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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KSB

|ý                                                             | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|------------------------------------------------------------- | ----------------------------------------------------------------------------------
|For the fiscal year ended March 31, 2003                     
|o                                                             | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period
from                             to

Commission File Number 0-27250

AML COMMUNICATIONS, INC.(Exact name of Registrant as specified in its charter)

|DELAWARE(State or other jurisdiction of
incorporation or organization) |  | 77-0130894(I.R.S. Employer Identification No.)
|---------------------------------------------------------------------- |  | ----------------------------------------------

|1000 AVENIDA ACASO, CAMARILLO, CALIFORNIA(Address of principal executive offices) |  | 93012(Zip Code)
|--------------------------------------------------------------------------------- |  | ---------------

|(805) 388-1345(Issuer's telephone number, including area code)
|--------------------------------------------------------------
|Securities registered pursuant to Section 12(b) of the Act:   
|Title of each class None                                      
|Securities registered pursuant to Section 12(g) of the Act:   
|Title of Class Common Stock, $.01 par value                   

Check
whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ý    No o

Check
if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, 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. o

Issuer's
revenues for its most recent fiscal year: $4,518,000

The
aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant on May 23, 2003, was approximately
$1,267,068. The per share stock price for computational purposes was $0.24, based on the closing sale price per share for the Registrant's common stock on the OTC Bulletin Board on May 23,
2003. This value is not intended to be a representation as to the value or worth of the Registrant's common stock. The number of non-affiliates of the Registrant has been calculated by
subtracting the number of shares held by persons affiliated with the Registrant from the number of outstanding shares.

The
number of shares of the Registrant's common stock outstanding on May 23, 2003 was 7,829,459.

DOCUMENTS
INCORPORATED BY REFERENCE: Portions of the Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders to be held on September 3, 2003, are
incorporated by reference into Part III of this Form 10-KSB. The Proxy Statement will be filed within 120 days after the end of the fiscal year covered by this report.

Transitional
Business Disclosure Format (Check
One). Yes o    No ý

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Introductory NotesForward Looking Statements and Certain Terminology

Some
of the statements made by us in this Annual Report on Form 10-KSB are forward-looking in nature, including but not limited to, statements relating to our future
revenue, product development, demand, acceptance and market share, gross margins, levels of research and development, our management's plans and objectives for our current and future operations, and
other statements that are not historical facts. Forward-looking statements include, but are not limited to, statements that are not historical facts, and statements including forms of the words
"intend", "believe", "will", "may", "could", "expect", "anticipate", "plan", "possible", and similar terms. Actual results could differ materially due to a variety of factors, including the risks
described below and those discussed in "Management's Discussion and Analysis of Financial Conditions and Results of Operations" or incorporated by reference herein. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release the result of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

In
this document, the words "we," "our," "ours," and "us" refer only to AML Communications Inc. and not any other person or entity.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Introduction

We were incorporated in California in 1986 as Advanced Milliwave Laboratories, Inc. Early in 1994, we changed our name to AML Communications, Inc.
In December 1995, in conjunction with the initial public offering of our common stock, we changed our state of incorporation from California to Delaware. In May 1996, we moved our
principal office and manufacturing facility to our current location, 1000 Avenida Acaso, Camarillo, California, 93012.

We
design, manufacture and market RF and microwave, power and low noise amplifiers for a variety of frequency ranges and transmission protocols serving the defense microwave and wireless
communications markets. Our defense industry products are used in communications equipment integrated into electronic systems for tactical aircraft, ships, ground systems, and missile systems. Our
wireless products consist of an array of low noise and power amplifiers serving the wireless, PCS, two-way messaging market as well as Cellular Coverage Enhancement amplifiers.

We
were founded to develop and manufacture hybrid microcircuit microwave and RF amplifiers to support the communications market. In 1994, we became active in the Wireless market and
developed a multicarrier linear power amplifier supporting this market in the 300-450 MHz range. In late 1994, we developed a multicarrier linear RF power amplifier specifically for
boosting signal strengths in the cellular communications market and marketed this multicarrier product directly to the domestic cellular service providers. During 1995 and 1996, we developed
derivative multicarrier cellular products at alternative power levels to support differing needs in the service provider market.

In
the fourth quarter of fiscal 1997, we experienced a significant decrease in our revenue, attributable to several factors. Original equipment manufacturers (OEMs) offered significantly
reduced prices on their improved base station products, and the service providers began to outsource the infrastructure build out and maintenance to their OEM equipment providers who used their own
equipment in the cell site. Also, the mobile communications industry focused substantial financial and human resources on the build out of the nascent PCS services, and competitors began to offer
similar or improved products within the domestic US market.

1

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As
a result, we decided to change our market focus and concentrate on selling to the OEM customer base. Late in fiscal 1997, we entered the satellite communications gateway market by
offering a high power linear amplifier for data transmission applications in a Low Earth Orbit (LEO) network. In fiscal 1998, we received significant revenue from an OEM in the South American market
and introduced products for the PCS markets and the two-way messaging market. We also invested heavily in wireless products for the Korean and European OEMs.

During
fiscal 1999, we developed a new generation of our original cellular multicarrier products and continued to develop and diversify our customer base. We experienced significant
negative impacts to our revenue because of the delay and cancellation of programs.

In
February 1999, we appointed Mr. Kirk A. Waldron as President and Chief Executive Officer following the resignation of Mr. Jacob Inbar. Mr. Scott T. Behan
was appointed Executive Vice President of Sales and Marketing following Mr. Edwin J. McAvoy's resignation of his position as Vice President. Mr. McAvoy was, in turn, appointed Director
of Custom Programs. Both Mr. Waldron and Mr. Behan were also elected to the Board of Directors following the resignations of Dr. Tiberiu Mazilu and Mr. McAvoy from the
Board.

In
March 1999, AML announced the appointment of Gerald M. Starek to our Board of Directors, expanding the board to six members.

In
August 1999, we received our ISO 9001 certification, a uniform worldwide quality management system standard and undertook the transition of our production technology from
traditional batch assembly to a flexible, self-balancing, one piece flow process. We believe this substantially increased our capacity and production efficiency to support growth.

In
January 2000, to expand our Defense Microwave product line, we purchased a product line and certain assets of a company serving the military small signal amplifier market. This
purchase was intended to bolster our Defense Microwave product line and position that segment of our business for future growth in the market.

In
February 2001, we re-appointed Mr. Jacob Inbar to President and Chief Executive Officer following the resignation of Mr. Kirk Waldron. Additionally,
two other co-founders, Dr. Tiberiu Mazilu and Mr. Ed McAvoy were appointed to the Board of Directors as well as to the positions of Vice President-Engineering and Vice
President-Marketing, respectively.

In
March 2001 we closed a private placement of common stock for $500,000 with a group of investors led by Jacob Inbar. Again in September, 2001 and December 2001, we closed
private placements of common stock for $100,000 and $160,000, respectively, with a group of investors led by Jacob Inbar. In January, 2002, we closed a private placement in the form of an equity
private placement worth approximately $233,000 to a group of outside investors. These funds have provided us with additional cash reserves to fund our future operations. It is highly likely that we
will need additional funding to finance growth or offset additional operational losses.

We
had our initial public offering in December 1995, and our common stock was originally listed on the Nasdaq National Market. We were unable to meet the financial requirements
for continued listing on the Nasdaq Stock Market, and our common stock was ultimately delisted. Our stock listing was transferred to the Nasdaq Small Cap Market on October 8, 2001 and
ultimately to the OTC Bulletin Board on August 14, 2002. We do not have any present plans to reapply for listing on Nasdaq in light of our current financial constraints.

We
believe our future success depends upon our ability to broaden our product offerings, continue to increase our defense microwave customer base, and capture volume product delivery
opportunities with increased gross margins. While we continually attempt to expand our customer base, we cannot give any assurance that a major customer will not reduce, delay or eliminate its
purchases from us.

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Such
a reduction would have a material adverse effect on our business, results of operations, and financial condition.

A
limited number of OEMs account for a majority of amplifier purchasers in the communications equipment market, and our future success is dependent upon our ability to establish
and maintain relationships with these types of customers. Additionally the company's future depends on the ability to generate new products, mostly as part of a standard line of products (i.e.
products we developed that are intended to be sold to many customers).

We
have experienced, and expect to continue to experience in most cases, declining average sales prices for our products. While defense products have maintained relative price stability,
wireless infrastructure manufacturers have come under increasing price pressure from wireless service providers, which in turn has resulted in downward pricing pressure on our products. In addition,
ongoing competitive pressures in the RF amplifier market have put continued pressure on us to continually reduce the sales price of our products. Consequently, we believe that in order to maintain or
improve our existing gross margins in the near term, we must achieve manufacturing cost reductions, and in the long term develop new products that incorporate advanced features that generate higher
gross margins.

Business Strategy

The return of Jacob Inbar and the other co-founders in February 2001, resulted in our re-direction toward the defense markets. As
such, we moved rapidly to utilize our knowledge base in Defense Microwave related design and manufacturing to offer new products, as well as variations of existing products. The results of this
strategy have been an increase in revenues for Defense related products from $1.3 million in fiscal 2001 to $2.8 million in fiscal 2002 and an increase to $3.7 million in fiscal
2003.

Utilizing
our extensive knowledge in Microwave Integrated Circuits ("MIC") design capabilities, the company has expanded the products offered as part of our full line catalog. Such
products are designed for and marketed to the Defense Microwave market. We also intend to utilize the MIC design capabilities toward higher value added products such as subsystems.

Due
to our limited financial resources, as well as the adverse effects of the global downturn in the wireless telecommunications infrastructure spending, we will limit the level of new
product introductions to this market to those which will provide adequate margins or those in which potential or existing customers will share the costs of the new product development.

Markets

We sell our RF/Microwave amplifier products into various segments of the communications market with primary focus on the Defense Microwave marketplace and to
lesser degree on segments of the wireless communications (PCS and two-way messaging), and Cellular Coverage Enhancement markets. In fiscal 2003, we derived approximately 81.7% of our
revenues from the Defense Microwave market, 4.8% from the PCS and two-way messaging market and 13.5% from Cellular Coverage Enhancement products. In comparison, in fiscal 2002 we derived
48.4% from Defense Customers, 40.9% from PCS and two-way messaging and 10.7% from Cellular Coverage Enhancement products.

