disposal of fixed assets in
the first quarter of 1997 compared to a loss of $150,000 in 1996.

     

                                      8





<PAGE>   9





INCOME TAXES

     The Company had an effective tax credit rate of 36.8% in the first quarter
of 1997 compared to 36.6% in 1996.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash used for operations was $37,000 for the first three months of
1997 compared to $706,000 for the first three months of 1996. A reduction of
inventories and increases in accrued expenses and accounts payable offset the
first three months of 1997 loss from operations. The Company also had income
tax refunds of $421,000.

     Capital expenditures were $128,000 for the first three months of 1997,
$105,000 to upgrade the network system at Poly Circuits. Capital expenditures
were $4.3 million in the first three months of 1996, $3.3 million for the new
P C Dynamics facility in Texas.

     The Company has a mortgage loan of $2,803,000 on the P C Dynamics
facility. Interest on this mortgage loan is at 1/2% over prime rate. The loan is
payable in monthly installments of principal and interest and is due in October
2001.

     The Company has a $2,000,000 line of credit available based on 80% of
eligible accounts receivable to fund the working capital needs of the Company.
The agreement expires May 31, 1997 and is renewable semi-annually at the mutual
consent of the Company and the lender. No balance was outstanding under the
line at March 31, 1997.

     As of March 31, 1997, the Company has $2,803,000 of debt and $1,053,000 of
cash and cash equivalents. Management believes that funds generated from
operations, coupled with the Company's cash balance and its capacity for debt
will be sufficient to fund current business operations. The Company's ability
to fund its activities is directly dependent upon its sales, its ability to
improve its manufacturing processes, the effective utilization of the Company's
manufacturing resources and the Company's ability to access external sources of
financing. There can be no assurances that such additional debt financing can
be obtained and, if obtained, at reasonable terms.

INFLATION

     Management believes inflation has not had a material effect on the
Company's operation or on its financial position.

FOREIGN CURRENCY TRANSACTIONS

     All of the Company's foreign transactions are negotiated, invoiced and
paid in United States dollars.

                                      9

<PAGE>   10

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

     As a supplier to microwave manufacturers, the Company is dependent upon
the success of its customers in developing and successfully marketing end-user
microwave systems. The Company is currently working on several development
programs for its customers. The development of commercial applications for
microwave systems and the timing and size of production schedules for these
programs is uncertain and beyond the control of the Company. There can be no
assurance that these development programs will have a favorable impact on the
Company's operating results. Although management believes some of these
products and programs may ultimately develop into successful commercial
applications, such developments could result in periodic fluctuations in the
Company's operating results. As a result of these considerations, the Company
has historically found it difficult to project operating results.

     The Company expects that a small number of customers will continue to
account for a substantial majority of its sales and that the relative dollar
amount and mix of products sold to any of these customers can change
significantly from year to year. There can be no assurance that the Company's 
major customers will continue to purchase products from the Company at current 
levels, or that the mix of products purchased will be in the same ratio. The 
loss of one or more of the Company's major customers or a change in the mix of 
product sales could have a material adverse effect on the Company.

     In addition, future results may be impacted by a number of other factors,
including the Company's dependence on suppliers and subcontractors for
components; the Company's ability to respond to technical advances; successful
award of contracts under bid; design and production delays; cancellation or
reduction of contract orders; the Company's effective utilization of existing
and new manufacturing resources; and pricing pressures by key customers.

     The Company's future success is highly dependent upon its ability to
manufacture products that incorporate new technology and are priced
competitively. The market for the Company's products is characterized by rapid
technology advances and industry-wide competition. This competitive environment
has resulted in downward pressure on gross margins. In addition, the Company's
business has evolved towards the production of relatively smaller quantities of
more complex products, the Company expects that it will at times encounter
difficulty in maintaining its yield standards. There can be no assurance that
the Company will be able to develop technologically advanced products or that
future pricing actions by the Company and its competitors will not have
a material adverse effect on the Company's results of operations.

                                       10



<PAGE>   11




                          PART II - OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

     The Company and Joseph Turek have been named as defendants in Lionheart
Partners. Inc., as general partner of Lionheart USA Micro Cap Value, L.P. v.
M~Wave, Inc. and Joseph Turek. which was filed on or about November 17, 1995 in
the United States District Court for the Northern District of Illinois.

The case was filed as a purported class action on behalf of all persons who
purchased common stock of the Company between August 8, 1995 and October 18,
1995. The complaint alleges that the defendants made materially false and
misleading statements and failed to correct public representations which had
become materially false and misleading regarding the Company's revenues and
earnings. The complaint asserts claims under Sections 10(b) and 20 of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seeks
compensatory damages in an unspecified amount.

     The Company believes that this action is without merit.  On April 25,
1997, the plaintiffs and the defendants entered into a settlement agreement
which, subject to court approval, would resolve all of the claims arising out
of this action, except as to claims of class members who opt out of the
settlement.  The settlement provides for a $150,000 payment to the plaintiff
class plus administrative fees not to exceed $20,000.  The Company's
contribution to the settlement would be approximately $85,000.

ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     10.9    Employment Agreement between the Company and Michael Bayles

     27      Financial Data

(b)  The Company filed a report on Form 8-K dated February 25, 1997 announcing
     the reduction in workforce at their Bensenville location.

                                       11


<PAGE>   12



                      


                                   SIGNATURE

     Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned "hereunto duly authorized.

                                                        M~WAVE, INC.

Date: May 9, 1997                           /s/ PAUL H. SCHMITT
                                            ---------------------------
                                                Paul H. Schmitt

                                                Chief Financial Officer

                                     12


<PAGE>   13


                                EXHIBIT INDEX


 EXHIBIT
   NO                                   DESCRIPTION
--------           -----------------------------------------------------------

10.9               Employment Agreement between the Company and Michael Bayles

27                 Financial Data







                                     13