UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-K




x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934For
      the fiscal year ended March 31, 2009o
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934For
      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
            
            Name
      of each exchange on which registeredNone
            
            None




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




Title
      of ClassCommon
      Stock, $.01 par value





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. o Yes  x No





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. o Yes  x No





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirement for
the past 90 days. x
Yes  o
No





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). oYesoNo





Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act).





Large
      accelerated filer   o
            Accelerated
      filer   oNon-accelerated
      filer  o
            Smaller
      reporting company x





The
aggregate market value of the registrant's common stock, par value $0.01 per
share, held by non-affiliates of the registrant on September 30, 2008, the
last business day of the registrant's most recently completed second fiscal
quarter, was approximately $8,676,872 (based on the closing sales price of the
registrant's common stock on that date).





As of
June 12, 2009, 10,654,665shares
of the registrant's common stock, par value $0.01 per share, were issued and
outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE





None





AML
Communications, Inc.




Index
to Form 10-K


For
the Fiscal Year Ended March 31, 2009


PagePart IItem 1.
            Business
            2Item
      1A.
            Risk
      Factors
            9Item 2.
            Properties
            13Item 3.
            Legal
      Proceedings
            13Item 4.
            Submission
      of Matters to a Vote of Security
      Holders
            13Part IIItem 5.
            Market
      for Common Equity and Related Stockholder
      Matters
            13Item 6.
            Selected
      Financial
      Data
            14Item 7.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            14Item 8.
            Financial
      Statements and Supplementary
      Data
            20Item 9.
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
            42Item 9A.
            Controls
      and
      Procedures
            42Item 9B.
            Other
      Information
            43Part IIIItem 10.
            Directors,
      Executive Officers and Corporate
      Governance
            43Item 11.
            Executive
      Compensation
            43Item 12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            43Item 13.
            Certain
      Relationships and Related Transactions, and Director
      Independence
            43Item 14.
            Principal
      Accounting Fees and
      Services
            44Part IVItem 15.
            Exhibits,
      Financial Statement
      Schedules
            45SIGNATURES





1




INTRODUCTORY
NOTES—FORWARD LOOKING STATEMENTS AND CERTAIN TERMINOLOGY




Some of
the statements made by us in this Annual Report on Form 10-K 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
from the results implied by the forward looking statements due to a variety of
factors, many of which are discussed throughout this Annual Report and
particularly in the sections titled “Additional Factors That May Affect Future
Results” and “Factors Affecting Business, Operating Results and Financial
Condition”, both of which are included in the section titled “Management’s
Discussion and Analysis of Plan of Operation”. 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 any revisions to
these forward-looking statements that may reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events. Factors
that could cause actual results to differ materially from those expressed in any
forward looking statement made by us include, but are not limited
to:




•
            our
      ability to finance our activities and maintain our financial
      liquidity;




•
            our
      ability to attract and retain qualified, knowledgeable
      employees;




•
            the
      impact of general economic conditions on our
  business;




•
            postponements,
      reductions, or cancellations in orders from new or existing
      customers;




•
            the
      limited number of potential customers for our
  products;




•
            the
      variability in gross margins on our
products;




•
            our
      ability to design and market new products
  successfully;




•
            our
      failure to acquire new customers in the
future;




•
            deterioration
      of business and economic conditions in our
  markets;




•
            intensely
      competitive industry conditions with increasing price competition;
      and




•
            the
      rate of growth in the defense
markets.




In this
document, the words “we,” “our,” “ours,” “Company,” and “us” refer to AML
Communications, Inc., its wholly owned division, Microwave
Power, Inc., and its wholly owned subsidiary,
Mica-Tech, Inc.




PART
I




ITEM
1.  BUSINESS




Introduction




We
currently design, manufacture, and market radio frequency (RF) and microwave,
low noise, medium and high power amplifiers and subsystems serving primarily the
Defense Electronic Warfare Market. Our business is comprised of three reportable
segments. AML Communications, Inc. (AML), the parent company, designs,
manufactures, and markets amplifiers and related products for the defense
microwave. Our division Microwave Power, Inc. (MPI) designs, manufactures,
and markets high power microwave amplifiers for the defense market. Our defense
industry products are used primarily in electronic systems for tactical
aircraft, ships, ground systems, and missile systems. These products are sold
directly by us as well as through independent sales representatives. On
April 11, 2007, we acquired a controlling interest of Mica-Tech, Inc.
(Mica-Tech) and subsequently acquired the remaining interest on
February 19, 2008. Mica-Tech designs, manufactures, and markets an
intelligent communication system to provide Supervisory Control And Data
Acquisition (SCADA) of the electric power grid. We had three reportable segments
(AML), (MPI), and (Mica-Tech) for the twelve month periods ended March 31,
2009 and March 31, 2008.






2




We were
incorporated in California in 1986 as Advanced Milliwave Laboratories,
Incorporated. 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.




Background




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 our 1997 fiscal year, 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 U.S. market.




As a
result, we decided to change our market focus and concentrate on selling to the
OEM customer base. Late in our 1997 fiscal year, 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 our 1998 fiscal
year, 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
our 1999 fiscal year, 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 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.




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.




Since
March 2001, we have concentrated our research and development on defense
customers and have expanded our Microwave Integrated Circuits (MIC)
facilities.




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 good gross margins. While we
continually attempt to expand our customer base, we cannot give any assurance
that our customers, including one or more major customers, will not reduce,
delay, or eliminate their purchases from us. Such a reduction, including one
from a major customer, would have a material adverse effect on our business,
results of operations, and financial condition. Additionally, our future depends
on our 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
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. There is no assurance that we will be able to develop products
that will generate higher gross margins, or that we will be able to reduce
manufacturing costs.




3




Business
Strategy




AML
Communications, Inc. and Microwave Power, Inc. Segments




The
return of Jacob Inbar and the other AML co-founders in February 2001 resulted in
our re-direction of our business focus 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 $3.7 million in our 2003 fiscal year to
$12.7 million in our 2009 fiscal year.




Utilizing
our extensive knowledge in Microwave Integrated Circuits (MIC) design
capabilities, we have expanded the products we offer as part of our full line
catalog. Such products are designed for and marketed to the Defense Electronic
Warfare Market. We also utilize our MIC design capabilities toward the design of
subsystems, an area that we continue to invest in for long term defense
projects. Investments in new subsystem products remain at the center of our
strategy because they offer product differentiation, opportunities for sole
source positions and higher added value.




We seek
and have been successful in securing contracts with our major customers that
span over a number of years. These program-based contracts remain the focus of
our marketing strategy.




Utilizing
MPI’s proprietary Microwave Monolithic Ceramic Circuits (MMCC) technology, we
intend to expand production of such amplifiers and subsystems at our Camarillo
facility. This technology offers cost savings, by reducing hand-mounted
operations while increasing yields and reliability.




On
May 25, 2004, we signed a definitive agreement for the acquisition of
Microwave Power, Inc. which was completed on June 18, 2004. MPI was
merged into our wholly owned subsidiary, with the subsidiary as the surviving
entity. The total consideration for the acquisition was $3,028,000. Pursuant to
the acquisition agreement, 2,117,108 shares as consideration for the acquisition
and 21,174 shares to be issued to the broker were committed, or authorized for
issuance by our board of directors, as of June 18, 2004. MPI will continue
to operate as our division from its facility in Santa Clara. On February 3,
2006, we purchased the building that houses MPI, which is located at 3350 Scott
Blvd. Bldg. 25 in Santa Clara, California, for a purchase price of $800,000. The
building is being financed by the Bank of America in the form of a promissory
note in the amount of $640,000 and paying the loan in 83 regular payments of
$4,425.88 each and one irregular last payment of $556,594.48. Our final payment
is due on February 10, 2013 and will be for all principle and interest not
yet paid. Payments include principle and interest.




The MPI
acquisition was driven by a number of key factors, including:




1)
            Technologically,
      MPI’s semi-monolithic, gold filled via’s, air bridge and
      microwave-monolithic-ceramic (MMCC) technology provide access to processes
      that we believe are complementary and additive to those available to AML
      prior to the acquisition.




2)
            MPI’s
      product base addresses higher power and higher frequency sectors of the
      microwave market. This acquisition was intended to strengthen our product
      offerings to this market by adding higher power microwave
      amplifiers.




Mica-Tech,
Inc. Segment




On
April 11, 2007, we completed the acquisition of a controlling position in
Mica-Tech, Inc., in a cash-for-stock transaction. Under the terms of the
agreement, AML purchased 51% or 4,146,400 shares of Mica-Tech’s outstanding
common stock for an aggregate price of $800,000. On February 19, 2008, we
subsequently acquired the remaining interest in Mica-Tech or 49% of the
outstanding common stock of Mica-Tech. Under the terms of the agreement, a newly
formed, wholly-owned subsidiary of ours would merge with Mica-Tech. Following
the merger, Mica-Tech would become a wholly-owned subsidiary of our Company. The
Mica-Tech shareholders in the aggregate received $1,000 for their Mica-Tech
common stock. In addition, we granted approximately 1,310,000 shares of options
and warrants to purchase our common stock to 49% shareholders and other current
employees. These options and warrants were performance based.




Markets




AML
Communications, Inc. and Microwave Power, Inc. Segments




4




We sell
our RF/Microwave amplifier products and subsystems primarily into various
segments of the Defense Electronic Warfare Market. In our 2009 fiscal year, the
AML segment accounted for 82.2% of the Company’s total revenues. 100% of AML’s
revenues were derived from the defense microwave market. In comparison, in our
2008 fiscal year, we derived approximately 99.9% of our revenues from the
defense microwave market and less than 0.10% from cellular coverage enhancement
products. In our 2009 fiscal year, the MPI segment accounted for 13.4% of the
Company’s total revenues, which were mainly derived from the defense microwave
market.




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.




Mica-Tech, Inc.
Segment




The
Mica-Tech segment accounted for 4.4% of the Company’s total revenues in our
fiscal 2009 year. Mica-Tech designs, manufactures, and markets an intelligent
satellite communication system to provide Supervisory Control And Data
Acquisition (SCADA) of the electric power grid. The satellite system is marketed
to power utility companies and enables remote control of substations for
reducing black-outs and enhancing power/load regulation during peak demand
hours. The Federal Energy Regulatory Commission (FERC) has mandated the power
utility companies to electronically control substations for purposes of
monitoring power quality and increase power grid reliability. Mica-Tech’s
satellite system provides an immediate and low cost solution for substation
control. Mica-Tech has successfully deployed its products with a major Southern
California utility company. Penetration into the domestic utility companies
market is in the initial phase.




Products




AML
Communications, Inc. Segment




During
the year, we designed and/or manufactured low noise, power amplifiers and
subsystems that were sold primarily into the Defense Electronic Warfare Market.
During the first quarter of our 2007 fiscal year, AML delivered the first
product utilizing the MMCC technology processed by MPI. We believe that
subsequent AML product developments would use MMCC as an implementation
technology due to its cost savings advantages.




Defense
Microwave.  We produce standard catalog and custom hybrid
microwave amplifiers and subsystems. We also produce derivative products that
are based upon minor modifications of catalog items. The frequencies for these
products range from 50kHz to 26GHz. Power levels range from less than one
milliwatt to several hundred watts. Integration of a number of amplifiers and
other microwave components built by AML address the subsystem
markets.




Our power
amplifiers range in price from $500 up to $10,000 per amplifier, depending upon
technology, complexity, quantity, and implementation.




Microwave
Power, Inc. Segment




Defense Microwave and Test
Instrumentation.  MPI manufactures solid state microwave
amplifiers operating in the frequency range from to 1 to 40 GHz with output
power from 100 mW to 500 W. MPI proprietary technology Microwave Monolithic
Ceramic Circuits (MMCC) is especially designed for broadband and high power.
Some typical applications include telecommunications, radar, simulators,
transmitters and test instrumentation. Most of the units are available either
rack mounted or as connectorized modules.




5




The MPI
transmit power amplifiers range in price from $2,000 to over $45,000 per
amplifier, depending upon the technology, complexity, quantity, and
implementation.




Mica-Tech, Inc.
Segment




Satellite Communication System for
Electric Grid Control and Demand Response Solutions.  The
Mica-Tech UltraSatNet system allows for efficient and secure electric grid
control. The technology offers highly reliable operations. Existing and
potential customers are electric utilities serving large service areas. The
UltraSatNet system also has an application in Demand Response for commercial and
industrial loads.