Defense Microwave Amplifiers.These hybrid microwave circuits utilizing MIC technology are sold to Defense OEM customers with
broadband, microwave frequency, component requirements. These parts typically support applications including surveillance, signal detection, satellite communication, radar and telemetry. They are used
in both the transmission and reception signal paths. The technology permits accurate, reproducible, volume products supporting broad bandwidths and higher frequencies to be designed and manufactured.
Moderate volume requirements and custom design requirements characterize this market.

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Cellular and PCS.Cellular networks utilize a number of base stations with high power antennas to serve a geographical
region. Each region is broken down into a number of smaller geographical areas, or "cells." Each cell has its own base station which uses wireless technology to receive subscribers calls and transmit
those calls through the wireline Public Switched Telephone Network (PSTN). Cellular networks operate within the 800 and 900 MHz bandwidths of the radio spectrum. PCS networks operate in a
substantially similar manner as cellular networks, except that PCS networks operate at 1800 and 1900 MHz bandwidths and utilize only digital transmission protocols. Transmissions at the higher
frequencies utilized by PCS networks have shorter transmission waves as compared to cellular frequency transmissions, which tends to limit the distances PCS transmissions can travel without
significant degradation. Lower frequency signals penetrate into buildings and other obstacles better than higher frequency signals. Therefore, PCS networks operating at the higher frequency ranges
should require smaller operating cells and more base stations than existing cellular networks to cover the same total geographic region. To the Cellular and PCS markets, we provide linear
multi-carrier RF low noise amplifiers, which are located in base stations and work to increase the signal strength of the received signal. The strategy of the cellular companies to expand service
utilizing the existing infrastructure while buying performance enhancement devices, the kind manufactured by us, offers the possibility of additional sales in this marketplace.

Two-Way Messaging.The two-way messaging networks consist of a substantial number of local and
nationwide transceivers that distribute and collect information from numerous handheld wireless messaging handsets. These handsets allow the user to perform functions such as accessing the internet,
retrieving and responding to e-mail, and instant messaging, among others. The two-way messaging protocols are being adapted to deliver greater amounts of digital information,
requiring high power, linear amplification for transmission from the base stations, and low noise tower mount receive amplifiers to maximize the sensitivity of the base station reception. We have
provided low noise tower-mount receive amplifiers and RF power amplifiers to two-way messaging OEM's as well as to several network operators. Currently, the two largest markets for
wireless messaging products are the domestic U.S. and China.

Products

We designed and/or manufactured during the year low noise and power amplifiers that were sold primarily into the Defense Microwave markets and to a lesser degree
to the Cellular and PCS, and two-way messaging markets.

Defense Microwave.We produce standard and custom hybrid microwave amplifier products that are listed in our
web-based catalog and selection guide. We also produce derivative products that are based upon minor modification of the catalog items. The frequencies range from 50kHz to 26GHz. Power
levels range from less than one milliwatt to several watts.

Cellular and PCS.We have offered and continue to offer our coverage and capacity enhancing power and low noise amplifiers to
the cellular and PCS marketplace. Within this product line are linear multicarrier RF power amplifiers suitable for use in the amplification of analog and digital communications formats. These
products range in power levels from 30 to 140 watts and provide flexible features/options such as AC or DC supply operation, replaceable input modules that allow wide variation and combination of
signal gain and connection types. For the PCS market, we have developed several RF low noise receive and single channel power amplifiers for various OEMs. These products offer cost effective
amplification of their respective formats to support the OEM requirements. Typical power levels range from 4 watts to 80 watts.

Two-Way Messaging.We have developed a wide range of receive products to support the two-way
messaging market. These products include tower mount receive amplifiers, RF power amplifiers, and base station receive multicouplers. We believe these products offer excellent performance in terms of

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maximizing
receive sensitivity while minimizing the effects of interference from alternative services. We also offer derivative products of our cellular RF power amplifier product line to support the
two-way messaging base station transmission requirements.

Our
power amplifiers range in price from $500 to over $10,000 per amplifier, depending upon technology, complexity, quantity, and implementation. Our receive products range in price from
$400 to $7,000 per amplifier, depending upon system requirements and implementation.

Customers

We sell products to wireless and Defense OEM manufacturers worldwide, including Raytheon, Boeing, Lockheed Sanders, Rockwell, ITT, and
L3-Communications. We sell products to wireless network operators such as AT&T Wireless Services, Cingular Wireless and Verizon Wireless. We also sold products to wireless and
two-way messaging OEM's such as Vytek Wireless and JDS Uniphase.

For
the fiscal year ended March 31, 2003, our largest customer was DFAS Columbus Center, which accounted for approximately 16.8% of net sales. Raytheon was our second largest
customer with approximately 11.2% of net sales. The loss of either of these customers, or a significant loss, reduction or rescheduling of orders from any of our customers could have a material
adverse effect on our business, results of operations and financial condition.

We
rely heavily on our technical expertise in acquiring new customers. The acquisition rate for new Defense Microwave customers during fiscal 2003 was approximately 1 new customer per
quarter compared to approximately 4.25 new customers per quarter for fiscal 2002.

Marketing and Distribution; International Sales

We sell our products through a combination of a technically proficient direct sales force and a network of independent sales representatives selected for their
familiarity with our potential customers and their knowledge of the Defense microwave markets. Both the direct sales personnel and independent sales
representatives generate product sales, provide product and customer service, and provide customer feedback for product development. In addition, the sales personnel and independent sales
representatives receive support from our marketing, product support and customer service departments.

Our
marketing efforts are focused on establishing and developing long-term relationships with potential customers. Sales cycles for certain of our products are lengthy,
typically ranging from six to eighteen months. Our customers typically conduct significant technical evaluations of our products before making purchase commitments. In addition, as is customary in the
industry, sales are made through standard purchase orders, which can be subject to cancellation, postponement or other types of delays. While certain customers provide us with forecasted needs, they
are not bound by such forecasts.

During
the fiscal years ended March 31, 2002 and March 31, 2003, international sales were $103,000, or 1.8% of net sales and $266,000, or 5% of net sales, respectively.

Warranty

Our warranty varies by product type and typically covers defects in material and workmanship for one year from the date of delivery. We perform warranty
obligations and other maintenance services at our facilities in Southern California.

Product Development

We invest significant resources in the research and development of new methods to improve amplifier performance, including reduced noise, and increased efficiency
in the RF amplification

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process
as well seeking to reduce the cost and increase the manufacturing efficiency of new and existing products. Our research and development staff consisted of 10 people as of March 31,
2003. Expenditures for research and development amounted to approximately $1.2 million in fiscal 2003 and $1.4 million in fiscal 2002.

Competition

The Defense Microwave industry is highly competitive. Our main competitors include Miteq, CTT, and JCA Technology. Although most of the competitors have
significantly higher resources than we have, we believe that our technical abilities in implementing MIC amplifiers do not differ to the same degree. We utilize our technological knowledge as well as
price to compete effectively.

We
have experienced significant price competition and expect price competition in the sale of RF/Microwave amplifiers to increase. No assurance can be given that our competitors will not
develop new technologies or enhancements to existing products or introduce new products that will offer superior price or performance features. We expect our competitors to offer new and existing
products at prices necessary to gain or retain market share. Certain of our competitors have substantial financial resources, which may enable them to withstand sustained price competition or a market
downturn better than us. There can be no assurance that we will be able to compete successfully in the pricing of our products, or otherwise, in the future.

Manufacturing and Suppliers

Our headquarters and our manufacturing facility are located in Camarillo, California. Our manufacturing process involves the assembly of numerous individual
components and precise fine-tuning by production technicians. The parts and materials we use consist primarily of specialized printed circuit boards, specialized subassemblies, fabricated
housings, and small electric circuit components, such as integrated circuits, semiconductors, resistors and capacitors.

We
obtained ISO 9001 certification, a uniform worldwide quality management system standard, on our headquarters and manufacturing facility located in Camarillo, California. Numerous
customers and potential customers throughout the world, particularly in Europe, require their suppliers be ISO certified. In addition, many customers require their suppliers to purchase components
only from subcontractors that are ISO certified.

We
currently procure, and expect to continue to procure, certain components from single source manufacturers due to unique component designs as well as certain quality and performance
requirements. In addition, in order to take advantage of volume pricing discounts, we purchase certain customized components from single sources. We have experienced, and may in the future experience,
shortages of single-source components. In such event, we may have to make adjustments to both product designs and production schedules, which could result in delays in production and delivery of
products. Such delays could have an adverse effect on our operating results and financial condition.

Intellectual Property

We rely on trade secrets and execute confidentiality and non-disclosure agreements with our employees and limit access to and distribution of our
proprietary information. We own several patents relating to multicarrier power amplifier circuits and implementation. We have an on-going program which encourages applications for both
U.S. and international patents for various aspects of our technology. These efforts allow us to rely upon the knowledge and experience of our management and technical personnel and our ability to
market our existing products and to develop new products. The departure of any of our management and technical personnel, the breach of their confidentiality and non-disclosure obligations
with us, or the failure to achieve our intellectual property objectives may have a material adverse effect on our business, financial condition and results of operations.

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We
believe our success depends upon the knowledge and experience of our management and technical personnel and our ability to market our existing products and to develop new products. We
do not have non-compete agreements with our employees who are employed on an "at-will" basis. Therefore, employees may, and have, left us to go to work for a competitor. While
we believe that we have adequately protected our proprietary technology, and we will take all appropriate and reasonable legal measures to protect it, the use of our processes by a competitor could
have a material adverse effect on our business, financial condition and results of operations.

Our
ability to compete successfully and achieve future revenue growth will depend, in part, on our ability to protect our proprietary technology and operate without infringing upon the
rights of others. We may not be able to successfully protect our intellectual property and our intellectual property or proprietary technology may otherwise become known or be independently developed
by competitors. In addition, the laws of certain countries in which our products have been or may be sold may not protect our products and intellectual property rights to the same extent as the laws
of the United States.