Customers




AML sells
products to defense OEM manufacturers worldwide, including Raytheon, Celestica Aerospace
Technologies Corporation,L3 Communications, The Boeing Company, BAE, and
Northrop Grumman. Additionally we export our products to major OEM’S in the
France, Israel, Spain, Turkey, Singapore, Italy, and UK. The Company seeks and
was successful in securing contracts with its major customers that span over a
number of years. These program-based contracts remain the focus of our marketing
strategy.




MPI sells
products to system integrators primarily in the defense sector and particularly
to specialized test equipment manufacturers. The list of customers includes
SRCTec Inc., System Planning Corporation, and Aeroflex. In addition, MPI exports
products to the customers in France, Singapore, Germany, Canada, and
Japan.




For the
fiscal year ended March 31, 2009, our largest customer for our AML
Communications and MPI segments was Raytheon; which accounted for approximately
22.6% of net sales. Versys was our
second largest customer accounting for approximately 5.5% of net sales. For the
fiscal year ended March 31, 2008, our largest customer was Raytheon, which
accounted for approximately 26.5% of net sales. Versys was our second largest
customer accounting for approximately 5.8% 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. The largest customer for our
Mica-Tech segment was Tri-State Generation and Transmission Association, which
accounted for approximately 3.3% of net sales.




We rely
heavily on acquiring new customers. The acquisition rate for new defense
microwave customers during our 2009 fiscal year was approximately 8 new
customers per quarter for the AML segment and approximately 4 new customers per
quarter for the MPI segment, compared to approximately 10 new customers per
quarter for the AML segment and approximately 5 new customers per quarter for
the MPI segment for the fiscal year ended March 31, 2008.




Mica-Tech
sells products to domestic electric utilities. Utilities serving Southern
California, New Mexico, Colorado, Wyoming, Nebraska, and Arizona are currently
the major customers. Mica-Tech has demonstrated its system to utilities serving
Nevada, Texas, Georgia and Florida and continues to market its products to other
US based utilities.




Marketing
and Distribution; International Sales




We sell
our AML Communications, Inc. products and Microwave Power, Inc.
products through a combination of a technically proficient internal sales and
marketing resources 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 internal sales and marketing personnel and
the independent sales representatives generate product sales, provide product
and customer service, and provide customer feedback for product development. In
addition, the independent sales representatives receive support from our
internal sales and marketing personnel, which currently consists of four
people.




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 months to two years. 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 year ended March 31, 2009, international sales were
$2.9 million or 21.9% of net sales as compared to international sales of
$3.1 million or 24.1% of net sales for the fiscal year ended March 31,
2008. During the fiscal year, we exported our products to major OEM’s in the
France, Israel, Spain, Turkey, Singapore, Italy, UK, and Japan.




The
following table summarizes the international sales by segment for the fiscal
year ended March 31, 2009:




(Dollars
      in thousands)
            
            AML
            
            
            
            
            
            MPI
            
            
            
            
            
            Mica-Tech
            
            
            
            
            
            TotalInternational
      Sales
            
            $
            2,274
            
            
            
            17.1
            %
            
            $
            633
            
            
            
            4.8
            %
            
            $
            —
            
            
            
            —
            
            
            $
            2,907
            
            
            
            21.9
            %Domestic
      sales
            
            
            8,650
            
            
            
            65.1
            
            
            
            1,144
            
            
            
            8.6
            
            
            
            587
            
            
            
            4.4
            
            
            
            10,381
            
            
            
            78.1Total
      Sales
            
            $
            10,924
            
            
            
            82.2
            %
            
            $
            1,777
            
            
            
            13.4
            %
            
            $
            587
            
            
            
            4.4
            %
            
            $
            13,288
            
            
            
            100.0
            %




6




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 facility in Southern
California and our facility in Northern California.




Product
Development




Our AML
segment and MPI segment 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 process as well as
seeking to reduce the cost and increase the manufacturing efficiency of our new
and existing products. The acquisition of MPI has added to our existing
technology, with their semi-monolithic, gold filled via’s, dielectric bridge and
microwave-monolithic-ceramic (MMCC) technology processes.




The
Mica-Tech segment of the company has invested in development of the next
generation UltraSatNet system that allows enhanced capabilities including higher
data rate, voice channel, GPS synchronization and advanced Subsystem
Automation System (SAS) functions.




Our
combined research and development staff consisted of 14 people as of
March 31, 2009. Expenditures for research and development amounted to
approximately $1,932,000 in our 2009 fiscal year and $2,289,000 in our 2008
fiscal year.




Competition




AML
Communications, Inc. and Microwave Power, Inc. Segments




The
defense microwave industry is highly competitive. Our main competitors include
Teledyne Defense, Miteq, Endwave Defense Systems and CTT. Although most of the
competitors have significantly more resources than we have, we believe that our
technical abilities in implementing MIC amplifiers do not differ to any great
degree. We utilize our technological knowledge as well as design our pricing to
compete effectively. We intend to apply the know-how and technology of MPI
towards gaining a technological advantage over our competitors.




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 will offer new and existing products at
prices necessary to gain or retain market share. Some of our competitors have
substantial financial resources, which may enable them to better withstand
sustained price competition or a market downturn. There can be no assurance that
we will be able to compete successfully in the pricing of our products, or
otherwise.




Mica-Tech, Inc.
Segment




The
Mica-Tech principal product, namely the UltraSatNet was developed specifically
to address the control of electric grid. To the best of our knowledge there is
no product on the market that was designed specifically for this
task.




Mica-Tech’s
competition includes alternative methods of setting secured communication links
for SCADA function. These include 900 MHz radios, fiber links, microwave links
and VSAT. While none of these competitive technologies have the unique
combination of security, remote coverage and cost-effectiveness these
technologies still present competition.




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 will offer new
and existing products at prices necessary to gain or retain market share. Some
of our competitors have substantial financial resources, which may enable them
to better withstand sustained price competition or a market downturn. There can
be no assurance that we will be able to compete successfully in the pricing of
our products, or otherwise.




Manufacturing
and Suppliers




Our
headquarters and our AML 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.




7




ISO 9001
is a uniform worldwide quality management system standard. 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 are currently certified to the ISO 9001
standard.




MPI’s
manufacturing facility is located in Santa Clara, California. Depending on the
specific requirements, we use a combination of three basic technologies:
Integration of internally matched GaAs FETs using MICs (Microwave Integrated
Circuits), Integration of GaAs Monolithics (MMIC’s) using various techniques,
including Multi-Chip Modules, and our own proprietary MMIC (Microwave Monolithic
Integrated Circuits) technology. We manufacture in house all the ceramic
integrated circuits, both MIC’s and MMIC’s.




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. These single source suppliers consist of Spectrum Control for their
filters, Mimix for MMIC parts, Johanson Technologies for their ceramic
capacitors, Sandvik Osprey LTD for their osprey materials, and NEC and
Fujitsu for their semiconductors. Although we did not experience shortages
during our 2009 fiscal year, we have experienced this in the past, and may again
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.




Mica-Tech
manufactures the UltraSatNet system from purchased components. Mica-Tech’s
manufacturing facility was moved into the AML Camarillo headquarters in May
2008. The manufacturing process involves in house assembly capabilities and
outside specialized printed circuit board/printed wire board
assemblies.




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. 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.




The
proprietary technologies of our MPI segment and Mica-Tech segment are primarily
protected through patent and trade secret protection. As of March 31, 2009,
we owned three U.S. issued patents and one foreign patent, and we had no patent
applications pending. The four patents expire at various dates from May 2007 to
September 2009. Additionally, MPI has two registered trademarks: the MPI Company
logo, and the term “MMCC” (monolithic microwave ceramic circuits).




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.




8




Employees




As of
June 22, 2009, we had 94 full-time employees, including 14 in research and
development; 57 in manufacturing, production engineering, and quality assurance;
18 in administration; and 5 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 our
employees are good.




Governmental
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.




We are subject to and comply with
federal regulations pertaining to health and safety, employment, privacy, and
related regulations pertinent to all businesses.  While we are not
directly subject to regulation by the FERC or state public utility commissions,
these commissions have oversight of regional grids and electric utilities. The
FERC must approve all wholesale products purchased by regional grids, and state
commissions may be involved in approval of transactions with electric
utilities.




ITEM
1A.  RISK FACTORS




RISK
FACTORS




You
should carefully consider the risks described below together with all of the
other information included in this report before making an investment decision
with regard to our securities. The statements contained in or incorporated into
this offering that are not historic facts are forward-looking statements that
are subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward-looking statements. If
any of the following risks actually occurs, our business, financial condition or
results of operations could be harmed. In that case, the trading price of our
common stock could decline, and you may lose all or part of your
investment.




Risks
Associated With Our Business




Most
of our sales are made to the defense industry. Our business and financial
results could be adversely affected if defense spending is curtailed, which
would cause the value of your investment to decline.




As a
percentage of total revenues, our net sales to our two largest customers,
Raytheon and Versys, during the fiscal year ended March 31, 2009 totaled
approximately 28.1%, accounting for $3.7 million of our revenues in our
2009 fiscal year. These customers rely on the defense industry for orders and
the defense industry relies upon the United States and foreign governments for
funding. Changes in funding may occur if there is a change in the current
administration or the government reduces defense spending. A decrease in
business from the defense industry to our customers would have a material
adverse effect on our results of operations and financial condition and the
value of your investment.




9




Our
market is subject to rapid technological change, and to compete effectively, we
must continually introduce new products or enhancements that achieve market
acceptance.




The
market for our products is characterized by rapidly changing technology,
frequent new product introductions, changes in customer requirements, and
evolving industry standards. We believe that we have been successful to date in
investing in research and development to meet these needs and delivering
products before our competitors. We believe that our future success will depend
upon continued development and timely introduction of products capable of
collecting or processing new types of telecommunications signals. However, we
expect that new technologies will continue to emerge. Our future performance
will depend on the successful development, introduction, and market acceptance
of new and enhanced products that address these changes as well as current and
potential customer requirements. The introduction of new and enhanced products
may cause our customers to defer or cancel orders for existing products. There
can be no assurance that we will be able to develop and market new products
successfully in the future or respond effectively to technological changes, or
that new products introduced by others will not render our products or
technologies noncompetitive or obsolete.




We also
may not be able to develop the underlying core technologies necessary to create
new products and enhancements or to license these technologies from third
parties. Product development delays may result from numerous factors,
including:




•
            changing
      product specifications and customer
  requirements;




•
            difficulties
      in hiring and retaining necessary technical
  personnel;




•
            difficulties
      in reallocating engineering resources and overcoming resource
      limitations;




•
            difficulties
      with contract manufacturers;




•
            changing
      market or competitive product requirements;
and




•
            unanticipated
      engineering complexities.




The
development of new, technologically advanced products is a complex and uncertain
process requiring high levels of innovation and highly skilled engineering and
development personnel, as well as the accurate anticipation of technological and
market trends. We may not be able to identify, develop, manufacture, market, or
support new or enhanced products successfully, if at all, or on a timely basis.
Further, our new products may not gain market acceptance or we may not be able
to respond effectively to product announcements by competitors, technological
changes, or emerging industry standards. Any failure to respond to technological
change would significantly harm our business.




Our
business, operating results and financial condition could be negatively impacted
if demand for our products is less than we anticipate or if we fail to hire
qualified employees. As a result, the value of your securities may
decline.




Our
growth depends on our ability to successfully develop and market our products.
The development and marketing of our products is dependent on a number of
factors, including our ability to:




•
            recruit
      and maintain a base of qualified
engineers;




•
            initiate,
      develop and sustain corporate and government
  relationships;




•
            attract,
      hire, integrate and retain qualified sales and sales support employees;
      and




•
            accurately
      assess the demands of the market.




Demand
for our products might be less than we anticipate, or we may not be successful
in recruiting and maintaining the personnel we need to develop and sell our
products. In either case, our business, operating results and financial
condition could be negatively impacted and the value of your securities may
decline.




10




Our
primary competitors are Teledyne Defense, Miteq, Endwave Defense Systems and
CTT. These competitors are much larger than we are and have more in the way of
financial and other resources than we have. We have tried to create a niche
market in the manufacturing of microwave integrated circuits for use by the
defense industry. However, we have no contractual agreements with contractors
with whom we do business that requires them to purchase minimum quantities and
we cannot assure you that these contractors will continue ordering parts from us
or that they will order at the same or greater levels than they have done in the
past. If our customers severely reduced their orders or ceased ordering from us
altogether, our business, results of operations and financial condition, as well
as the value of your securities, could be materially adversely
affected.




Unexpected
increases in the cost to develop or manufacture our products under fixed-price
contracts may cause us to experience unreimbursed cost overruns.




A
significant portion of our revenue is derived from fixed-price contracts. Under
fixed-price contracts, unexpected increases in the cost to develop or
manufacture a product, whether due to inaccurate estimates in the bidding
process, unanticipated increases in materials costs, inefficiencies, or other
factors, are borne by us. We have experienced cost overruns in the past that
have resulted in losses on certain contracts, and may experience additional cost
overruns in the future. Such cost overruns would increase our operating
expenses, reduce our net income and earnings per share, and have a materially
adverse effect on our future results of operations and financial
condition.




We
may engage in future acquisitions that dilute our stockholders equity and cause
us to use cash, incur debt, or assume contingent liabilities.




We
completed our acquisition of Microwave Power, Inc. on June 18, 2004
and acquired a controlling interest of Mica-Tech, Inc. on April 11,
2007 and subsequently the remaining interest on February 19, 2008. As part
of our business strategy, we expect to continue to review opportunities to buy
other businesses or technologies that would complement our current products,
expand the breadth of our markets, or enhance our technical capabilities, or
that may otherwise offer growth opportunities. If we buy other businesses,
products or technologies in the future, we could:




•
            incur
      significant unplanned expenses and personnel
  costs;




•
            issue
      stock, or assume stock option plans that would dilute our current
      stockholders’ percentage ownership;




•
            use
      cash, which may result in a reduction of our
  liquidity;




•
            incur
      debt; or




•
            assume
      liabilities.




These
purchases also involve numerous risks, including:




•
            problems
      integrating the purchased operations, technologies, personnel or
      products;




•
            unanticipated
      costs, litigation and other contingent
  liabilities;




•
            diversion
      of management’s attention from our core
  business;




•
            adverse
      effects on existing business relationships with suppliers and
      customers;




•
            risks
      associated with entering into markets in which we have no, or limited,
      prior experience;




•
            unconsummated
      transactions; and




•
            potential
      loss of our key employees or the key employees of an acquired
      organization.




We may
not be able to successfully integrate any businesses, products, technologies or
personnel that we might acquire, or to realize expected benefits of acquisitions
that may occur in the future. If this occurs, our business and financial results
may be adversely affected.




Adverse
changes in the political and economic policies of the governments of non U.S.
countries in which we have sales could have a material adverse effect on the
overall economic growth of such countries, which could reduce the demand for our
products and materially and adversely affect our competitive
position.
 
 We
conduct international sales in France, Israel, Spain, Turkey, Singapore, Italy,
the United Kingdom, and Japan.  A significant change in the economy or
deterioration in United States trade relations or the economic or political
stability of those foreign markets could have a material adverse effect on our
business, results of operations, and financial condition.




11




Fluctuation
in the value of the U.S. dollar as compared to the currencies of non U.S.
countries in which we have sales may result in decreased international sales,
which could have a material adverse affect  on our
business.
 
 Sales to
foreign customers are invoiced in U.S. dollars.  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.


Risks
Associated With Ownership of Our Securities




We
have not paid cash dividends and it is unlikely that we will pay cash dividends
in the foreseeable future.




We plan
to use all of our earnings, to the extent we have earnings, to fund our
operations. We do not plan to pay any cash dividends in the foreseeable future.
We cannot guarantee that we will, at any time, generate sufficient surplus cash
that would be available for distribution as a dividend to the holders of our
common stock. You should not expect to receive cash dividends on our common
stock.




We
have the ability to issue additional shares of our common stock without asking
for shareholder approval, which could cause your investment to be
diluted.




Our
Articles of Incorporation currently authorize the Board of Directors to issue up
to 15,000,000 shares of common stock. The power of the Board of Directors to
issue shares of common stock or warrants or options to purchase shares of common
stock is generally not subject to shareholder approval. Accordingly, any
additional issuance of our common stock may have the effect of further diluting
your investment.




We
may raise additional capital through a securities offering that could dilute
your ownership interest.




We
require substantial working capital to fund our business. If we raise additional
funds through the issuance of equity, equity-related or convertible debt
securities, these securities may have rights, preferences or privileges senior
to those of the holders of our common stock. The issuance of additional common
stock or securities convertible into common stock by our management will also
have the effect of further diluting the proportionate equity interest and voting
power of holders of our common stock.




There
is no active public market for our securities, so you may not be able to
liquidate your securities if you need money.




Trading
of our common stock is sporadic. It is not likely that an active market for our
common stock will develop or be sustained soon. You may not be able to liquidate
our securities if you need money.




We
are subject to the Penny Stock Rules and these rules may adversely affect
trading in our common stock.




Our
common stock is a “low-priced” security under rules promulgated under the
Securities Exchange Act of 1934. In accordance with these rules, broker-dealers
participating in transactions in low-priced securities must first deliver a risk
disclosure document which describes the risks associated with such stocks, the
broker-dealer’s duties in selling the stock, the customer’s rights and remedies
and certain market and other information. Furthermore, the broker-dealer must
make a suitability determination approving the customer for low-priced stock
transactions based on the customer’s financial situation, investment experience
and objectives. Broker-dealers must also disclose these restrictions in writing
to the customer, obtain specific written consent from the customer, and provide
monthly account statements to the customer. The effect of these restrictions
probably decreases the willingness of broker-dealers to make a market in our
common stock, decreases liquidity of our common stock and increases transaction
costs for sales and purchases of our common stock as compared to other
securities.




12




ITEM
2.  PROPERTY




Our AML
administrative, engineering, and manufacturing facility is located in a 25,017
square foot leased building in Camarillo, California. The lease for this space
expired in April 2008 and we entered into a new lease, which will be expiring in
April 2015. Our MPI division operates in a 3,868 square foot industrial/office
condominium located at 3350 Scott Boulevard in Santa Clara, California. The
building was purchased on February 3, 2006. We had relocated the Mica-Tech
operation to the AML facility in May 2008. We believe that our current
facilities are in reasonable condition and provide adequate expansion
capabilities.




ITEM
3.  LEGAL PROCEEDINGS




We may be
subject to, from time to time, various legal proceedings relating to claims
arising out of our operations in the ordinary course of our business. We are not
currently a 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




None.




PART
II




ITEM
5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS




Market
Information




Our
common stock is currently quoted on the OTC Bulletin Board under the symbol
“AMLJ.OB”.  The table below sets forth for the periods indicated the
high and low bid prices for the Company’s common stock for the periods it was
quoted on the OTC Bulletin Board. The bid prices represent inter-dealer
quotations, without adjustments for retail mark-ups, markdowns or commissions
and may not necessarily represent actual transactions. The source of the
information for the high and low bid prices is the OTC Bulletin
Board.




Price
      Range of
                Common
      StockHigh
            
            
            LowFiscal
      year ended March 31, 2008First
      quarter
            
            $
            1.65
            
            
            $
            1.30Second
      quarter
            
            $
            1.40
            
            
            $
            0.87Third
      quarter
            
            $
            1.22
            
            
            $
            0.81Fourth
      quarter
            
            $
            1.50
            
            
            $
            0.89Fiscal
      year ended March 31, 2009First
      quarter
            
            $
            1.64
            
            
            $
            1.18Second
      quarter
            
            $
            1.18
            
            
            $
            0.87Third
      quarter
            
            $
            0.98
            
            
            $
            0.37Fourth
      quarter
            
            $
            0.64
            
            
            $
            0.33




At
June 5, 2009, there were approximately 87 holders of record of our 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 our Board of Directors and would depend on operations, financial
and business requirements, compliance with bank covenants, and other
factors.




13




Equity
Compensation Plans




The
following table gives information about our common stock that may be issued
under our existing equity compensation plans as of March 31,
2009:




Equity
Compensation Plan Information




Plan
      Category
            
            Number
      of Securities to
                be
      Issued Upon Exercise
                of
      Outstanding Options
                and
      Rights (a)
            
            
            Weighted
      Average
                Exercise
      Price of
                Outstanding
      Options
                and
      Rights (b)
            
            
            Number
      of Securities Remaining
                Available
      for Future Issuance
                Under
      Equity Compensation Plans
                (Excluding
      Securities Reflected in
                Column (a))(c)1995
      Equity compensation plans approved by
      security holders
            
            None
            
            
            None
            
            
            None2005
      Equity compensation plans approved by
      security holders(1)
            
            
            2,924,450
            
            
            $
            1.07
            
            
            
            1,795,900Total
            
            
            2,924,450
            
            
            $
            1.07
            
            
            
            1,795,900







(1)
            In
      November 2005, we established the 2005 Equity Incentive Plan
      (“2005 Plan”) with 150,000 shares initially approved and subject to
      the 2005 Plan. Incentive stock option awards may be granted under the
      2005 Plan only to employees (including officers and directors who are
      also employees) of the Company or of a Parent or subsidiary of the
      Company. All other awards (including nonqualified stock options,
      restricted stock or stock awards) under the 2005 Plan may be granted
      to employees, officers, directors, consultants, independent contractors
      and advisors of the Company or any Parent or Subsidiary of the Company,
      provided such consultants, contractors and advisors render bona fide
      services not in connection with the offer and sale of securities in a
      capital-raising transaction. The Board of Directors has full authority to
      administer the 2005 Plan, including but not limited to, the authority
      to designate eligible persons, grant awards, interpret the 2005 Plan,
      prescribe, rescind or amend the rules and regulations of the
      2005 Plan, make all other determinations necessary or advisable for
      the administration of the 2005 Plan, and also delegate to one or more
      executive officers of the Company the authority to grant an Award under
      the 2005 Plan to plan participants who are not insiders of the
      Company. The number of shares reserved and available for grant and
      issuance shall be increased on the first day of January of each year so
      that the total of all Common Stock available for Awards shall be the
      maximum amount allowable under Regulation 260.140.45 of Title 10
      of the California Code of Regulations. The total of all Common Stock
      available for grant and issuance under the 2005 Plan was
      3,196,400 shares as of March 31, 2009. The number of shares
      initially approved for issuance under the 2005 Plan was
      150,000 shares of our common stock. The Company filed a registration
      statement on Form S-8 with SEC to register the unregistered shares
      under the Plan or 2,927,000 shares on May 20, 2008. Unless earlier
      terminated as provided in the plan, the 2005 Plan will terminate on
      October 31, 2015.




ITEM
6.  SELECTED FINANCIAL DATA




We are currently not required to
provide the information required by Item 301 of Regulation S-K.




ITEM
7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS




Overview




Our
business is comprised of three reportable segments, AML
Communications, Inc. (“AML”), Microwave Power, Inc. (“MPI”), and
Mica-Tech, Inc (“Mica-Tech”). AML and MPI design, manufacture, and market RF and
microwave amplifiers and subsystems serving, primarily, the Defense Electronic
Warfare Market. AML represented 82.2% of our 2009 product revenue and MPI
represented 13.4% of our 2009 product revenue. On April 11, 2007, we
acquired a controlling interest of Mica-Tech and subsequently acquired the
remaining interest on February 19, 2008. Our wholly owned subsidiary
Mica-Tech designs, manufactures, and markets an intelligent communication system
to provide Supervisory Control And Data Acquisition (SCADA) of the electric
power grid. Mica-Tech represented 4.4% of our 2009 revenues.




Our AML
segment includes low noise, power amplifiers and integrated sub assemblies with
frequencies that range from 50 kHz to 26 GHz. In February 2001, we
made a strategic decision to focus our resources on 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 $3.7 million in our 2003 fiscal
year to $12.7 million in our 2009 fiscal year.




14




We
consider the AML segment to be our core business since it has a larger revenue
base, and investments have been made in this segment that address long term
growth. We devote most of our management time and other resources to improving
the prospects for this segment. Most of our sales and marketing expenses are
from the AML segment. The majority of our research and development spending is
dedicated to this segment as well.




Our MPI
segment includes solid state microwave amplifiers operating in the frequency
range from 1 to 40 GHz with output power from 10mW to 500 W. In
June 2004, we acquired MPI and have since operated it as a division of AML.
The MPI division operates independently, with its own marketing, production, and
general management team.




Our
Mica-Tech segment designs and manufactures the UltraSatNet, an Intelligent
Satellite Utility Communication Solution for the monitoring and control of power
grid distribution. The operating software and hardware are designed in-house
with support from outside consultants. Since the completion of acquisition of
the remaining interest of Mica-Tech in February 2008, steps are being taken to
bolster Mica-Tech’s financial structure while the company pursues the utility
SCADA market.




Results
of Operations




The
following table summarizes our results of operations both in dollars and as a
percentage of net sales for the fiscal years ended March 31, 2009 and
2008.