The
inability to protect our intellectual property and proprietary technology could have a material adverse effect on our business, financial condition and results of operations. As the
number of patents, copyrights and other intellectual property rights in our industry increases, and as the coverage of these rights and the functionality of the products in the market further overlap,
we believe that companies in our industry may face more frequent infringement claims. We may in the future be notified that we are infringing upon certain patent or other intellectual property rights
of others. Although we are not aware of any pending or threatened intellectual property lawsuits against us, we cannot guarantee that such litigation or infringement claims will not occur in the
future. Such litigation or claims could result in substantial costs and diversion of resources and could have a material adverse effect on our business, results of operations and financial condition.
A third party claiming infringement may also be able to obtain an injunction or other equitable relief, which could effectively block our ability or our customer's ability to distribute, sell or
import allegedly infringing products. If it appears necessary or desirable, we
may seek licenses from third parties covering intellectual property that we are allegedly infringing. No assurance can be given, however, that any such licenses could be obtained on terms acceptable
to us, if at all. The failure to obtain the necessary licenses or other rights could have a material adverse effect on our business, financial condition and results of operations.

Government Regulation

Radio frequency transmissions and emissions, and certain equipment used in connection therewith, are regulated in the United States, Canada and internationally.
We often must obtain regulatory approval in connection with the manufacture and sale of our products, and by our customers to operate our products. We cannot assure you that the United States Federal
Communications Commission (FCC), International Telecommunications Union (ITU), European Telecommunications Standard Institute (ETSI), or other organizations charged with regulating the requirements of
RF equipment, will not adopt more stringent regulations for the communications industry. If such regulations are adopted, AML, the OEMs and the wireless system operators may be required to
alter the manner in which radio signals are transmitted, or otherwise to alter the equipment transmitting such signals, which could materially and adversely affect our products and markets. The
enactment by federal, state, local or international governments of new laws or regulations, or a change in the interpretation of existing laws or regulations, could affect the market for our products.
Recent deregulation of international communications industries, along with recent RF spectrum allocations made by the FCC, have increased the potential demand for our products by providing users of
those products with opportunities to establish new wireless personal communications services. However, we cannot assure you that the trend toward deregulation and current regulatory developments
favorable to the promotion of new and expanded personal communications services will continue or that other future regulatory changes will have a positive impact us. The increasing demand for wireless
communications

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has
exerted pressure on regulatory bodies worldwide to adopt new standards for such products, generally following extensive investigation of and deliberation over competing technologies. The delays
inherent in this governmental approval process may cause the cancellation, postponement or rescheduling of the installation of communications systems by our customers.

Employees

As of March 31, 2003, we had 48 full-time employees, including 10 in research and development; 29 in manufacturing, production engineering and
quality assurance; 5 in administration; and 4 in sales, marketing, order entry and customer support. We believe the success of our business depends, in part, on our ability to attract and retain
qualified personnel, particularly qualified scientific, technical and key management personnel. Our employees are not governed by collective bargaining agreements. We believe our relationships with
are employees are good.

Environmental Regulations

We are subject to federal, state and local governmental regulations relating to the storage, discharge, handling, emission, generation, manufacture and disposal
of toxic or other hazardous substances used to manufacture our products. We believe we are currently in compliance in all material respects with such regulations. Failure to comply with current or
future regulations could result in the imposition of substantial fines on us, suspension of production, alteration of our manufacturing processes, cessation of our operations, or other actions which
could materially and adversely affect our business, financial condition and results of operations.

ITEM 2. DESCRIPTION OF PROPERTY

Our administrative, engineering and manufacturing facilities are located in a 25,000 square foot leased building in Camarillo, California. The lease for this
space expires in April 2008. We believe that our current facilities are in reasonable condition and provide adequate expansion capabilities.

ITEM 3. LEGAL PROCEEDINGS

We may be subject, from time to time, to various legal proceedings relating to claims arising out of our operations in the ordinary course of our business. We are
not currently party to any legal proceedings, the adverse outcome of which, individually or in the aggregate, would have a material adverse effect on the business, financial condition or results of
operations of the Company.

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

Not applicable.

PART II

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



Our common stock currently trades on Nasdaq's OTC Bulletin Board under the symbol "AMLJ.OB". Our common stock traded on the Nasdaq Small Cap Market from
October 8, 2001 to August 13, 2002 and on the Nasdaq National Market prior to that time. The table below sets forth for the periods indicated (1) the high and low bid prices for
the Company's common stock for the periods it traded on the OTC Bulletin Board and (2) the high and low intraday sales prices for the common stock during periods it traded on the Nasdaq Small
Cap and National Markets. For the quarter in which the common stock transitioned from Nasdaq to the OTC Bulletin Board, the table reflects the higher of the two methods in the "high" column and the
lower of the two methods in the "low" column.

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Price Range of Common StockHigh

LowFiscal year ended March 31, 2002First quarter

$
1.25

$
0.44Second quarter

$
0.94

$
0.50Third quarter

$
1.60

$
0.52Fourth quarter

$
0.90

$
0.50Fiscal year ended March 31, 2003First quarter

$
0.80

$
0.38Second quarter

$
0.18

$
0.06Third quarter

$
0.18

$
0.08Fourth quarter

$
0.19

$
0.10


At
June 21, 2003 there were approximately 81 holders of record of the Company's common stock. This number does not include the number of persons whose stock is in nominee or in
"street name" accounts through brokers.

Dividends

We have not paid cash dividends and do not anticipate paying cash dividends in the foreseeable future. We expect to utilize future earnings to finance future
growth. The actual amount of any dividends paid would be subject to the discretion of the Board of Directors of the Company and would depend on the Company's operations, financial and business
requirements, compliance with bank covenants and other factors.



The following table gives information about our common stock that may be issued under our existing equity compensation plans as of March 31, 2003:

|                                                           |  | Equity Compensation Plan Information
|---------------------------------------------------------- |  | ------------------------------------
|
|Equity compensation plans approved by security holders     |  | 1,873,625                           
|Equity compensation plans not approved by security holders |  |                                    
|                                                           |  |                                     
|Total                                                      |  | 1,873,625                           



We did not issue any securities in unregistered offerings in fiscal 2003.

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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The following table summarizes the Company's results of operations both in dollars and as a percentage of net sales for the fiscal years ended March 31,
2002 and 2003.

|                                       |                                     | Year Ended March 31, |      
|-------------------------------------- | ----------------------------------- | -------------------- | -----
|
|
|Revenues                               |                                     |                      |      
|MIC                                    |                                     | $                    | 2,842
|PCS and wireless messaging             |                                     |                      | 2,404
|Cellular, wireless telephony and other |                                     |                      | 629  
|                                       |                                     |                      |      
|                                       | Total net sales                     |                      |      
|Cost of goods sold                     |                                     |                      | 4,196
|                                       |                                     |                      |      
|Gross profit (loss)                    |                                     |                      | 1,679
|Operating expenses:                    |                                     |                      |      
|                                       | Selling, general and administrative |                      |      
|                                       | Research and development            |                      |      
|                                       |                                     |                      |      
|Operating loss                         |                                     |                      | (763 
|Other income, net                      |                                     |                      | 50   
|                                       |                                     |                      |      
|Loss before income taxes               |                                     |                      | (713 
|Income tax expense                     |                                     |                      |     
|                                       |                                     |                      |      
|Net loss                               |                                     | $                    | (713 
|                                       |                                     |                      |      

Fiscal Years Ended March 31, 2003 and 2002

Net sales.Net sales for fiscal 2003 were $4.5 million compared to $5.9 million in fiscal 2002. The decrease in
net sales is attributable to the reduction of shipments for our PCS products. The PCS product line made up 40.9% of net sales in fiscal 2002, with a decrease to 4.8% of net sales in fiscal 2003. This
decline is due to the economic slow down in the wireless, PCS, and two-way messaging markets. We anticipate that sales of our PCS and two-way messaging products will continue
to decrease due to reduced capital expenditures for new equipment by OEM's and service providers given the current economic conditions within the wireless market. MIC sales continue to increase with
sales of $3.7 million in fiscal 2003, 81.7% of net sales, compared to $2.8 million in fiscal 2002, 48.4% of net sales. The increase in sales of MIC products is the result of our
aggressive penetration of the fractured MIC market and an increase in demand for defense related MIC products related to the procurement of upgrade, replacement, and spare parts for defense
applications. As a result of planned increase in defense spending, we anticipate that MIC sales will continue to be a significant portion of our revenue. Sales of cellular and other products were
$608,000, 13.5% of net sales in fiscal 2003, as compared to $629,000, 10.7% of net sales in fiscal 2002. This dollar decrease for this market reflects the continued weakness in the global wireless
communications market.

Gross profit/loss.Gross profit for fiscal 2003 was $1.5 million, or 33.3% of net sales, compared to a gross profit in
fiscal 2002, of $1.7 million, or 28.6% of net sales. The increase in margin can be attributed to lower material costs in the MIC product line, which accounts for 81.7% of our net sales.

Selling, general, and administrative costs.Selling, general and administrative costs for fiscal 2003 were
$1.2 million, or 27.5% of net sales, compared to $1.1 million, or 18.4% of net sales, for fiscal

10

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2002.
The increase is attributed to higher sales labor and related costs, commissions to third-party sales representatives, additional marketing expenditures in an effort to generate new revenues. We
believe continued investment in marketing and administration is necessary to increase market share within the defense communications market and to compete profitably in the intensely competitive
wireless industry.

Research and development costs.Research and development costs for fiscal 2003 were $1.2 million, or 27.2% of net
sales, compared to $1.4 million, or 23.1% of net sales, for the corresponding period in fiscal 2002. The decrease is primarily due to a reduction in depreciation expenses due to assets
completing their life cycles and from asset dispositions. We also realized a decrease in material usage on new research and development projects, and a reduction in expenditures for engineering
support services.