For
the fiscal year ended March 31, 2009:




(Dollars
      in thousands)
            
            AML
            
            
            
            
            
            MPI
            
            
            
            
            
            Mica-Tech
            
            
            
            
            
            TotalRevenuesDefense
      Microwave and other
            
            $
            10,924
            
            
            
            82.2
            %
            
            $
            1,777
            
            
            
            13.4
            %
            
            $
            —
            
            
            
            —
            
            
            $
            12,701
            
            
            
            95.6
            %Cellular,
      wireless telephony andother
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Satellite
      communication systems
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            587
            
            
            
            4.4
            %
            
            
            587
            
            
            
            4.4Total
      net sales
            
            
            10,924
            
            
            
            82.2
            %
            
            
            1,777
            
            
            
            13.4
            %
            
            
            587
            
            
            
            4.4
            %
            
            
            13,288
            
            
            
            100.0
            %Cost
      of goods sold
            
            
            6,329
            
            
            
            47.6
            
            
            
            834
            
            
            
            6.3
            
            
            
            386
            
            
            
            2.9
            
            
            
            7,549
            
            
            
            56.8Gross
      profit
            
            $
            4,595
            
            
            
            34.6
            %
            
            $
            943
            
            
            
            7.1
            %
            
            $
            201
            
            
            
            1.5
            %
            
            $
            5,739
            
            
            
            43.2
            %Operating
      expenses:Selling,
      general and
              administrative
            
            
            1,867
            
            
            
            14.1
            
            
            
            797
            
            
            
            6.0
            
            
            
            261
            
            
            
            2.0
            
            
            
            2,925
            
            
            
            22.0Research
      and development
            
            
            1,625
            
            
            
            12.2
            
            
            
            152
            
            
            
            1.1
            
            
            
            155
            
            
            
            1.2
            
            
            
            1,932
            
            
            
            14.5Income
      (loss) from operations
            
            
            1,103
            
            
            
            8.3
            
            
            
            (6
            )
            
            
            (0.0
            )
            
            
            (215
            )
            
            
            (1.6
            )
            
            
            882
            
            
            
            6.7Other
      income/(Interest & other expense), net
            
            
            (89
            )
            
            
            (0.7
            )
            
            
            6
            
            
            
            0.0
            
            
            
            550
            
            
            
            4.1
            
            
            
            467
            
            
            
            3.5Income
      (loss) before income tax and minority interest
            
            
            1,014
            
            
            
            7.6
            
            
            
            0
            
            
            
            0.0
            
            
            
            335
            
            
            
            2.5
            
            
            
            1,349
            
            
            
            10.2Income
      tax expense (credit)
            
            
            293
            
            
            
            2.2
            
            
            
            —
            
            
            
            0.0
            
            
            
            97
            
            
            
            0.7
            
            
            
            390
            
            
            
            2.9Minority
      interest
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            0.0Net
      Income (loss)
            
            $
            721
            
            
            
            5.4
            %
            
            $
            0
            
            
            
            0.0
            %
            
            $
            238
            
            
            
            1.8
            %
            
            $
            959
            
            
            
            7.2
            %







For
the fiscal year ended March 31, 2008:




15


(Dollars
      in thousands)
              
              AML
              
              
              
              
              
              MPI
              
              
              
              
              
              Mica-Tech
              
              
              
              
              
              TotalRevenuesDefense
      Microwave and other
              
              $
              9,871
              
              
              
              77.7
              %
              
              $
              1,846
              
              
              
              14.5
              %
              
              $
              —
              
              
              
              —
              
              
              $
              11,717
              
              
              
              92.2
              %Cellular,
      wireless telephony andother
              
              
              2
              
              
              
              0.0
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              2
              
              
              
              0.0Satellite
      communication systems
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              992
              
              
              
              7.8
              %
              
              
              992
              
              
              
              7.8Total
      net sales
              
              
              9,873
              
              
              
              77.7
              %
              
              
              1,846
              
              
              
              14.5
              %
              
              
              992
              
              
              
              7.8
              %
              
              
              12,711
              
              
              
              100.0
              %Cost
      of goods sold
              
              
              5,882
              
              
              
              46.3
              
              
              
              751
              
              
              
              5.9
              
              
              
              562
              
              
              
              4.4
              
              
              
              7,195
              
              
              
              56.6Gross
      profit
              
              $
              3,991
              
              
              
              31.4
              %
              
              $
              1,095
              
              
              
              8.6
              %
              
              $
              430
              
              
              
              3.4
              %
              
              $
              5,516
              
              
              
              43.4
              %Operating
      expenses:Selling,
      general and
                administrative
              
              
              1,658
              
              
              
              13.0
              
              
              
              637
              
              
              
              5.0
              
              
              
              796
              
              
              
              6.3
              
              
              
              3,091
              
              
              
              24.3Research
      and development
              
              
              1,624
              
              
              
              12.8
              
              
              
              170
              
              
              
              1.3
              
              
              
              495
              
              
              
              3.9
              
              
              
              2,289
              
              
              
              18.0Income
      (loss) from operations
              
              
              709
              
              
              
              5.6
              
              
              
              288
              
              
              
              2.3
              
              
              
              (861
              )
              
              
              (6.8
              )
              
              
              136
              
              
              
              1.1Other
      income/(Interest & other expense), net
              
              
              (125
              )
              
              
              (1.0
              )
              
              
              6
              
              
              
              0.0
              
              
              
              (64
              )
              
              
              (0.5
              )
              
              
              (183
              )
              
              
              (1.4
              )Income
      (loss) before income tax and minority interest
              
              
              584
              
              
              
              4.6
              
              
              
              294
              
              
              
              2.3
              
              
              
              (925
              )
              
              
              (7.3
              )
              
              
              (47
              )
              
              
              (0.4
              )Income
      tax expense (credit)
              
              
              (1,757
              )
              
              
              (13.8
              )
              
              
              —
              
              
              
              0.0
              
              
              
              2
              
              
              
              0.0
              
              
              
              (1,755
              )
              
              
              (13.8
              )Minority
      interest
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              464
              
              
              
              3.7Net
      Income (loss)
              
              $
              2,341
              
              
              
              18.4
              %
              
              $
              294
              
              
              
              2.3
              %
              
              $
              (927
              )
              
              
              (7.3
              )%
              
              $
              2,172
              
              
              
              17.1
              %


Fiscal
Years Ended March 31, 2009 and 2008




Net sales.  Net
sales in our 2009 fiscal year were $13.3 million, compared to
$12.7 million in our 2008 fiscal year. AML’s revenues increased by
$1.1 million as a result of increased bookings from both short and long
term programs as well as through the addition of new customers, which were a
result of a significant investment in research and development, which is more
fully described in the paragraph below. Revenues from our MPI division decreased
by $69,000 due to a reduction in incidental orders, which was a result of the
recent national and international economic slowdown. Mica-Tech’s revenues
decreased by $405,000 as a result of a slowdown in selling existing products as
Mica-Tech has encountered slow penetration in the traditional utilities
market.




AML and,
to a lesser extent, MPI have devoted significant resources during the last four
fiscal years towards the development of products that address long term
contracts to reduce our reliance on spot-market and incidental orders. These
investments and associated strategy have, in management’s opinion, reached
maturity. Starting in our 2008 fiscal year, the Company started to benefit from
the investments made as these programs entered their production phases and new
program orders were granted from recurring and new customers.




Domestic
and international net sales were approximately 78.1% and 21.9% of our net sales,
respectively, for the year ended March 31, 2009. For the year ended
March 31, 2008, domestic and international net sales were approximately
75.9% and 24.1% of our net sales, respectively. Net sales are attributed to
geographic areas based on the location of the customer to which our products are
shipped. International net sales primarily consist of sales to customers in
France, Turkey, Singapore, Canada, Germany, and Israel. However, certain OEM
customers take possession of our products domestically and then distribute these
products to their international customers. Because we account for all of those
net sales as domestic revenues, we cannot be certain of the extent to which our
domestic and international net sales is impacted by the practices of our
customers.




Gross
profit.  Gross profit in our 2009 fiscal year was
$5.7 million, or 43.2% of net sales, compared to a gross profit in our 2008
fiscal year, of $5.5 million, or 43.4% of net sales. Change in gross
profit, as a percentage of net sales, is insignificant.




Selling, general, and administrative
costs.  Selling, general and administrative costs for our 2009
fiscal year were $2.9 million, or 22.0% of net sales, compared to
$3.1 million, or 24.3% of net sales, for our 2008 fiscal year. Selling,
general and administrative costs for AML and MPI increased by $369,000, compared
to the same period of the prior year, due to increased payroll related expenses,
which was due to annual salary increases and bonus reserve, and amortization
expenses. MPI recorded a one time catch-up entry of $162,000 to book
amortization expenses associated with its intangible assets from June 19, 2004
to March 31, 2007. Mica-Tech’s administrative cost has been reduced by $535,000
mainly due to a reduction in payroll related expenses and consulting expenses as
a result of cost management and reduced headcounts at Mica-Tech. To reduce
operating costs, we relocated the Mica-Tech operation to the AML facility in May
2008.




Research and development
costs.  Research and development costs for our 2009 fiscal year
were $1.9 million, or 14.5% of net sales, compared to $2.3 million, or
18.0% of net sales, for the corresponding period in our 2008 fiscal year. Change
in R&D costs for both AML and MPI is insignificant compared to the same
period of the last year. We are committed to continue our investment in R&D
projects to address customer needs for short and long term program orders.
Mica-Tech’s R&D expenses are reduced by $340,000, mainly due to a reduction
in payroll related expenses as a result of the reduced headcounts and a
reduction in outside consulting expenses as a part of the cost
management.




16




Other net
income.  We recorded a net other income of $467,000 for our
2009 fiscal year and a net other expense of $183,000 for our 2008 fiscal year.
During our 2009 fiscal year, Mica-Tech realized a special gain of $521,000 from
the settlement of a promissory note and a special gain of $45,000 from the
settlement of royalties payable to Southern California Edison. These are
considered a one-time event.




Income (loss) before income tax and
minority interest.  Income before income tax and minority
interest was $1.3 million in our 2009 fiscal year, compared to loss before
income tax and minority interest of $47,000 in our 2008 fiscal year. The
significant improvement in income before income tax and minority interest as
compared to the last fiscal year is mainly due to increased revenues in AML
segment and special gains recognized during this year.




Income
before income tax and minority interest in AML segment was $1.0 million in our
2009 fiscal year, compared to $584,000 in our 2008 fiscal year. This increase is
mainly attributable to increased revenue in this segment.




MPI
segment had $0 income before income tax and minority interest in our 2009 fiscal
year, compared to $294,000 in our 2008 fiscal year. This significant reduction
in MPI’s income before income tax and minority interest is attributed to
decreased revenues and a one time catch-up entry of $162,000 to its amortization
expenses.




Income
before income tax and minority interest in Mica-Tech segment was $335,000 in our
2009 fiscal year, compared to loss before income tax and minority interest of
$925,000 in our 2008 fiscal year. The reduction in operating loss is
attributable to cost cutting measures and streamlining of the operation.
Additionally, Mica-Tech realized a special gain of $521,000 from the settlement
of a promissory note and a special gain of $45,000 from the settlement of
royalties payable to Southern California Edison.




Minority
Interest. Minority interests for fiscal 2009 is $0, compared to
$464,000 in fiscal 2008. Minority interests represented minority ownership
interests in Mica-Tech consolidated in the Company’s consolidated financial
statement.




Provision for income taxes.
During our 2009 fiscal year, the company utilized its deferred tax assets
reserve to record income tax expenses of $390,000. The company has no tax
liability as of March 31, 2009 due to the deferred tax benefits accounted for in
the prior years. We recorded tax credits of $1,755,000 in our 2008 fiscal year
and identified tax credits on the balance sheet as a Deferred Tax Allowance.
This represents both tax credits and net operating losses carried
forward.




Net income.Net
income was $959,000 or $0.09 per share in our 2009 fiscal year, compared to net
income of $2.2 million, or $0.21 per share in our 2008 fiscal year. Excluding a
deferred tax allowance benefit of $1.8 million in our 2008 fiscal year, the
Company’s pretax earnings increased from $417,000 to $1.3 million, up $932,000
over the prior fiscal year, which reflected efficiency improvements and higher
value added products.




Net income from the AML segment was
$721,000 in our 2009 fiscal year and $2.3 million in our 2008 fiscal
year.




Net income from the MPI segment was $0
in our 2009 fiscal year and $294,000 in our 2008 fiscal year.




Net income from the Mica-Tech segment
was $238,000 in our 2009 fiscal year, compared to net loss of $927,000 in our
2008 fiscal year.