Other income, net.Other income for fiscal 2003 decreased by $166,000 to $216,000 compared to $50,000 for fiscal 2002. The
decrease is mainly due to the recognition of a $170,000 loss on the sale of a certain fixed asset during fiscal 2003. The additional loss of $46,000 is due to the increased interest expenses related
to leases and banking.

Income tax expense.We recorded no benefit from income taxes during fiscal 2003, or in fiscal 2002, due to the availability
of net operating losses.

Liquidity and Capital Resources

Historically, we have financed our operations primarily from internally generated funds and, to a lesser extent, loans from stockholders and capital lease
obligations. In December 1995, we completed an initial public offering of 1,725,000 shares of common stock (including the exercise of the underwriters' over allotment option), raising net
proceeds of approximately $7.7 million. Of such net proceeds, $425,000 was used to repay loans from certain stockholders and the remainder was used to expand manufacturing capability through
the leasing and outfitting of substantially larger facilities, the acquisition of equipment sufficient to produce higher product quantities and the employment and training of additional employees
capable of expanding production and sales. From March 2001 through January 2002, we raised approximately $1.0 million in additional funds from the completion of four
(4) equity private placements. The net proceeds of the equity private placements have also been used to maintain inventory and working capital balances.

In
April 2001, we entered into three non-cancelable capital leases to acquire test equipment valued in aggregate at $137,000. The terms of the leases are identical and
call for 36 equal monthly aggregate payments of $4,396, commencing in April 2001, and at an annual interest rate of 9.4%.

In
December 2001, we entered into a non-cancelable capital lease to acquire test equipment valued at $53,000. The terms of the lease call for 48 equal monthly
aggregate payments of $1,503.89 commencing in December 2001 and at an annual interest rate of 15.63%.

In
December 2001, we entered into a promissory note payable with a principal value of $50,000 with Mr. Tiberiu Mazilu, PhD, an officer and director of the Company. The
terms of the note call for quarterly interest payments to Dr. Mazilu commencing on September 30, 2002, with the interest payment calculated quarterly based on the prime interest rate
plus 1.25%. The principal amount of the note is due on January 2, 2005 but would become due and payable by the Company immediately upon the consolidation or merger of the Company with another
entity, the death of Dr. Mazilu, or the Company's termination of Dr. Mazilu's employment with the Company.

In
June 2002, the Company entered into a non-cancelable capital lease to acquire test equipment valued at approximately $50,000. The terms of the lease call for 12
equal monthly aggregate payments of $4,192 commencing in July 2002 with no annual interest.

11

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In
November 2002, we renewed our $1,000,000 line of credit with Silicon Valley Bank. This revolving line of credit bears interest at the bank's reference rate prime rate at 4.25%
plus 1%, totaling 5.25% at March 31, 2003. This line of credit is secured by substantially all of the Company's assets and expires on December 15, 2003. As of March 31, 2003,
there was $482,000 in outstanding borrowings under the line of credit. Borrowings under the line of credit are subject to a borrowing base of accounts receivable, and there are no financial covenants.

In
December 2002, the Company entered into a non-cancelable capital lease to acquire test equipment valued in aggregate at approximately $50,000. The terms of the
lease call for 36 equal monthly payments of $1,699 commencing in December 2002 and at an annual interest rate of 13.7%.

At
March 31, 2003, we had $195,000 in cash and cash equivalents. The Company's operating activities provided cash of approximately $60,000 in fiscal 2003, primarily as a result of
the reduction in receivables and inventory, which is offset by the reduction in accounts payable. We anticipate capital expenditures of approximately $300,000 in fiscal 2004. We have scheduled
principal payments; capital lease payments and operating lease payments totaling $250,000 in fiscal 2004.

We
believe the funds provided from the private placements and the borrowing capacity from our line of credit may not be sufficient to finance us for the next 12 months. We are
attempting to procure additional sources of financing in the event that the capital available as of March 31, 2003 is insufficient. Other sources may include, but not be limited to, an equity
investment in us by a third party. There are, however, no assurances that we will be able to successfully obtain additional financing at terms acceptable to us.

Our
auditors have included an explanatory paragraph relating to our ability to continue as a going concern as of and for the year ended March 31, 2003, in their Report of
Independent Certified Public Accountants included in our audited financial statements contained elsewhere in this report. For the year ended March 31, 2003, we incurred a net loss of $1,188,000
and had negative cash flows from operations of approximately $119,000. Our auditors considered these factors, combined with the current economic conditions, and raise substantial doubt about our
ability to continue as a going concern. Recovery of our assets is dependent upon future events, the outcome of which is indeterminable.

Successful
completion of our development program and attaining profitable operations are dependent upon our maintaining a level of sales adequate to support our cost structure. In
addition, realization of a major portion of the assets in the accompanying balance sheet is dependent upon our ability to meet our financing requirements and the success of our plans to sell our
products. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might
be necessary should we be unable to continue in existence.

Critical Accounting Policies

Our discussion and analysis of our financial conditions and results of operations are based upon our financial statements, which have been prepared in accordance
with generally accepted accounting principles in the United States. The preparation of financial statements requires managers to make estimates and disclosures on the date of the financial statements.
On an on-going basis, we evaluate our estimates, including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical experience and other
assumptions as the basis for making judgments. Actual results could differ from those estimates. We believe that the following critical accounting policies affect our more significant judgments and
estimates in the preparation of our financial statements.

Revenue recognition.We are required to make judgments based on historical experience and future expectations, as to the
realizability of shipments made to our customers. These judgments are required to assess the propriety of the recognition of revenue based on Staff Accounting Bulletin

12

---

("SAB")
No. 101, "Revenue Recognition," and related guidance. We make these assessments based on the following factors: i) customer-specific information, ii) return policies, and
iii) historical experience for issues not yet identified.

Inventory.We are required to make judgments based on historical experience and future expectations as to the realizability
of inventory. We make these assessments based on the following factors: i) existing orders, ii) age of the inventory, and iii) historical experience. Management is currently
reviewing the accounting policies regarding the application of overhead to its inventories and is unable to estimate any effect it may have on future operations.

Additional Factors That May Affect Future Results

Future operating results may be impacted by a number of factors that could cause actual results to differ materially from those stated herein, which reflect
management's current expectations. These factors include:



For
the year ended March 31, 2003, we incurred a net loss of $1.2 million, and negative cash flows from operations of approximately $119,000. Our auditors considered these
factors, combined with the current economic conditions, to raise substantial doubt about our ability to continue as a going concern. Recovery of our assets is dependent upon future events, the outcome
of which is indeterminable. Successful completion of our development program and attaining profitable operations are dependent upon our maintaining a level of sales adequate to support our cost
structure. In addition, realization of a major portion of the assets in the accompanying balance sheet is dependent upon our ability to meet our financing requirements and the success of our plans to
sell our products. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities
that might be necessary should we be unable to continue in existence.

We
believe that funds provided from the private placements and the borrowing capacity from our line of credit may not be sufficient to finance us for the next 12 months. We are
attempting to procure additional sources of financing in the event that the capital available as of March 31, 2003 is insufficient. Other sources may include, but not be limited to, an equity
investment in us by a third party. We cannot assure you that we will be able to successfully obtain additional financing at terms acceptable to us. Failure to maintain or secure adequate financing
could have a material impact on our liquidity and results from operations.

13

---

We
believe that, to the extent that foreign sales are recognized, we may face increased risk associated with political and economic instability, compliance with foreign regulatory rules
governing export requirements, tariffs and other trade barriers, differences in intellectual property protections, longer
accounts receivable cycles, currency fluctuations and general trade restrictions. If any of these risks materialize, they could have a material adverse effect on our business, results of operations
and financial condition.

We
have evaluated the credit exposure associated with conducting business with foreign customers and have concluded that such risk is acceptable. Nevertheless, any significant change in
the economy or a deterioration in United States trade relations or the economic or political stability of foreign markets could have a material adverse effect on our business, results of operations
and financial condition.

Sales
to foreign customers are invoiced in U.S. dollars. Accordingly, we currently do not engage in foreign currency hedging transactions. However, as we expand further into foreign
markets, we may experience greater risk associated with general business, political and economic conditions in those markets. At such time, we may seek to lessen our exposure through currency hedging
transactions. We cannot assure you that a currency hedging strategy would be successful in avoiding currency exchange related losses. In addition, should the relative value of the U.S. dollar in
comparison to foreign currencies increase, the resulting increase in the price of our products to foreign customers could result in decreased sales which could have a material adverse impact on our
business, results of operations and financial condition.

We
experience significant price competition and expect price competition in the sale of our products to remain intense. We cannot assure you that our competitors will not develop new
technologies or enhancements to existing products or introduce new products that will offer superior price or performance features. We expect our competitors to offer new and existing products at
prices necessary to gain or retain market share. Several of our competitors have substantial financial resources, which may enable them to withstand sustained price competition or a downturn in the
pricing of their products in the future. Substantially all of our competitors have, and potential future competitors could have, substantially greater technical, marketing, distribution and other
resources than we do and have, or could have, greater name recognition and market acceptance of their products and technologies.

We
receive periodic order forecasts from our major customers who have no obligation to purchase the forecasted amounts. Nevertheless, we maintain significant work in process and raw
materials inventory, as well as increased levels of technical production staff to meet order forecasts and/or management's projections. To the extent our major customers purchase less than the
forecasted amounts, we will have higher levels of inventory than otherwise needed, increasing the risk of obsolescence, and we will have increased levels of production staff to support such forecasted
orders. Such higher levels of inventory and increased employee levels could reduce our liquidity and could have a material adverse effect on our business, results of operations and financial
condition.

Rapidly
changing technology, evolving industry standards, communications protocols, and continuous improvements in products and services characterize the Markets in which our customers
and we compete. Our future success depends on our ability to enhance our current products and to develop and introduce, in a timely manner, new products that keep pace with technological developments,
industry standards and communications protocols, compete effectively on the basis of price, performance and quality, adequately address OEM customer and end-user customer requirements and
achieve market acceptance. We believe that to remain competitive in the future we will need to continue to develop new products, which will require the investment of significant financial resources in
new product development. In the event our newly developed products are not timely developed or do not gain market acceptance, our business, results of operations and financial condition could be
materially adversely affected.

14

---

Our
quarterly and annual results have in the past been, and will continue to be, subject to significant fluctuations due to a number of factors, any of which could have a material
adverse effect on our business, financial condition and results of operations. There can be no assurance that we will not experience such fluctuations in the future. We establish our expenditure
levels for product development and other operating expenses based on expected revenues, and expenses are relatively fixed in the short term. As a result, variations in timing of revenues can cause
significant variations in quarterly results of operations. There can be no assurances that we will be profitable on a quarter-to-quarter basis in the future. We believe that
period-to-period comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of future performance. Due to these factors,
it is likely that in some future quarter or quarters our revenues or operating results will not meet the expectations of public stock market analysts or investors. In such event, the market price of
our common stock would be materially adversely affected.

Quantitative and Qualitative Disclosures About Market Risk

We have some risk exposure from interest rates being unfavorable. At March 31, 2003, our line of credit facilities were the only debt facilities subject to
variable interest rates. We will monitor the level of risk by keeping variable rate exposures at acceptable levels.

15

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ITEM 7. FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

|                                                                                         |  | Page 
|---------------------------------------------------------------------------------------- |  | -----
|Reports of Independent Certified Public Accountants                                      |  | 17   
|Balance Sheet as of March 31, 2002                                                       |  | 18   
|Statements of Operations for the years ended March 31, 2001 and March 31, 2002           |  | 19   
|Statements of Stockholders' Equity for the years ended March 31, 2001 and March 31, 2002 |  | 20   
|Statements of Cash Flows for the years ended March 31, 2001 and March 31, 2002           |  | 21   
|Notes to Financial Statements                                                            |  | 22-30

16

---



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board
of Directors and Shareholders

AML
Communications, Inc.

We
have audited the accompanying balance sheet of AML Communications, Inc. as of March 31, 2003, and the related statements of operations, shareholders' equity, and cash
flows for each of the two years in the period ended March 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AML Communications, Inc. as of March 31,
2003, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2003 in conformity with accounting principles generally accepted in the United
States of America.

The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, during the
year ended March 31, 2003, the Company incurred a net loss of $1,188,000 and it had negative cash flows from operations of $119,000. In addition, the Company had an accumulated deficit of
$9,494,000 as of March 31, 2003.
These factors, among others, as discussed in Note 2 to the financial statements, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

SINGER
LEWAK GREENBAUM & GOLDSTEIN LLP

Los
Angeles, California

May 27,
2003

17

---



AML COMMUNICATIONS, INC.        BALANCE SHEET        AS OF MARCH 31, 2003

|ASSETS                                                          |                                                                        |                                                                       |                           |           
|--------------------------------------------------------------- | ---------------------------------------------------------------------- | --------------------------------------------------------------------- | ------------------------- | ----------
|Current Assets:                                                 |                                                                        |                                                                       |                           |           
|                                                                | Cash and cash equivalents                                              |                                                                       | $                         | 195,000   
|                                                                | Accounts receivable, net of allowance for doubtful accounts of $36,000 |                                                                       |                           | 609,000   
|                                                                | Inventories, net                                                       |                                                                       |                           | 1,059,000 
|                                                                | Other current assets                                                   |                                                                       |                           | 135,000   
|                                                                |                                                                        |                                                                       |                          
|                                                                |                                                                        | Total current assets                                                  |                           |           
|Property and Equipment, at cost:                                |                                                                        |                                                                       | 4,267,000                 |           
|                                                                | LessAccumulated depreciation and amortization                         |                                                                       |                           | (3,631,000
|                                                                |                                                                        |                                                                       |                          
|                                                                |                                                                        |                                                                       | 636,000                   |           
|Other assets                                                    |                                                                        |                                                                       | 43,000                    |           
|                                                                |                                                                        |                                                                       |                          
|                                                                |                                                                        | $                                                                     | 2,677,000                 |           
|                                                                |                                                                        |                                                                       |                          
|LIABILITIES AND STOCKHOLDERS' EQUITY                            |                                                                        |                                                                       |                           |           
|Current Liabilities:                                            |                                                                        |                                                                       |                           |           
|                                                                | Accounts payable                                                       |                                                                       | $                         | 568,000   
|                                                                | Line of credit                                                         |                                                                       |                           | 482,000   
|                                                                | Current portion of capital lease obligations                           |                                                                       |                           | 168,000   
|                                                                | Accrued expenses:                                                      |                                                                       |                           |           
|                                                                |                                                                        | Accrued payroll and payroll related expenses                          |                           |           
|                                                                |                                                                        | Other accrued expenses                                                |                           |           
|                                                                |                                                                        |                                                                       |                          
|                                                                |                                                                        |                                                                       | Total current liabilities |           
|Note PayableOfficers                                           |                                                                        |                                                                       | 50,000                    |           
|Capital lease obligations, net of current portion               |                                                                        |                                                                       | 126,000                   |           
|Commitments and Contingencies                                   |                                                                        |                                                                       |                           |           
|Stockholders' Equity:                                           |                                                                        |                                                                       |                           |           
|                                                                | Preferred stock, $.01 par value:                                       |                                                                       |                           |           
|                                                                |                                                                        | 1,000,000 shares authorized; no shares issued or outstanding          |                           |           
|                                                                | Common stock, $.01 par value:                                          |                                                                       |                           |           
|                                                                |                                                                        | 15,000,000 shares authorized; shares issued and outstanding 7,829,459 |                           |           
|Capital in excess of par value                                  |                                                                        |                                                                       | 10,301,000                |           
|Treasury stock114,500 shares, at cost (Retired March 14, 2003) |                                                                        |                                                                       |                          |           
|Accumulated deficit                                             |                                                                        |                                                                       | (9,494,000                | )         
|                                                                |                                                                        |                                                                       |                          
|                                                                | Total stockholders' equity                                             |                                                                       |                           | 880,000   
|                                                                |                                                                        |                                                                       |                          
|                                                                |                                                                        | $                                                                     | 2,677,000                 |           
|                                                                |                                                                        |                                                                       |                          

The
accompanying notes are an integral part of these financial statements.

18

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AML COMMUNICATIONS, INC.        STATEMENTS OF OPERATIONS        FOR THE YEARS ENDED MARCH 31, 2002 AND 2003

|                                                                                |                                     | Year Ended                     |          
|------------------------------------------------------------------------------- | ----------------------------------- | ------------------------------ | ---------
|
|Net sales                                                                       |                                     | $                              | 5,875,000
|Cost of goods sold                                                              |                                     |                                | 4,196,000
|                                                                                |                                     |                                |          
|                                                                                | Gross profit (loss)                 |                                |          
|Operating Expenses:                                                             |                                     |                                |          
|                                                                                | Selling, general and administrative |                                |          
|                                                                                | Research and development            |                                |          
|                                                                                |                                     |                                |          
|                                                                                |                                     |                                | 2,442,000
|                                                                                |                                     |                                |          
|                                                                                |                                     | Operating loss                 |          
|Other (Income) Expense:                                                         |                                     |                                |          
|                                                                                | Interest income                     |                                |          
|                                                                                | Interest expense                    |                                |          
|                                                                                | Other                               |                                |          
|                                                                                |                                     |                                |          
|                                                                                |                                     |                                | (50,000  
|                                                                                |                                     |                                |          
|                                                                                |                                     | Loss before income tax expense |          
|Income tax expense                                                              |                                     |                                |         
|                                                                                |                                     |                                |          
|                                                                                |                                     | Net loss                       |          
|                                                                                |                                     |                                |          
|Basic and Diluted Loss Per Common Share                                         |                                     | $                              | (0.09    
|                                                                                |                                     |                                |          
|Basic and Diluted Weighted Average Number of Shares of Common Stock Outstanding |                                     |                                | 7,830,000
|                                                                                |                                     |                                |          

The
accompanying notes are an integral part of these financial statements.

19

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AML COMMUNICATIONS, INC.        STATEMENTS OF STOCKHOLDERS' EQUITY        FOR THE YEARS ENDED MARCH 31, 2002 AND 2003

|                        |                              | Common Stock |         |   |        | Treasury Stock |   | Retained
Earnings/
Accumulated
Deficit |          |          |        
|----------------------- | ---------------------------- | ------------ | ------- | - | ------ | -------------- | - | -------------------------------------- | -------- | -------- | -------
|
|
|Balance, March 31, 2001 |                              | 6,932,389    |         |   | 69,000 |                |   | 10,036,000                             |          | (114,500 | )      
|                        | Private placement            |              | 897,067 |   |        | 4,000          |   |                                        | 488,000  |          |       
|                        | Net loss                     |              |        |   |        |               |   |                                        |         |          |       
|                        |                              |              |         |   |        |                |   |                                        |          |          |        
|Balance, March 31, 2002 |                              | 7,829,456    |         | $ | 73,000 |                | $ | 10,524,000                             |          | (114,500 | )      
|                        |                              |              |         |   |        |                |   |                                        |          |          |        
|                        | Retirement of Treasury Stock |              |        |   |        |               |   | $                                      | (223,000 | )        | 114,500
|                        |                              |              |         |   |        |                |   |                                        |          |          |        
|                        | Net loss                     |              |        |   |        |               |   |                                        |         |          |       
|                        |                              |              |         |   |        |                |   |                                        |          |          |        
|Balance, March 31, 2003 |                              | 7,829,456    |         | $ | 73,000 |                | $ | 10,301,000                             |          |         |        
|                        |                              |              |         |   |        |                |   |                                        |          |          |        

The
accompanying notes are an integral part of these financial statements.