In 2010,
we expect total operating expenses to increase as we continue to invest in
infrastructure and new product development. We expect operating expenses
generally will increase more slowly than increases in revenue.




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.




At March
31, 2009, AML had a line of credit agreement with Bridge Bank. On September 16,
2008, we signed a Business Financing Modification Agreement (the “Modification
Agreement”) with Bridge Bank to renew our line of credit, with a credit facility
of $1.3 million. Of this $1.3 million, $1.0 million may be used for
cash advances against accounts receivables and $0.3 million may be used for
equipment advances. Our ability to borrow under this agreement varies based upon
eligible accounts receivable and eligible equipment purchases. We are obligated
to pay the bank a finance charge at a rate per year equal to the prime rate,
which in no event shall be less than 5.00%, plus 0.25% with respect to cash
advances, and a rate of such prime rate plus 1.0% with respect to equipment
advances. We were obligated to pay a facility fee of $2,500 upon execution of
the Modification Agreement and annually thereafter. We were also obligated to
pay a one-time equipment loan facility fee of $2,500 upon execution of the
Modification Agreement.  We must maintain certain financial
requirements, including a minimum Asset Coverage Ratio of 1.50 to 1.00. We are
also required to stay within 80% of our planned quarterly revenue. We were in
compliance with these requirements at March 31, 2009; however, there is no
assurance that we will be in compliance at future dates. This agreement to
provide cash advances against accounts receivables terminates on August 15, 2010
or upon a date that the bank or AML chooses to terminate the agreement. Any
unpaid balance is due and payable pursuant to the agreement on the termination
date. At March 31, 2009, we had an outstanding balance of $0 under the accounts
receivable agreement and $442,000 under the equipment financing agreement, which
includes amounts owed under prior lines of credit with Bridge Bank. Our
remaining borrowing capacity is approximately $1,000,000 under the accounts
receivable agreement and $0 under the equipment financing agreement as the
availability period for the equipment term loan expired as of December 31,
2008.




17




At
March 31, 2009, we had $1,581,000 in cash and cash equivalents. Our
operating activities provided cash of approximately $806,000 in our 2009 fiscal
year, compared to using cash of $420,000 in 2008. Net cash used in investing
activities amounted to $105,000 in 2009, primarily due to capital equipment
expenditures, as compared to net cash used in investing activities of $294,000
in 2008. Net cash used in financing activities was $325,000 in 2009 and $159,000
in 2008, due to payments on outstanding notes payable and line of
credit.




We
anticipate capital expenditures of approximately $700,000 in our 2010 fiscal
year. We believe that funds for these expenditures will be provided by our
operating activities. However, we may choose to finance some of these
expenditures through our financing agreement with Bridge Bank. At March 31,
2009, our remaining borrowing capacity under this agreement was
$1,000,000.




We may
attempt to procure additional sources of financing in the event that the capital
available as of March 31, 2009 is insufficient for our operating needs and
capital expenditures. These sources may include, but are not limited to,
additional sales of our equity and debt securities. There are, however, no
assurances that we will be able to successfully obtain additional financing at
terms acceptable to us. Failure to obtain such financing could have a material
adverse effect on our ability to operate as a going concern.




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.




Contractual
Obligations




The
following table summarizes our contractual obligations, including purchase
commitments at March 31, 2009, and the effect that such obligations are
expected to have on our liquidity and cash flow in future periods.




Payment
      due by periodContractual
      Cash Obligations
              (in
      thousands)
            
            Total
            
            
            Less
      than 1 year
            
            
            1-3
      years
            
            
            3-5
      years
            
            
            ThereafterOperating
      leases
            
            $
            1,323
            
            
            $
            207
            
            
            $
            426
            
            
            $
            443
            
            
            $
            247Line
      of credit
            
            
            496
            
            
            
            380
            
            
            
            87
            
            
            
            29
            
            
            
            -Notes
      payable
            
            
            652
            
            
            
            58
            
            
            
            13
            
            
            
            14
            
            
            
            566Balance
      due on the settlement
            
            
            20
            
            
            
            20
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
      contractual cash obligations
            
            $
            2,491
            
            
            $
            665
            
            
            $
            527
            
            
            $
            486
            
            
            $
            813




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.




18




Revenue
recognition.  We generate our revenue through the sale of
products. Our policy is to recognize revenue when the applicable revenue
recognition criteria have been met, which generally include the
following:




•
            Persuasive evidence of an
      arrangement exists;




•
            Delivery has occurred or
      services have been rendered;




•
            Price is fixed or
      determinable; and




•
            Collectability is reasonably
      assured




Revenue
from the sale of products is generally recognized after both the goods are
shipped to the customer and acceptance has been received, if required. Our
products are custom made for our customers, who primarily consist of original
engineer manufacturers (OEMs), and we do not accept returns. Our products are
shipped complete and ready to be incorporated into higher level assemblies by
our customers. The terms of the customer arrangements generally pass title and
risk of ownership to the customer at the time of shipment.




Recording
revenue from the sale of products involves the use of estimates and management
judgment. We must make a determination at the time of sale whether the customer
has the ability to make payments in accordance with arrangements. While we do
utilize past payment history, and, to the extent available for new customers,
public credit information in making our assessment, the determination of whether
collectability is reasonably assured is ultimately a judgment decision that must
be made by management.




Allowance for Doubtful
Accounts.  We maintain an allowance for doubtful accounts
receivable based on customer-specific allowances, as well as a general
allowance. Specific allowances are maintained for customers which are determined
to have a high degree of collectability risk based on such factors, among
others, as: (i) the aging of the accounts receivable balance; (ii) the
customer’s past payment experience; or (iii) a deterioration in the
customer’s financial condition, evidenced by weak financial condition and/or
continued poor operating results, reduced credit ratings, and/or a bankruptcy
filing. In addition to the specific allowance, we maintain a general allowance
for all of our accounts receivables that are not covered by a specific
allowance. The general allowance is established based on such factors, among
others, as: (i) the total balance of the outstanding accounts receivable,
including considerations of the aging categories of those accounts receivable;
(ii) past history of uncollectible accounts receivable write-offs; and
(iii) the overall creditworthiness of the customer base. A considerable
amount of judgment is required in assessing the realizability of accounts
receivables. Should any of the factors considered in determining the adequacy of
the overall allowance change, an adjustment to the provision for doubtful
accounts receivable may be necessary.




Inventory.  Inventories
are stated at the lower of cost or market, cost being determined on the
first-in, first-out method. Inventories are written down if the estimated net
realizable value is less than the recorded value. We review the carrying cost of
our inventories by product each quarter to determine the adequacy of our
reserves for obsolescence. In accounting for inventories we must make estimates
regarding the estimated net realizable value of our inventory. This estimate is
based, in part, on our forecasts of future sales and age of the
inventory.




Intangible
Assets.  We test intangible assets with indefinite lives for
impairment on an annual basis or more frequently if certain events occur. If the
assets are considered to be impaired, the impairment to be recognized will be
measured by the amount in which the carrying amount exceeds the fair value of
the assets. For our intangible assets with finite lives, including our customer
lists, existing technology, customer relationship, trademarks and brand names,
and patents, we amortize the costs of the assets over their useful lives and
assess impairment at least annually or whenever events and circumstances suggest
the carrying value of an asset may not be recoverable. Determining the life of
the assets with finite lives is judgmental in nature and involves the use of
estimates and assumptions. These estimates and assumptions involve a variety of
factors, including future market growth and conditions, forecasted revenues and
costs and a strategic review of our business and operations. We base our fair
value estimates on assumptions we believe to be reasonable but that are
unpredictable and inherently uncertain. Actual future results may differ from
those estimates. In the event we determine that an intangible asset is impaired
in the future, an adjustment to the value of the asset would be charged to
earnings in the period such determination is made.




Existing
Technology.  MPI’s existing technology is based on a patent
issued in 1990, which continues to be the main technology of MPI. It is a
substrate deposition technology that is mature and with no replacement
technology forecasted.


19


ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




INDEX
TO FINANCIAL STATEMENTS




Report
      of Independent Registered Public Accounting Firm
            22Consolidated
      Balance Sheet as of March 31, 2009 and March 31, 2008
            23Consolidated
      Statements of Income for the years ended March 31, 2009 and
      March 31, 2008
            24Consolidated
      Statements of Stockholders’ Equity for the years ended March 31, 2009
      and March 31, 2008
            25Consolidated
      Statements of Cash Flows for the years ended March 31, 2009 and
      March 31, 2008
            26Notes
      to Consolidated Financial Statements
            27




20





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




Board of
Directors and Shareholders




AML
Communications, Inc.


Camarillo,
CA




We have
audited the accompanying consolidated balance sheets of AML
Communications, Inc. and subsidiaries as of March 31, 2009, and the
related consolidated statements of income, stockholders’ equity, and cash flows
for each of the years in the two-year period ended March 31, 2009. These
consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.




We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of AML
Communications, Inc. and subsidiary as of March 31, 2009, and the
results of its operations and its cash flows for each of the years in the
two-year period ended March 31, 2009 in conformity with accounting
principles generally accepted in the United States of America.




/s/
      KABANI & COMPANY, INC.CERTIFIED
      PUBLIC ACCOUNTANTSLos
      Angeles, California
              June 29,
      2009




21




AML
COMMUNICATIONS, INC. & SUBSIDIARIES




CONSOLIDATED
BALANCE SHEETS




ASSETS
            
            March
      31, 2009
            
            
            March
      31, 2008Current
      Assets:Cash
      and cash equivalents
            
            $
            1,581,000
            
            
            $
            1,205,000Accounts
      receivable, net
            
            
            2,367,000
            
            
            
            2,303,000Inventories,
      net
            
            
            3,290,000
            
            
            
            2,873,000Note
      receivable
            
            
            7,000
            
            
            
            5,000Prepaid
      expenses
            
            
            189,000
            
            
            
            164,000Deferred
      tax asset—current
            
            
            867,000
            
            
            
            831,000Total
      current assets
            
            
            8,301,000
            
            
            
            7,381,000Property
      and equipment, at cost
            
            
            7,313,000
            
            
            
            7,244,000Less:
      Accumulated depreciation
            
            
            (5,229,000
            )
            
            
            (4,566,000
            )Property
      and equipment, net
            
            
            2,084,000
            
            
            
            2,678,000Deferred
      tax asset
            
            
            3,916,000
            
            
            
            3,633,000Intangible
      Assets:Technologies,
      net
            
            
            1,778,000
            
            
            
            2,695,000Patents,
      net
            
            
            75,000
            
            
            
            99,000Customer
      relationship, net
            
            
            41,000
            
            
            
            82,000Trademarks
      and brand names
            
            
            203,000
            
            
            
            220,0002,097,000
            
            
            
            3,096,000Deposits
            
            
            33,000
            
            
            
            43,000$
            16,431,000
            
            
            $
            16,831,000LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      Liabilities:Line
      of credit
            
            $
            496,000
            
            
            $
            874,000Accounts
      payable
            
            
            854,000
            
            
            
            1,312,000Current
      portion of long term debt
            
            
            58,000
            
            
            
            57,000Accrued
      expenses:Accrued
      payroll and payroll related expenses
            
            
            659,000
            
            
            
            737,000Accrued
      income taxes
            
            
            —
            
            
            
            27,000Other
      accrued liabilities
            
            
            242,000
            
            
            
            322,000Total
      current liabilities
            
            
            2,309,000
            
            
            
            3,329,000Long
      term notes payable
            
            
            594,000
            
            
            
            1,138,000Commitments
            
            
            —
            
            
            
            —Stockholders’
      Equity:Common stock, $0.01 par
      value:15,000,000 shares authorized; 10,654,665 and 10,422,166 shares
      issued and outstanding at March 31, 2009 and March 31, 2008,
      respectively
            
            
            106,000
            
            
            
            104,000Capital
      in excess of par value
            
            
            14,034,000
            
            
            
            13,831,000Accumulated
      deficit
            
            
            (612,000
            )
            
            
            (1,571,000
            )Total
      stockholders’ equity
            
            
            13,528,000
            
            
            
            12,364,000$
            16,431,000
            
            
            $
            16,831,000




The
accompanying notes are an integral part to these consolidated financial
statements




22




AML
COMMUNICATIONS, INC.