20

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AML COMMUNICATIONS, INC.        STATEMENTS OF CASH FLOWS        FOR THE YEARS ENDED MARCH 31, 2002 AND 2003

|                                                   |                                                                             | Year Ended                          |                                          
|-------------------------------------------------- | --------------------------------------------------------------------------- | ----------------------------------- | -----------------------------------------
|
|Cash Flows from Operating Activities:              |                                                                             |                                     |                                          
|                                                   | Net Income (Loss)                                                           |                                     | $                                        
|                                                   | Adjustments to reconcile net loss to net cash used in operating activities: |                                     |                                          
|                                                   |                                                                             | Depreciation and amortization       |                                          
|                                                   |                                                                             | Loss (gain) on sale of fixed assets |                                          
|                                                   |                                                                             | Changes in assets and liabilities:  |                                          
|                                                   |                                                                             | Decrease in Bad Debt expense        |                                          
|                                                   |                                                                             | Decrease (increase) in:             |                                          
|                                                   |                                                                             |                                     | Accounts receivable                      
|                                                   |                                                                             |                                     | Inventories                              
|                                                   |                                                                             |                                     | Other current assets                     
|                                                   |                                                                             |                                     | Other assets                             
|                                                   |                                                                             | Increase (decrease) in:             |                                          
|                                                   |                                                                             |                                     | Accounts payable                         
|                                                   |                                                                             |                                     | Accrued expenses                         
|                                                   |                                                                             |                                     | Net cash used in operating activities    
|                                                   |                                                                             |                                     |                                          
|Cash Flows from Investing Activities:              |                                                                             |                                     |                                          
|                                                   | Purchases of property and equipment                                         |                                     |                                          
|                                                   | Proceeds from the sale of property and equipment                            |                                     |                                          
|                                                   |                                                                             |                                     |                                          
|                                                   |                                                                             |                                     | Net cash used in investing activities    
|                                                   |                                                                             |                                     |                                          
|Cash Flows from Financing Activities:              |                                                                             |                                     |                                          
|                                                   | Proceeds from exercise of stock options                                     |                                     |                                          
|                                                   | Proceeds from private stock placement                                       |                                     |                                          
|                                                   | Proceeds from line of credit                                                |                                     |                                          
|                                                   | Proceeds from note payable                                                  |                                     |                                          
|                                                   | Principal payments capital lease obligations                                |                                     |                                          
|                                                   |                                                                             |                                     |                                          
|                                                   |                                                                             |                                     | Net cash provided by Financing activities
|                                                   |                                                                             |                                     |                                          
|Net decrease in Cash and Cash Equivalents          |                                                                             |                                     | (700,000                                 
|Cash and Cash Equivalents, beginning of year       |                                                                             |                                     | 860,000                                  
|                                                   |                                                                             |                                     |                                          
|Cash and Cash Equivalents, end of year             |                                                                             | $                                   | 160,000                                  
|                                                   |                                                                             |                                     |                                          
|Supplemental disclosures of cash flow information: |                                                                             |                                     |                                          
|                                                   | Cash paid during the period for:                                            |                                     |                                          
|                                                   |                                                                             | Interest                            |                                          
|                                                   |                                                                             |                                     |                                          
|                                                   |                                                                             | Income taxes                        |                                          
|                                                   |                                                                             |                                     |                                          
|                                                   | Non-cash transactions:                                                      |                                     |                                          
|                                                   |                                                                             | Debt incurred to purchase equipment |                                          
|                                                   |                                                                             |                                     |                                          

The
accompanying notes are an integral part of these financial statements.

21

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AML COMMUNICATIONS, INC.  NOTES TO FINANCIAL STATEMENTS  March 31, 2003

1. Line of Business

AML Communications, Inc. designs and manufactures RF and microwave, power and low noise amplifiers for a variety of frequency ranges and transmission
protocols serving the Defense Microwave and Wireless Communications Markets.

2. Summary of Significant Accounting Policies



The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. During the year ended March 31, 2003, the Company incurred a net loss of $1.2 million; however, the company had negative cash flows from operations of approximately
$119,000.

Recovery
of the Company's assets is dependent upon future events, the outcome of which is indeterminable. Successful completion of the Company's development program and its transition to
the attainment of profitable operations is dependent upon the Company achieving a level of sales adequate to support the Company's cost structure. In addition, realization of a major portion of the
assets in the accompanying balance sheet is dependent upon the Company's ability to meet its financing requirements and the success of its plans to sell products. The financial statements do not
include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should the Company be unable to continue in existence.

The
Company intends to seek out new investors for raising additional sources of financing to supplement the approximately $1.0 million raised from March 2001 through
January 2002 in private placement offerings. Other sources may include, but are not limited to, an equity investment in the Company by a third party. There are, however, no assurances that the
Company will be able to successfully obtain financing at term acceptable to the Company.



The Company considers all liquid investments with an original maturity of three months or less to be cash equivalents. As of March 31, 2003, the Company
had cash and cash equivalent balances totaling $63,000 in financial institutions which were in excess of federally insured amounts.



The Company performs ongoing credit evaluations of its customers' financial conditions and generally does not require collateral on accounts receivable, hence,
the accounts receivable are unsecured and the Company is at risk to the extent that such amounts become uncollectable. During fiscal 2002, the Company had sales to three customers that represented
24.2%, 21.4%, and 12.6% of net sales, respectively. During fiscal 2003, the Company had sales to two customers, which represented 16.8% and 11.2% of net sales, respectively. As of March 31,
2003, these two customers comprised 14.8% and 5.0% of accounts receivable, respectively.

The
Company's customers are comprised primarily of defense sub contractors, cellular service providers, original equipment manufacturers ("OEMs"). Customers are located primarily
throughout the United States. However, the Company also had sales to customers in South America, Western

22

---

Europe,
Canada, Israel, and Russia. During the fiscal years ended March 31, 2002 and March 31, 2003, international sales were $103,000, or 1.8% of net sales and $266,000, or 5% of net
sales, respectively.



The wireless communications equipment industry is highly competitive and is characterized by rapid technology change, new product development, product
obsolescence, evolving industry standards and substantial price erosion over the life of a product. The Company continues to be subject to such risk.



The Company recognizes revenue from product sales at the time of shipment.

In
December 1999, the Securities and Exchange Commission staff released Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements" to provide
guidance on the recognition, presentation, and disclosure of revenue in financial statements. Changes in accounting to apply the guidance in SAB No. 101 may be accounted for as a change in
accounting principle effective April 1, 2000. SAB No. 101 has not had a material effect on the Company's revenue recognition and results of operations.



Inventories include costs of materials, labor and manufacturing overhead and are stated at the lower of cost (first-in, first-out) or
market, and consist of the following:

March 31, 2003Raw materials

$
800,000Work in process


132,000Finished goods


127,000$
1,059,000


The
reserve for inventory at March 31, 2003 was $351,000. Management is currently reviewing the accounting policies regarding the application of overhead to its inventories and is
unable to estimate any effect it may have on future operations.



Property and equipment are being depreciated and amortized on the straight-line basis over the following estimated useful lives:

Machinery and equipment

3 to 5 yearsFurniture and fixtures

5 yearsLeasehold improvements

Life of lease


Depreciation
expense for the years ended March 31, 2002 and March 31, 2003 were $784,000 and $569,000, respectively.

23

---

The
Company capitalizes expenditures that materially increase asset lives and charges ordinary repairs and maintenance to operations as incurred. When assets are sold or otherwise
disposed of, the cost and related depreciation or amortization is removed from the accounts and any resulting gain or loss is included in other income (expense) in the accompanying statements of
operations.

Property
and equipment consist of the following:

March 31, 2003Machinery and equipment

$
3,476,000Furniture and fixtures


131,000Leasehold improvements


660,000$
4,267,000




The Company typically warrants its products against defects in materials and workmanship for a period of one year from the date of shipment. A provision for
estimated future warranty and customer support is recorded when products are shipped. To date, warranty and customer support costs have not been material.



Earnings per share calculations are in accordance with Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share". Accordingly,
"basic" earnings per share are computed by dividing net income or loss by the weighted average number of shares outstanding for the year. "Diluted" earnings per share is computed by dividing net
income or loss by the total of the weighted average number of shares outstanding plus, if applicable, the dilative effect of outstanding stock options (applying the treasury stock method).

Due
to the loss in fiscal 2002 and fiscal 2003, the effect of outstanding options was not included as the effect would be anti-dilutive.



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 and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.



The Company operates as one reportable business segment. The Company designs and manufactures RF and microwave, power and low noise amplifiers for a variety of
frequency ranges and

24

---

transmission
protocols serving the Defense Microwave and Wireless Communications Markets. The revenues earned by each product line are as follows:

|                            |  | Year Ended March 31, |      
|--------------------------- |  | -------------------- | -----
|
|
|Revenues                    |  |                      |      
|Cellular and other          |  | $                    | 629  
|PCS and two-way messaging   |  |                      | 2,404
|Defense microwave and other |  |                      | 2,842
|                            |  |                      |      
|Total net sales             |  | $                    | 5,875



Research and development costs are charged to expense as incurred.



The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of the Company's financial
instruments, including cash and cash equivalents, accounts receivable, notes payablerelated parties, accounts payable, and accrued expenses, the carrying amounts approximate fair value
due to their short maturities. The amount shown for short-term loans also approximates fair value because current interest rates offered to the Company for short-term loans of
similar maturities are substantially the same or the difference is immaterial.



The Company expenses advertising costs as incurred. Advertising costs for the years ended March 31, 2002 and 2003 were $8,000 and $28,000, respectively.



In April 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. The Statement further clarifies accounting for derivative instruments. The company believes the adoption of this Statement will have no material
impact on its financial statements.

In
May 2003, the FASB issued Statement of Financial Accounting Standards No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and
Equity," ("SFAS 150"). SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity.
SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after
June 15, 2003. We do not believe the adoption of SFAS 150 will have a material impact on our consolidated financial statements.

25

---

3. Debt and Lease Commitments



In November 2002, the Company renewed its line of credit with Silicon Valley Bank for $1,000,000. This revolving line of credit bears interest at the
bank's reference rate (prime rate 4.25%) plus 1.00 percent (5.25% at March 31, 2003). This line of credit is secured by substantially all of the Company's assets and expires on
December 15, 2003. As of March 31, 2003, there was $482,000 in outstanding borrowings under the line of credit. Borrowings under the line of credit are subject to a borrowing base of
accounts receivable and there are no financial covenants.



The Company leases its office space, manufacturing facility and certain equipment under long-term operating leases expiring at various dates through
April 2008. Total rent expense under these operating leases was approximately $164,000 and $169,000 during the years ended March 31, 2002 and 2003, respectively. Included in property and
equipment is approximately $875,000 of equipment, which is leased under non-cancelable leases, accounted for as capital leases which expire through January, 2006. The effective interest
rate for these leases range from 8.6% to 15.0%. The accumulated depreciation under capital leases amounted to $464,000 as of March 31, 2003.

Total
minimum lease payments under the above leases are as follows:

|                                        |  | Capital
Leases |          | Operating
Leases |   | Total  
|--------------------------------------- |  | -------------- | -------- | ---------------- | - | -------
|Year ending March 31,                   |  |                |          |                  |   |        
|2004                                    |  | $              | 196,000  |                  | $ | 146,000
|2005                                    |  |                | 89,000   |                  |   | 172,000
|2006                                    |  |                | 53,000   |                  |   | 179,000
|2007                                    |  |                |         |                  |   | 184,000
|2008                                    |  |                |         |                  |   | 190,000
|Thereafter                              |  |                |         |                  |   | 16,000 
|                                        |  |                |          |                  |   |        
|                                        |  | $              | 338,000  |                  | $ | 887,000
|LessAmount representing interest       |  |                | (44,000  | )                |   |        
|                                        |  |                |          |                  |   |        
|Present value of minimum lease payments |  |                | 294,000  |                  |   |        
|LessCurrent portion                    |  |                | (168,000 | )                |   |        
|                                        |  |                |          |                  |   |        
|                                        |  | $              | 126,000  |                  |   |        
|                                        |  |                |          |                  |   |        

4. Income Taxes

The Company accounts for income taxes under the provisions of Statement of Financial Accounting Standards No. 109 ("SFAS 109"). Under
SFAS 109, deferred income tax assets or liabilities are computed based on the temporary difference between the financial statement and income tax bases of assets and liabilities using the
currently enacted marginal income tax rate. Deferred income tax expenses or credits are based on the changes in the deferred income tax assets or liabilities from period to period.

26

---

Differences
between the benefit from income taxes and income taxes at the statutory federal income tax rate for years ended March 31, 2002 and 2003 are as follows:

|                                              |  | March 31,
2002 |          | March 31,
2003 |      
|--------------------------------------------- |  | -------------- | -------- | -------------- | -----
|
|Income tax at statutory federal rate          |  | $              | (242,000 | )              | (34.0
|State income taxes, net of federal income tax |  |                |         |                |     
|Effect of permanent differences               |  |                | 1,500    |                | 0.2  
|Change in valuation allowance                 |  |                | 240,500  |                | 33.8 
|Other                                         |  |                | (       | )              | (   
|                                              |  |                |          |                |      
|                                              |  | $              | 0        |                | 0.0  
|                                              |  |                |          |                |      

Under
SFAS 109, deferred tax assets may be recognized for temporary differences that will result in deductible amounts in future periods and for loss carry forwards. A valuation
allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized.

A
detail of the Company's deferred tax assets and liabilities as of March 31, 2003 follows:

Inventory reserves

$
140,000Allowance for doubtful accounts


14,000Accrued vacation


30,000Accrued warranty and customer support


6,000Other


26,000General tax credit carry-forwards


812,000Net operating loss carry-forwards


4,083,000Depreciation


(243,000
)4,868,000Valuation allowance


(4,868,000
)$



As
of March 31, 2003, the Company had federal net operating loss carry-forwards of approximately $12 million, expiring at various dates through 2023.

5. Stockholders' Equity



The Company's Stock Incentive Plan provides for the granting of non-qualified and incentive stock options to purchase up to 2,096,586 shares of common
stock for periods not to exceed 10 years. Options typically vest 25% after one year from the date of grant with remaining options vesting at a

27

---

rate
of 25% per year thereafter. Options may be granted to employees, officers, directors and consultants. Activity under this plan is as follows:

Number of
Shares

Weighted
Average
Exercise PriceOutstanding at March 31, 2001

591,157


2.75Granted

1,372,250


0.88Exercised




Canceled

(361,282
)

1.77Expired/Forfeited

(2,500
)

(5.44
)Outstanding at March 31, 2002

1,599,625

$
2.16Granted

533,500


0.26Exercised




Canceled

(259,500
)

0.74Outstanding at March 31, 2003

1,873,625

$
1.82Exercisable at March 31, 2003

1,267,906

$
1.41


The
weighted average fair value for options granted during each year was $.75 and $0.42 for fiscal 2002 and fiscal 2003, respectively.

The
number of common stock options available for grant as of each year was 123,956 for fiscal 2002 and 222,961 for fiscal 2003.

Options
outstanding at March 31, 2003 and related weighted average price and life information is as follows:

|Range of
Exercise Prices |  | Total
Options
Outstanding |  | Weighted
Average
Remaining Life
(Years) |  | Total
Weighted
Average
Exercise Price |      | Options
Exercisable |           | Weighted
Average
Exercise Price
|------------------------ |  | ------------------------- |  | --------------------------------------- |  | ------------------------------------- | ---- | ------------------- | --------- | -------------------------------
|$0.11 - $0.50            |  | 344,000                   |  | 9.86                                    |  | $                                     | 0.14 |                     | 9.000     |                                
|$1.51 - $1.00            |  | 1,330,500                 |  | 8.35                                    |  | $                                     | 0.91 |                     | 1,101,656 |                                
|$1.01 - $2.00            |  | 86,125                    |  | 7.11                                    |  | $                                     | 1.78 |                     | 61,625    |                                
|$2.01 - $5.00            |  | 53,250                    |  | 7.01                                    |  | $                                     | 3.35 |                     | 35,875    |                                
|$5.01 - $15.75           |  | 59,750                    |  | 4.36                                    |  | $                                     | 8.80 |                     | 59,750    |                                
|                         |  |                           |  |                                         |  |                                       |      |                     |           |                                
|$0.11 - $15.75           |  | 1,873,625                 |  | 8.40                                    |  | $                                     | 1.41 |                     | 1,267,906 |                                

The
Company has adopted only the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." It applies APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations in accounting for its plans and does not recognize compensation expense for its stock-based compensation plans other than for restricted stock and
options issued to outside third parties. If the Company had elected to recognize compensation expense based upon the fair value at the grant date for awards under its plan consistent with the
methodology prescribed by SFAS No. 123,

28

---

the
Company's net loss and loss per share would be reduced to the pro forma amounts indicated below for the years ended March 31, 2003 and 2002:

2003

2002Net lossAs reported

$
(1,188,000
)
$
(713,000
)Pro forma

$
(1,430,917
)
$
(1,146,000
)Basic loss per common shareAs reported

$
(0.15
)
$
(0.09
)Pro forma

$
(0.18
)
$
(0.15
)


For
purposes of computing the pro forma disclosures required by SFAS No. 123, the fair value of each option granted to employees and directors is estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions for the years ended March 31, 2003 and 2002: dividend yields of 0% and 0%, respectively; expected volatility of 141% and
73%, respectively; risk-free interest rates of 3.3% and 4.41%, respectively; and expected lives of 4.33 and 2.89, respectively. The weighted-average fair value of options granted during
the year ended March 31, 2003 for which the exercise price equals the market price on the grant date was $0.42, and the weighted-average exercise price was $0.88.

The
Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of its employee stock options.



In connection with the renewal of the Company's Line of Credit facility through Silicon Valley Bank in November 2000, the Company sold Silicon Valley Bank
warrants to purchase an aggregate of 27,429 shares of the Company's common stock at $2.1875 per common share and recorded a charge of $59,000 for the year ended March 31, 2001. This warrant
expires in November 2007, and as of March 31, 2003, none of the shares related to this warrant have been exercised.

In
connection with the March 2001 private placement of $500,000 by a group of investors led by Jacob Inbar, we issued warrants to the non-employee investors to
purchase a total of 40,000 shares of our common stock at a price of $1.125. We did not record a charge in connection to these warrants as the charge is considered to be immaterial to the financial
statements. These warrants expire in March 2006, and as of March 31, 2003, none of the shares related to this warrant have been exercised.

In
connection with the September 2001 private placement of $100,000 by a group of investors led by Jacob Inbar, we issued warrants to the non-employee investors to
purchase a total of 8,000 shares of our common stock at a price of $0.65. We did not record a charge in connection to these warrants as the charge is considered to be immaterial to the financial
statements. These warrants expire in

29

---

September 2006
and as of March 31, 2003, none of the shares related to this warrant have been exercised.

In
connection with an agreement for investor relations services to be performed during the year ended March 31, 2002, we issued warrants to CastleRook Financial Partners, LLC to
purchase a total of 75,000 shares of the Company's common stock at a price of $0.72. We did not record a charge in connection to these warrants as the charge is considered to be immaterial to the
financial statements. These warrants expire in August 2003, and as of March 31, 2003, none of the shares related to this warrant have been exercised.

7. Employee Benefit Plan

The Company has a defined contribution 401(k) employee retirement plan (the "Plan"). Under the terms of the Plan, eligible employees, as defined, may contribute
from 1% to 16% of their pre-tax earnings to the Plan. At its discretion, the Company may match the employees' contribution up to 6%. The Company made no discretionary matching contribution
for the years ended
March 31, 2002 and 2003. Additionally, no contributions were made for the years ended March 31, 2002 and 2003.

8. Legal Proceedings

The Company may be subject, from time to time, to various legal proceedings relating to claims arising out of its operations in the ordinary course of its
business. The Company currently is not party to any legal proceedings, the adverse outcome of which, individually or in the aggregate, management believes would have a material adverse effect on the
business, financial condition or results of operations of the Company.

9. Related Party Transactions

In December 2001, we entered into a promissory note payable with a principal value of $50,000 with Mr. Tiberiu Mazilu, PhD, an officer and director
of the Company. The terms of the note call for quarterly interest payments to Dr. Mazilu commencing on September 30, 2002, with the interest payment calculated quarterly based on the
prime interest rate plus 1.25%. The principal amount of the note is due on January 2, 2005 but would become due and payable by the Company immediately upon the consolidation or merger of the
Company with another entity, the death of Dr. Mazilu, or the Company's termination of Dr. Mazilu's employment with the Company.