CONSOLIDATED
STATEMENTS OF INCOME




For
      the Years EndedMarch 31, 2009
            
            
            March 31, 2008Net
      sales
            
            $
            13,288,000
            
            
            $
            12,711,000Cost
      of goods sold
            
            
            7,549,000
            
            
            
            7,195,000Gross
      profit
            
            
            5,739,000
            
            
            
            5,516,000Operating
      Expenses:Selling,
      general and administrative
            
            
            2,925,000
            
            
            
            3,091,000Research
      and development
            
            
            1,932,000
            
            
            
            2,289,000Total
      operating expenses
            
            
            4,857,000
            
            
            
            5,380,000Income
      from operations
            
            
            882,000
            
            
            
            136,000Gain
      on settlement of debt
            
            
            567,000
            
            
            
            -Interest
      & other expense
            
            
            (100,000
            )
            
            
            (183,000
            )Total
      other income (expense)
            
            
            467,000
            
            
            
            (183,000
            )Income
      (loss) before provision for income taxes and minority
    interest
            
            
            1,349,000
            
            
            
            (47,000
            )Provision
      for income taxes
            
            
            (390,000
            )
            
            
            1,755,000Minority
      interest
            
            
            -
            
            
            
            464,000Net
      income
            
            $
            959,000
            
            
            $
            2,172,000Basic
      earnings per common share
            
            $
            0.09
            
            
            $
            0.21Basic
      weighted average number of shares of common stock
    outstanding
            
            
            10,575,000
            
            
            
            10,271,000Diluted
      earnings per common share
            
            $
            0.09
            
            
            $
            0.20Diluted
      weighted average number of shares of common stock
    outstanding
            
            
            10,688,000
            
            
            
            10,807,000




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




23




AML
COMMUNICATIONS, INC.




CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY




FOR
THE YEARS ENDED MARCH 31, 2009 AND 2008




Common
      Stock
            
            
            Capital in
              Excess of
            
            
            AccumulatedShares
            
            
            Amount
            
            
            Par Value
            
            
            Deficit
            
            
            TotalsBalance,
      March 31, 2007
            
            
            10,256,666
            
            
            $
            103,000
            
            
            $
            13,616,000
            
            
            $
            (3,743,000
            )
            
            $
            9,976,000Options
      & Warrants Exercised
            
            
            165,500
            
            
            
            1,000
            
            
            
            63,000
            
            
            
            —
            
            
            
            64,000Stock
      Options Compensation
            
            
            —
            
            
            
            —
            
            
            
            152,000
            
            
            
            —
            
            
            
            152,000Net
      Income
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            2,172,000
            
            
            
            2,172,000Balance,
      March 31, 2008
            
            
            10,422,166
            
            
            
            104,000
            
            
            
            13,831,000
            
            
            
            (1,571,000
            )
            
            
            12,364,000Options
      & Warrants Exercised
            
            
            232,499
            
            
            
            2,000
            
            
            
            73,000
            
            
            
            —
            
            
            
            75,000Stock
      Options Compensation
            
            
            —
            
            
            
            —
            
            
            
            130,000
            
            
            
            —
            
            
            
            130,000Net
      Income
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            959,000
            
            
            
            959,000Balance,
      March 31, 2009
            
            
            10,654,665
            
            
            $
            106,000
            
            
            $
            14,034,000
            
            
            $
            (612,000
            )
            
            $
            13,528,000




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




24




AML
COMMUNICATIONS, INC.




CONSOLIDATED
STATEMENTS OF CASH FLOWS




For
      the Years EndedMarch 31, 2009
            
            
            March 31, 2008Cash
      Flows from Operating Activities:Net
      Income
            
            $
            959,000
            
            
            $
            2,172,000Adjustments
      to reconcile net income to net cash provided by (used in) operating
      activities:Depreciation
            
            
            699,000
            
            
            
            642,000Bad
      debt expense
            
            
            3,000
            
            
            
            (17,000
            )Inventory
      reserves
            
            
            (85,000
            )
            
            
            16,000Stock
      options compensation
            
            
            130,000
            
            
            
            152,000Amortization
            
            
            385,000
            
            
            
            358,000Gain on settlement of
      debt
            
            
            (567,000
            )
            
            
            -Minority
      interest
            
            
            -
            
            
            
            (464,000
            )Changes
      in assets and liabilities:Decrease
      (increase) in:Accounts
      receivable
            
            
            (67,000
            )
            
            
            (932,000
            )Inventories
            
            
            (331,000
            )
            
            
            (860,000
            )Other
      current assets
            
            
            (18,000
            )
            
            
            (75,000
            )Other
      assets—Deferred Tax Asset
            
            
            295,000
            
            
            
            (1,784,000
            )Increase
      (decrease) in:Accounts
      payable
            
            
            (413,000
            )
            
            
            79,000Accrued
      income taxes
            
            
            (27,000
            )
            
            
            27,000Accrued
      expenses
            
            
            (157,000
            )
            
            
            266,000Net
      cash provided by (used in) operating activities
            
            
            806,000
            
            
            
            (420,000
            )Cash
      Flows from Investing Activities:Purchases
      of property and equipment
            
            
            (105,000
            )
            
            
            (253,000
            )Cash
      used in Mica-Tech acquisition
            
            
            -
            
            
            
            (41,000
            )Net
      cash used in investing activities
            
            
            (105,000
            )
            
            
            (294,000
            )Cash
      Flows from Financing Activities:Proceeds
      from exercise of stock options
            
            
            75,000
            
            
            
            29,000Proceeds
      from (payments to) line of credit
            
            
            (378,000
            )
            
            
            (57,000
            )Payments
      on notes payable
            
            
            (22,000
            )
            
            
            (118,000
            )Principal
      payments on capital lease obligations
            
            
            -
            
            
            
            (13,000
            )Net
      cash used in financing activities
            
            
            (325,000
            )
            
            
            (159,000
            )Net
      increase (decrease) in Cash and Cash Equivalents
            
            
            376,000
            
            
            
            (873,000
            )Cash
      and Cash Equivalents, beginning of period
            
            
            1,205,000
            
            
            
            2,078,000Cash
      and Cash Equivalents, end of period
            
            $
            1,581,000
            
            
            $
            1,205,000




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




25




NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




1.
Line of Business




AML
Communications is a designer, manufacturer, and marketer of amplifiers,
subsystems, and related products that address the Defense Electronic Warfare
Market. The Company currently conducts its operations through three reportable
segments: (1) amplifiers and related products that are designed,
manufactured, and marketed by the Company, (2) high power microwave
amplifiers that are designed, manufactured, and marketed through its division,
Microwave Power, Inc., and (3) the UltraSatNet, an Intelligent
Satellite Utility Communication Solution for the monitoring and control of power
grid distribution, that are designed, manufactured, and marketed through its
division, Mica-Tech, Inc.




2.
Summary of Significant Accounting Policies




Basis
of Presentation




The
accompanying consolidated financial statements include the accounts of AML
Communications, Inc. (“AML”), its wholly owned division, Microwave
Power, Inc. (“MPI”), and its wholly owned subsidiary, Mica-Tech, Inc.
(“Mica-Tech”), (collectively, the “Company”). All significant inter-company
accounts and transactions have been eliminated in consolidation.




The
accompanying consolidated financial statements have been prepared in accordance
with the rules and regulations of the Securities and Exchange Commission for the
presentation of financial information, and include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included.




Concentration
of Cash




The
Company considers all liquid investments with an original maturity of three
months or less to be cash equivalents. As of March 31, 2009, the Company
had cash and cash equivalent balances totaling $1,343,000 in financial
institutions, which were in excess of federally insured amounts.




Credit
Risk




The
Company performs ongoing credit evaluations of its customers’ financial
conditions and generally does not require collateral on accounts receivable,
therefore, the accounts receivable are unsecured and the Company is at risk to
the extent that such amounts become non-collectable. During our 2009 fiscal
year, the Company had sales to two customers that represented 22.6% and 5.5% of
net sales, respectively, as compared to our 2008 fiscal year, in which the
Company had sales to two customers, which represented 26.5% and 6.6% of net
sales, respectively. As of March 31, 2009, these two customers comprised
8.5% and 7.0%, of accounts receivable, respectively.




The
Company’s customers are comprised primarily of defense subcontractors and
original equipment manufacturers (“OEMs”). Customers are located primarily
throughout the United States. However, the Company also sells to customers
worldwide. During the fiscal year ended March 31, 2009, international sales
were $2.9 million, or 21.9% of net sales, as compared to $3.1 million,
or 24.1% of net sales in fiscal year ended March 31, 2008.




Revenue
Recognition




We
generate our revenue through the sale of products. Our policy is to recognize
revenue when the applicable revenue recognition criteria have been met, which
generally include the following:




•
            Persuasive evidence of an
      arrangement exists;




•
            Delivery has occurred or
      services have been rendered;




•
            Price is fixed or
      determinable; and




•
            Collectability is reasonably
      assured




Revenue
from the sale of products is generally recognized after both the goods are
shipped to the customer and acceptance has been received, if required. Our
products are custom made for our customers, who primarily consist of original
engineer manufacturers (OEMs), and we do not accept returns. Our products are
shipped complete and ready to be incorporated into higher level assemblies by
our customers. The terms of the customer arrangements generally pass title and
risk of ownership to the customer at the time of shipment.




26




Recording
revenue from the sale of products involves the use of estimates and management
judgment. We must make a determination at the time of sale whether the customer
has the ability to make payments in accordance with arrangements. While we do
utilize past payment history, and, to the extent available for new customers,
public credit information in making our assessment, the determination of whether
collectability is reasonably assured is ultimately a judgment decision that must
be made by management.




Inventories




Inventories
are stated at the lower of cost or market, cost being determined on the
first-in, first-out method. Inventories are written down if the estimated net
realizable value is less than the recorded value. We review the carrying cost of
our inventories by product each quarter to determine the adequacy of our
reserves for obsolescence. In accounting for inventories we must make estimates
regarding the estimated net realizable value of our inventory. This estimate is
based, in part, on our forecasts of future sales and age of the
inventory.




Inventories
include costs of material, and manufacturing overhead on work-in-process and
finished goods, and are stated at the lower of cost (first-in, first-out) or
market and consist of the following:




March 31,
      2009
            
            
            March 31,
      2008Raw
      materials, net
            
            $
            2,280,000
            
            
            $
            2,147,000Work
      in process
            
            
            873,000
            
            
            
            591,000Finished
      goods
            
            
            137,000
            
            
            
            135,000$
            3,290,000
            
            
            $
            2,873,000




The
reserve for inventory was $324,000 at March 31, 2009 and $409,000 at March
31, 2008.




Depreciation
and Amortization




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
            Shorter
      of life of lease or life of improvementBuilding
            30 years




Depreciation
expense for the years ended March 31, 2009 and March 31, 2008 was
$699,000 and $642,000 respectively.




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,
      2009
            
            
            March 31,
      2008Building
            
            $
            800,000
            
            
            $
            800,000Machinery
      and equipment
            
            
            5,631,000
            
            
            
            5,578,000Furniture
      and fixtures
            
            
            192,000
            
            
            
            176,000Leasehold
      improvements
            
            
            690,000
            
            
            
            690,000Accumulated
      depreciation
            
            
            (5,229,000
            )
            
            
            (4,566,000
            )$
            2,084,000
            
            
            $
            2,678,000




On
February 3, 2006, the Company purchased the building that houses MPI, which
is located at 3350 Scott Blvd. 25 Santa Clara, California, for a purchase price
of $800,000. The Company made a down payment of $160,000. The building is being
financed by the bank promissory note in the amount of $640,000 with 6.760%
interest payable in 83 regular payments of $4,425.88, each which includes
principle and interest, and one irregular last payment of $556,594.48. The
Company’s final payment is due on February 10, 2013 and will be for all
principle and interest not yet paid. The note payable is secured by the deed of
trust on the building. As of March 31, 2009, the outstanding note amounted
to $606,000 with $13,000 in current portion.




27




Intangible
Assets




The
Company accounts for its intangible assets under the applicable guidelines of
SFAS 142 “goodwill and other intangible assets” and SFAS 144
“accounting for the impairment or disposal of long lived assets”. Where
intangible assets have finite lives, they are amortized over their useful life
unless factors exist to indicate that the asset has been impaired. The Company
evaluates if the assets are impaired annually or on an interim basis if an event
occurs or circumstances change to suggest that the assets value has diminished.
Under SFAS 144, when deemed necessary, the Company completes the evaluation
of the recoverability of its long-lived assets by comparing the carrying amount
of the assets against the estimated undiscounted future cash flows associated
with them. If such evaluations indicate that the future undiscounted cash flows
of long-lived assets are not sufficient to recover the carrying value of such
assets, the assets are adjusted to their estimated fair values. Under
SFAS 142 intangible assets with indefinite useful lives are required to be
tested annually for impairment or whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. If the
assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount exceeds the fair value of
the assets. During the year ended March 31, 2009, the Company recognized no
impairment.