30

---



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS

Information required by this item is incorporated by reference to the information under the captions "Executive Compensation" and "Election of Directors" in the
Company's definitive proxy statement for the 2003 Annual Meeting of Stockholders to be held on September 3, 2003.

ITEM 10. EXECUTIVE COMPENSATION

Information required by this item is incorporated by reference to the information under the captions "Executive Compensation" and "Election of Directors" in the
Company's definitive proxy statement for the 2003 Annual Meeting of Stockholders to be held on September 3, 2003.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required by this item is incorporated by reference to the information under the caption "Principal Stockholders" in the Company's definitive proxy
statement for the 2003 Annual Meeting of the Stockholders to be held on September 3, 2003.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required by this item is incorporated by reference to the information under the caption "Certain Relationships and Related Transactions" in the
Company's definitive proxy statement for the 2003 Annual Meeting of Stockholders to be held on September 3, 2003.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K



| |  | 3.1   |  | Certificate of Incorporation(1)                                                                    
| |  | ----- |  | ---------------------------------------------------------------------------------------------------
| |  | 3.2   |  | Bylaws(1)                                                                                          
| |  | 10.1  |  | AML Communications, Inc. Stock Incentive Plan(1)                                                   
| |  | 10.2  |  | Form of Incentive Stock Option Agreement(1)                                                        
| |  | 10.3  |  | Form of Non-employee Director Incentive Stock Option Agreement(1)                                  
| |  | 10.4  |  | Incentive Stock Option Agreement, dated August 1, 1994, between the Company and Jacob Inbar.(7)    
| |  | 10.5  |  | Stock Option Agreement, dated December 15, 1995, between the Company and David A. Derby.(7)        
| |  | 10.6  |  | Stock Option Agreement, dated August 28, 1996, between the Company and David A. Derby.(7)          
| |  | 10.7  |  | Stock Option Agreement, dated December 15, 1995, between the Company and Richard W. Flatow.(7)     
| |  | 10.8  |  | Stock Option Agreement, dated August 28, 1996, between the Company and Richard W. Flatow.(7)       
| |  | 10.9  |  | Incentive Stock Option Agreement, dated April 28, 1997, between the Company and Kirk A. Waldron.(7)
| |  | 10.10 |  | Form of Indemnity Agreement(1)                                                                     
| |  |       |  |                                                                                                    

31

---

| |  | 10.11 |  | Standard offer, Agreement and Escrow Instructions for Purchase of Real Estate dated January 30, 1996, between the Company and Parr-Bohn Properties, Ltd. II, a California Limited Partnership(2)
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 10.12 |  | Lease, dated March 11, 1996, between the Company and Parr-Bohn Properties, Ltd. II, a California Limited Partnership(3)                                                                         
| |  | 10.13 |  | Business Loan Agreement dated August 2, 1996, between the Company and Bank of America National Trust and Savings Association (4)                                                                
| |  | 10.14 |  | Security Agreement dated August 2, 1996, between the Company and Bank of America National Trust and Savings Association(4)                                                                      
| |  | 10.15 |  | Amendment No. 1 dated September 2, 1997 to Business Loan Agreement dated August 2, 1996 between the Company and Bank of America National Trust and Savings Association(5)                       
| |  | 10.16 |  | Stock Incentive Plan of AML Communications, Inc., as Amended and Restated on June 24, 1998 (6)                                                                                                  
| |  | 10.17 |  | Form of amended Non-employee Director Stock Option Agreement. (6)                                                                                                                               
| |  | 10.18 |  | Amendment No. 2 dated September 1, 1998 to Business Loan Agreement dated August 2, 1996 between the Company and Bank of America National Trust and Savings Association. (6)                     
| |  | 10.19 |  | Change in Control Agreement dated August 25, 1998 between the Company and Kirk A. Waldron.(8)                                                                                                   
| |  | 10.20 |  | Employment Agreement dated February 23, 1999 between the Company and Jacob Inbar.(8)                                                                                                            
| |  | 10.21 |  | Employment Agreement dated February 23, 1999 between the Company and Tiberiu Mazilu (8)                                                                                                         
| |  | 10.22 |  | Employment Agreement dated February 23, 1999 between the Company and Edwin J. McAvoy.(8)                                                                                                        
| |  | 10.23 |  | Loan and Security Agreement dated October 26, 1999 between the Company and Silicon Valley Bank. (9)                                                                                             
| |  | 10.24 |  | Intellectual Property Security Agreement.(9)                                                                                                                                                    
| |  | 10.25 |  | Loan and Security Agreement dated November 10, 2000 between the Company and Silicon Valley Bank. (10)                                                                                           
| |  | 10.26 |  | Intellectual Property Security Agreement dated November 10, 2000 between the Company and Silicon Valley Bank. (10)                                                                              
| |  | 10.27 |  | Warrant to purchase stock dated November 9, 2000 between the Company and Silicon Valley Bank. (10)                                                                                              
| |  | 10.28 |  | Change in Control Agreement dated December 20, 2000 between the Company and Karl R. Brier.(11)                                                                                                  
| |  | 10.29 |  | Change in Control Agreement dated December 20, 2000 between the Company and Scott T. Behan. (11)                                                                                                
| |  | 10.30 |  | Change in Control Agreement dated December 20, 2000 between the Company and Kevin W. Pietramala. (11)                                                                                           
| |  | 10.31 |  | Settlement and Release Agreement dated January 17, 2001 between the Company and Jacob Inbar.(11)                                                                                                
| |  | 10.32 |  | Copy of letter from Arthur Andersen LLP to the Securities & Exchange Commission. (12)                                                                                                           
| |  | 10.33 |  | Termination and Change in Control Agreement dated September 12, 2001 between the Company and Jacob Inbar. (13)                                                                                  
| |  | 10.34 |  | Termination and Change in Control Agreement dated September 12, 2001 between the Company and Tiberiu Mazilu. (13)                                                                               
| |  | 10.35 |  | Termination and Change in Control Agreement dated September 12, 2001 between the Company and Edwin McAvoy. (13)                                                                                 
| |  |       |  |                                                                                                                                                                                                 

32

---

| |  | 10.36 |  | Change in Control Agreement dated September 12, 2001 between the Company and Gary Rogers. (13)                                      
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------
| |  | 10.37 |  | Change in Control Agreement dated September 12, 2001 between the Company and Si Le. (13)                                            
| |  | 10.39 |  | Accounts Receivable Purchase Agreement dated November 20, 2001 between AML Communications Inc. and Silicon Valley Bank. (14)        
| |  | 10.40 |  | Promissory Note dated December 30, 2001 between Tiberiu, Mazilu, and AML Communications Inc.(14)                                    
| |  | 10.41 |  | Accounts Receivable Purchase Modifications Agreement dated December 16, 2002 between Silicon Valley Bank and AML Communications (15)
| |  | 23.1  |  | Consent of Independent Accountants                                                                                                  
| |  | 99.1  |  | Certification by the Chief Executive Officer                                                                                        
| |  | 99.2  |  | Certification by the Director of Finance                                                                                            

---



33

---



We
did not file any reports on Form 8-K during the quarter ended March 31, 2003.

ITEM 14. CONTROLS AND PROCEDURES.

(a)Evaluation of disclosure controls and procedures. Within the 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Director of Finance, of the effectiveness
of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and
Director of Finance concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the
Company's periodic SEC filings.

(b)Changes in internal controls. No significant changes were made in the Company's internal controls or in other factors
that could significantly affect these controls subsequent to the date of their evaluation.

34

---



SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|                         |                                                                 |  |  |  |        |              
|------------------------ | --------------------------------------------------------------- |  |  |  | ------ | -------------
|AML Communications, Inc. |                                                                 |  |  |  |       
|By:                      | /s/JACOB INBARJacob Inbar
President and Chief Executive Officer |  |  |  | Dated: | June 30, 2003

KNOW
ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jacob Inbar and Susan Fite, and each of them, jointly and severally, his
attorneys in fact, each with full power of substitution, for him in any and all capacities, to sign any and all amendments to this Report on Form 10-KSB, and to file the same, with
exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each said attorneys-in-fact
or his substitute or substitutes, may do or cause to be done by virtue hereof.

In
accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

|Signature                             |  | Title                                                        |  | Date         
|------------------------------------- |  | ------------------------------------------------------------ |  | -------------
|                                      |  |                                                              |  |              
|/s/JACOB INBARJacob Inbar             |  | President, Chief Executive Officer and Chairman of the Board |  | June 30, 2003
|/s/TIBERIU MAZILUTiberiu Mazilu       |  | Vice President-Engineering and Director                      |  | June 30, 2003
|/s/EDWIN J. MCAVOYEdwin J. McAvoy     |  | Secretary, Vice President-Sales, and Director                |  | June 30, 2003
|/s/SUSAN FITESusan Fite               |  | Director of Finance
Chief Accounting Officer                 |  | June 30, 2003
|/s/DAVID A. DERBYDavid A. Derby       |  | Director                                                     |  | June 30, 2003
|/s/RICHARD W. FLATOWRichard W. Flatow |  | Director                                                     |  | June 30, 2003
|/s/GERALD M. STAREKGerald M. Starek   |  | Director                                                     |  | June 30, 2003

35

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CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE  ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Jacob Inbar, certify that:

1.     I
have reviewed this annual report on Form 10-KSB of AML Communications, Inc.;

2.     Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The
registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:



5.     The
registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.     The
registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

|                    |  |                                                                            
|------------------- |  | ---------------------------------------------------------------------------
|Date: June 30, 2003 |  | /s/JACOB INBARJacob Inbar
Chairman of the Board and
Chief Executive Officer

36

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CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE
ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Susan Fite, certify that:

1.     I
have reviewed this annual report on Form 10-KSB of AML Communications, Inc.;

2.     Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The
registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:



5.     The
registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.     The
registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

|                    |  |                                                                         
|------------------- |  | ------------------------------------------------------------------------
|Date: June 30, 2003 |  | /s/SUSAN FITESusan Fite
Director of Finance and Chief Accounting Officer

37

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