At
March 31, 2009, intangibles consisted of the following:




Intangibles
            
            Gross
      Carrying
                Amount
            
            
            Accumulated
                Amortization
            
            
            NetAmortized
      intangibles:Patents
            
            $
            189,000
            
            
            $
            (114,000
            )
            
            $
            75,000Existing
      Technology
            
            
            2,504,000
            
            
            
            (726,000
            )
            
            
            1,778,000Customer
      Lists
            
            
            339,000
            
            
            
            (339,000
            )
            
            
            —Customer
      Relationship
            
            
            50,000
            
            
            
            (9,000
            )
            
            
            41,000Trademarks
      and Brand Name
            
            
            24,000
            
            
            
            (2,000
            )
            
            
            22,000Unamortized
      intangibles:Trademarks
            
            
            181,000
            
            
            
            —
            
            
            
            181,000$
            3,287,000
            
            
            $
            (1,190,000
            )
            
            $
            2,097,000







At
March 31, 2008, intangibles consisted of the following:




Intangibles
            
            Gross
      Carrying
                Amount
            
            
            Accumulated
                Amortization
            
            
            NetAmortized
      intangibles:Patents
            
            $
            189,000
            
            
            $
            (90,000
            )
            
            $
            99,000Existing
      Technology
            
            
            3,069,000
            
            
            
            (374,000
            )
            
            
            2,695,000Customer
      Lists
            
            
            339,000
            
            
            
            (339,000
            )
            
            
            —Customer
      Relationship
            
            
            84,000
            
            
            
            (2,000
            )
            
            
            82,000Trademarks
      and Brand Name
            
            
            40,000
            
            
            
            (1,000
            )
            
            
            39,000Unamortized
      intangibles:Trademarks
            
            
            181,000
            
            
            
            —
            
            
            
            181,000$
            3,902,000
            
            
            $
            (806,000
            )
            
            $
            3,096,000




Due to
the acquisition of MPI in the quarter ended June 30, 2004 and the
acquisition of Mica-Tech on April 11, 2007 (51%) and February 19, 2008
(100%), we recorded the intangible assets above.




For the
intangible assets we acquired from MPI acquisition, we assigned an 8-year life
to Patents, a 12-year life to Existing Technology, and a 3-year life to Customer
Lists. All items are subject to amortization. The value assigned to Trademarks,
which have an indefinite life, should not be amortized and is subject to an
annual impairment testing. Since AML acquired the stock of MPI, the amortization
of separately identified intangibles is not deductible for tax
purposes.  FAS 109 requires the Company to set up a deferred tax
liability for its separately identified intangibles and book the offset to
goodwill.  When the Company was reviewing the purchase price
allocation related to the Mica Tech acquisition during our 2008 fiscal year, it
realized that it should have recorded a goodwill adjustment related to the
separately identified intangibles that were established at the MPI acquisition.
As a result, we recorded a proper adjustment to increase the value of subject
intangible asset by $697,000 and associated amortization expense of $58,000 for
the twelve months ended March 31, 2008 during our 2008 fiscal year. Furthermore,
as per the comments the Company received from the Staff of Securities and
Exchange Commission in March 2009, MPI recorded a one time catch-up entry of
$162,000 to book amortization expense associated with the subject intangible
assets for the period of June 19, 2004 through March 31, 2007. This entry was
recorded in March 2009.




28




For
the intangible assets we acquired from the Mica-Tech acquisition, we initially
assigned a 12-year life to Existing Technology, a 3-year life to Customer
Relationship, a 1-year life to Backlog and an indefinite life to Trademarks and
Brand Names. During the quarter ended September 30, 2007, Mica-Tech’s
management thoroughly reevaluated the life span of Mica-Tech’s intangible asset
and assigned a new life span to these intangible assets: a 15-year life to
Existing Technology, a 6-year life to Customer Relationship, and a 15-year life
to Trademarks and Brand Names. All items stated are subject to amortization.
Backlog was amortized on fulfillment of orders.




Upon the
acquisition of Mica-Tech’s remaining interest on February 19, 2008,
Mica-Tech’s intangible assets were revalued by an appraiser to find out the fair
value of minority interest on the date of 100% acquisition of Mica Tech. The new
fair market values of Mica-Tech’s intangible assets, after any associated tax
adjustments, are reflected on the financial statement. As per the comments the
Company received from the Staff of Securities and Exchange Commission in March
2009, the balance of Mica-Tech’s intangibles and  associated
accumulated amortizations as of March 31, 2008 was reduced by $440,000 to
reflect the true acquisition cost of Mica-Tech’s assets on February 19, 2008.
There is no change in the net book value of the subject
intangibles.




During
the preparation of a Federal Income Tax return for the year ended March 31,
2008, the Company determined that Mica Tech had more attributes to be carried
over into the Company’s tax return than were estimated in the FAS 109
calculation for the year ended March 31, 2008.  As such, this change
in estimation increased the Company’s deferred taxes for the additional
attributes, such as R&D credits and NOL credits, reflected on the Company’s
Federal Income Tax return filed for the year ended March 31, 2008. This tax
adjustment resulted in a reduction in Mica-Tech’s intangibles by
$615,000.




Amortization
expense from continuing operation for the year ended March 31, 2009 was
$385,000. The Company expects the amortization expenses for the next five years
to be as follows:




Year
      Ending March 31,
            
            Annual
      Amount2010
            
            $
            228,0002011
            
            $
            228,0002012
            
            $
            228,0002013
            
            $
            208,0002014
            
            $
            204,000




Warranty
and Customer Support




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




Statement
of Financial Accounting Standards No. 128, “Earnings per share” requires
the presentation of basic earnings per share and diluted earnings per share.
Basic and diluted earnings per share computations are presented by the Company
conform to the standard and are based on the weighted average number of shares
of Common Stock outstanding during the year.




Basic
earnings per share is 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, and the dilutive effect of outstanding stock
options (applying the treasury stock method).




The
Company had 1,781,000 of granted stock options that were exercisable as of
March 31, 2009 and 1,826,000 of granted stock options and warrants
exercisable at March 31, 2008.




The
following is a reconciliation of the numerators and denominators of the basic
and diluted earnings per share computations:




29




Year  ended
      March 31, 2009
            
            Net
      Income
            
            
            Shares
            
            
            Per
      ShareBasic
      earnings per shares:Net
      income available to common stockholders
            
            $
            959,000
            
            
            
            10,575,000
            
            
            $
            0.09Effect
      of dilutive securities:Stock
      options
            
            
            
            
            
            
            113,000Warrants
            
            
            
            
            
            
            -Diluted
      earnings per share:
            
            $
            959,000
            
            
            
            10,688,000
            
            
            $
            0.09





Year  ended
      March 31, 2008
            
            Net
      Income
            
            
            Shares
            
            
            Per
      ShareBasic
      earnings per shares:Net
      income available to common stockholders
            
            $
            2,172,000
            
            
            
            10,271,000
            
            
            $
            0.21Effect
      of dilutive securities:Stock
      options
            
            
            
            
            
            
            386,000Warrants
            
            
            
            
            
            
            150,000Diluted
      earnings per share:
            
            $
            2,172,000
            
            
            
            10,807,000
            
            
            $
            0.20




Segments




The
Company has three reportable segments consisting of (1) AML, (2) MPI
and (3) Mica-Tech. Our AML segment includes low noise and high power
amplifiers with frequencies that range from 50KHz to 26GHz. These products are
manufactured and sold through operations in Camarillo, California. MPI is a
designer, manufacturer and marketer of high power microwave amplifiers. Our MPI
segment includes solid state microwave amplifiers operating in the frequency
range from 1 to 40 GHz with output power from 10mW to 500W. These products
are manufactured and sold through operations in Santa Clara, California. Our
Mica-Tech segment designs, manufactures and markets an intelligent satellite
communication system that provides a highly reliable and secure communications
link between remote sites and control centers, utilizing Supervisory Control And
Data Acquisition (SCADA) technology. The Company evaluates performance based on
sales, gross profit margins, and operating profit before income
taxes.




The
following is information for the Company’s three reportable segments for the
years ended March 31, 2009 and March 31, 2008.





Twelve
      Month Periods EndedMarch 31, 2009
            
            
            March 31, 2008Revenue
      from unrelated entitiesAML
            
            $
            10,924
            
            
            $
            9,873MPI
            
            
            1,777
            
            
            
            1,846Mica-tech
            
            
            587
            
            
            
            992$
            13,288
            
            
            $
            12,711Income
      (loss) from operationsAML
            
            $
            1,103
            
            
            $
            709MPI
            
            
            (6
            )
            
            
            288Mica-tech
            
            
            (215
            )
            
            
            (861
            )$
            882
            
            
            $
            136Income
      tax benefit (expense)AML
            
            $
            (293
            )
            
            $
            1,757MPI
            
            
            -
            
            
            
            -Mica-tech
            
            
            (97
            )
            
            
            (2
            )$
            (390
            )
            
            $
            1,755




30




Net
      income (loss)AML
            
            $
            721
            
            
            $
            2,341MPI
            
            
            -
            
            
            
            294Mica-tech
            
            
            238
            
            
            
            (463
            )$
            959
            
            
            $
            2,172Provision
      for depreciation and amortizationAML
            
            $
            603
            
            
            $
            552MPI
            
            
            391
            
            
            
            237Mica-tech
            
            
            90
            
            
            
            211$
            1,084
            
            
            $
            1,000Capital
      expendituresAML
            
            $
            56
            
            
            $
            158MPI
            
            
            49
            
            
            
            87Mica-tech
            
            
            -
            
            
            
            8$
            105
            
            
            $
            253As of March 31,
              2009
            
            
            As of March 31,
              2008Total
      AssetsAML
            
            $
            9,979
            
            
            $
            9,694MPI
            
            
            5,029
            
            
            
            5,008Mica-tech
            
            
            1,423
            
            
            
            2,129$
            16,431
            
            
            $
            16,831







Use
of Estimate in Preparation of Financial Statements




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.




Product
Lines




The
Company operates as three reportable business segments. The AML segment designs
and manufactures RF and microwave, power and low noise, medium and high power
amplifiers for a variety of frequency ranges and transmission protocols serving
the defense microwave and commercial microwave markets. The MPI segment
manufactures solid state microwave amplifiers. This proprietary technology is
especially designed for broadband and high power. Some typical applications
include telecommunications, radar, simulators, transmitters, and test
instrumentation. Mica-Tech designs and manufactures an intelligent satellite
communication system to provide Supervisory Control And Data Acquisition (SCADA)
of the electric power grid. The revenues earned by each product line are as
follows:




For
the Fiscal Year Ended March 31, 2009:




(Dollars
      in thousands)
            
            AML
            
            
            
            
            
            MPI
            
            
            
            
            
            Mica-Tech
            
            
            
            
            
            TotalRevenuesDefense
      microwave and other
            
            $
            10,924
            
            
            
            82.2
            %
            
            $
            1,777
            
            
            
            13.4
            %
            
            $
            —
            
            
            
            —
            
            
            $
            12,701
            
            
            
            95.6
            %Cellular
      and other
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —Satellite
      communication systems
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            587
            
            
            
            4.4
            %
            
            
            587
            
            
            
            4.4Total
      net sales
            
            $
            10,924
            
            
            
            82.2
            %
            
            $
            1,777
            
            
            
            13.4
            %
            
            $
            587
            
            
            
            4.4
            %
            
            $
            13,288
            
            
            
            100.0
            %




31


For
the Fiscal Year Ended March 31, 2008:
  (Dollars
      in thousands)
              
              AML
              
              
              
              
              
              MPI
              
              
              
              
              
              Mica-Tech
              
              
              
              
              
              TotalRevenuesDefense
      microwave and other
              
              $
              9,871
              
              
              
              77.7
              %
              
              $
              1,846
              
              
              
              14.5
              %
              
              $
              —
              
              
              
              —
              
              
              $
              11,717
              
              
              
              92.2
              %Cellular
      and other
              
              
              2
              
              
              
              0.0
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              2
              
              
              
              0.0Satellite
      communication systems
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              992
              
              
              
              7.8
              %
              
              
              992
              
              
              
              7.8Total
      net sales
              
              $
              9,873
              
              
              
              77.7
              %
              
              $
              1,846
              
              
              
              14.5
              %
              
              $
              992
              
              
              
              7.8
              %
              
              $
              12,711
              
              
              
              100.0
              %


The
following table summarizes the international sales by segment for the fiscal
year ended March 31, 2009:




(Dollars
      in thousands)
            
            AML
            
            
            
            
            
            MPI
            
            
            
            
            
            Mica-Tech
            
            
            
            
            
            TotalInternational
      Sales
            
            $
            2,274
            
            
            
            17.1
            %
            
            $
            633
            
            
            
            4.8
            %
            
            
            —
            
            
            
            —
            
            
            $
            2,907
            
            
            
            21.9
            %Domestic
      sales
            
            
            8,650
            
            
            
            65.1
            
            
            
            1,144
            
            
            
            8.6
            
            
            
            587
            
            
            
            4.4
            
            
            
            10,381
            
            
            
            78.1Total
      Sales
            
            $
            10,924
            
            
            
            82.2
            %
            
            $
            1,777
            
            
            
            13.4
            %
            
            $
            587
            
            
            
            4.4
            %
            
            $
            13,288
            
            
            
            100.0
            %




The
following table summarizes the international sales by segment for the fiscal
year ended March 31, 2008:




(Dollars
      in thousands)
            
            AML
            
            
            
            
            
            MPI
            
            
            
            
            
            Mica-Tech
            
            
            
            
            
            TotalInternational
      Sales
            
            $
            2,210
            
            
            
            17.4
            %
            
            $
            854
            
            
            
            6.7
            %
            
            
            —
            
            
            
            —
            
            
            $
            3,064
            
            
            
            24.1
            %Domestic
      sales
            
            
            7,663
            
            
            
            60.3
            
            
            
            992
            
            
            
            7.8
            
            
            
            992
            
            
            
            7.8
            
            
            
            9,647
            
            
            
            75.9Total
      Sales
            
            $
            9,873
            
            
            
            77.7
            %
            
            $
            1,846
            
            
            
            14.5
            %
            
            $
            992
            
            
            
            7.8
            %
            
            $
            12,711
            
            
            
            100.0
            %





Research
and Development Costs




Research
and development costs for our 2009 fiscal year were $1,932,000, or 14.5% of net
sales, compared to $2,289,000, or 18.0% of net sales, for the corresponding
period in 2008. Change in R&D costs for both AML and MPI is insignificant
compared to the same period of the last year. We continue to invest our
resources in R&D projects to address customer needs for short and long term
program orders. Mica-Tech’s R&D expenses are reduced by $340,000, mainly due
to a reduction in payroll related expenses and outside consulting
expenses.




Fair
Value of Financial Instruments




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.




Stock-Based
Compensation




The
Company adopted SFAS No. 123 (Revised 2004), Share Based Payment (“SFAS
No. 123R”), under the modified-prospective transition method on
April 1, 2006. SFAS No. 123R requires companies to measure and
recognize the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value. Share-based compensation
recognized under the modified-prospective transition method of SFAS
No. 123R includes share-based compensation based on the grant-date fair
value determined in accordance with the original provisions of SFAS
No. 123, Accounting for
Stock-Based Compensation, for all share-based payments granted prior to
and not yet vested as of April 1, 2006 and share-based compensation based
on the grant-date fair-value determined in accordance with SFAS No. 123R
for all share-based payments granted after April 1, 2006. SFAS
No. 123R eliminates the ability to account for the award of these
instruments under the intrinsic value method proscribed by Accounting Principles
Board (“APB”) Opinion No. 25, Accounting for Stock Issued to
Employees, and allowed under the original provisions of SFAS
No. 123. Prior to the adoption of SFAS No. 123R, the Company accounted
for our stock option plans using the intrinsic value method in accordance with
the provisions of APB Opinion No. 25 and related
interpretations.




As a
result of adopting SFAS No. 123R, the Company recognized $130,000 or $0.01
per basic and diluted earnings per share in share-based compensation expense for
the year ended March 31, 2009. The fair value of our stock options was
estimated using the Black-Scholes option pricing model.




The
weighted average assumptions used in calculating the fair value of options
granted using the Black-Scholes option-pricing model are as
follows:




32




Risk-free
      interest rate
            4.4%Expected
      life of the options
            7.81 yearsExpected
      volatility
            56.0%Expected
      dividend yield
            —




The
weighted average fair value of options granted as of March 31, 2009 was
$0.64 per share.




Advertising
Costs




The
Company expenses advertising costs as incurred. Advertising costs for the years
ended March 31, 2009 and 2008 were $70,000 and $89,000,
respectively.




Recently
Issued Accounting Pronouncements




In
December 2007, FASB issued FASB Statement No. 160, Noncontrolling Interests
in Consolidated Financial Statements—an amendment of ARB No. 51. This
Statement applies to all entities that prepare consolidated financial
statements, except not-for-profit organizations, but will affect only those
entities that have an outstanding non-controlling interest in one or more
subsidiaries or that deconsolidate a subsidiary. Not-for-profit organizations
should continue to apply the guidance in Accounting Research Bulletin
No. 51, Consolidated Financial Statements, before the amendments made by
this Statement, and any other applicable standards, until the Board issues
interpretative guidance. This Statement is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after
December 15, 2008 (that is, April 1, 2009, for entities with calendar
year-ends). Earlier adoption is prohibited. The effective date of this Statement
is the same as that of the related Statement 141(R). This Statement shall be
applied prospectively as of the beginning of the fiscal year in which this
Statement is initially applied, except for the presentation and disclosure
requirements. The presentation and disclosure requirements shall be applied
retrospectively for all periods presented. Management is currently evaluating
the effect of this pronouncement on financial statements.




In
March 19, 2008, FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities. The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows. It is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. Currently the Company does not carry any derivative instruments and
the adoption of this statement is not exposed to have any effect on the
financial statements.




In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”.
This Statement replaces SFAS No. 141, Business Combinations. This Statement
retains the fundamental requirements in Statement 141 that the acquisition
method of accounting (which Statement 141 called the purchase method) be used
for all business combinations and for an acquirer to be identified for each
business combination. This Statement also establishes principles and
requirements for how the acquirer: a) recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
and any noncontrolling interest in the acquiree; b) recognizes and measures
the goodwill acquired in the business combination or a gain from a bargain
purchase and c) determines what information to disclose to enable users of
the financial statements to evaluate the nature and financial effects of the
business combination  The statement applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual  reporting period beginning on or after December15, 2008.
While the Company has not yet evaluated this statement for the impact, if any,
that SFAS No. 141(R) will have on its consolidated financial statements,
the Company will be required to expense costs related to any acquisitions after
its effective date.




In May
2008, FSAB issued SFASB No.162, The Hierarchy of Generally Accepted Accounting
Principles. The pronouncement mandates the GAAP hierarchy reside in the
accounting literature as opposed to the audit literature. This has the practical
impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP
hierarchy. This pronouncement will become effective 60 days following SEC
approval. The company does not believe this pronouncement will impact its
financial statements.




In May of 2008, FASB issued SFASB
No. 163, Accounting for Financial Guarantee Insurance Contracts-an
interpretation of FASB Statement No. 60. The scope of the statement is
limited to financial guarantee insurance (and reinsurance) contracts. The
pronouncement is effective for fiscal years beginning after December 31,
2008. The company does not believe this pronouncement will impact its financial
statements.




3.
Debt and Lease Commitments




33




Line
of Credit




At March
31, 2009, AML had a line of credit agreement with Bridge Bank. On September 16,
2008, we signed a Business Financing Modification Agreement (the “Modification
Agreement”) with Bridge Bank to renew our line of credit, with a credit facility
of $1.3 million. Of this $1.3 million, $1.0 million may be used for
cash advances against accounts receivables and $0.3 million may be used for
equipment advances. Our ability to borrow under this agreement varies based upon
eligible accounts receivable and eligible equipment purchases. We are obligated
to pay the bank a finance charge at a rate per year equal to the prime rate,
which in no event shall be less than 5.00%, plus 0.25% with respect to cash
advances, and a rate of such prime rate plus 1.0% with respect to equipment
advances. We were obligated to pay a facility fee of $2,500 upon execution of
the Modification Agreement and annually thereafter. We were also obligated to
pay a one-time equipment loan facility fee of $2,500 upon execution of the
Modification Agreement.  We must maintain certain financial
requirements, including a minimum Asset Coverage Ratio of 1.50 to 1.00. We are
also required to stay within 80% of our planned quarterly revenue. We were in
compliance with these requirements at March 31, 2009; however, there is no
assurance that we will be in compliance at future dates. This agreement to
provide cash advances against accounts receivables terminates on August 15, 2010
or upon a date that the bank or AML chooses to terminate the agreement. Any
unpaid balance is due and payable pursuant to the agreement on the termination
date. At March 31, 2009, we had an outstanding balance of $0 under the accounts
receivable agreement and $442,000 under the equipment financing agreement, which
includes amounts owed under prior lines of credit with Bridge Bank. Our
remaining borrowing capacity is approximately $1,000,000 under the accounts
receivable agreement and $0 under the equipment financing agreement as the
availability period for the equipment term loan expired as of December 31,
2008.




As of March 31, 2009, Mica-Tech had a
line of credit with Santa Barbara Bank and Trust and Wells Fargo. At March 31,
2009, the outstanding balance was $41,000 for the Santa Barbara Bank and Trust
line and $12,000 for the Wells Fargo line.   Our remaining
borrowing capacity was $8,000 under the Santa Barbara Bank and Trust line and $0
under the Wells Fargo line as of March 31, 2009




Note
Payable




On
February 3, 2006 the company purchased the building that houses MPI, which
is located at 3350 Scott Blvd. 25 Santa Clara, California, for a purchase price
of $800,000. The Company made a down payment of $160,000. The building is being
financed by the bank promissory note in the amount of $640,000 with 6.760%
interest payable in 83 regular payments of $4,425.88, each which includes
principle and interest, and one irregular last payment of $556,594.48. The
Company’s final payment is due February 10, 2013 and will be for all
principle and interest not yet paid. The note payable is secured by the deed of
trust on the building. As of March 31, 2009, the outstanding note amounted
to $606,000 with $13,000 in current portion.




On
December 20, 2006, Mica-Tech raised $200,000 from an outside investor in
the form of short term note payable. The funds were used for working capital.
The promissory note bears interest at the rate of 10%. Mica-Tech makes equal
monthly payments of $25,000, which includes a principal and an accrued interest
on the remaining principal balance. Mica-Tech defaulted on its monthly payments
due to a cash deficiency. The default was waived by the lender at no cost. The
total amount remaining on the note at March 31, 2009 was $38,000. The
Company was not able to make April and May payments as agreed. Currently the
note is due on demand.




Mica-Tech
was advanced working capital from its former president and a major shareholder,
over a period of time which totaled to $685,000 as of April 10,
2007.  On April 10, 2007, Mica-Tech converted these advancements in
the form of a single note for the amount of $685,000, with an annual interest
rate of 10%.  Of the $685,000, $200,000 was converted into 200,000
shares of Mica-Tech’s common stock at the closing of the acquisition on April
11, 2007.  In connection with the merger on February 19, 2008,
Mica-Tech and Steven Ow entered into an amended and restated promissory note in
the principal amount of $522,000. The interest rate on the note was reduced to
8% per annum and the maturity date was extended until April 4, 2010. On
May 19, 2008, Mica-Tech and Steven Ow entered into an agreement that
settles the promissory note in the amount of $531,000, including $9,000 in
accrued interest, and deferred compensation of $128,000. The consideration for
this settlement was $150,000 in cash, which would be paid by three equal
payments of $40,000 and one last payment of $30,000. As part of settlement, the
Company recorded gain on settlement of debt amounting to $521,000 during the
period ended June 30, 2008. As of March 31, 2009, Mica-Tech paid $130,000 toward
the settlement amount and the remaining amount due to Steven Ow was $20,000
which was part of the last payment.




The
future aggregate payments arising from these loans are as follows:




34




Annual
      AmountDue
      during the fiscal year ended March 31,2010
            
            $
            458,0002011
            
            
            101,0002012
            
            
            43,0002013
            
            
            566,0002014
            
            
            —Thereafter
            
            
            —$
            1,168,000




Operating
Lease Obligations




The lease
for AML’s office space and manufacturing facility expired in April 2008 and
we entered into a new lease, which will expire in April 2015. Until they
moved into the AML facility in May 2008, Mica-Tech was leasing its office space
and manufacturing facility under an operating lease expired in
October 2008. Total rent expense under these operating leases was
approximately $236,000 and $257,000 during the years ended March 31, 2009
and 2008, respectively.




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




Operating
      LeasesYear
      ending March 31,2010
            
            $
            207,0002011
            
            
            211,0002012
            
            
            215,0002013
            
            
            219,0002014
            
            
            224,000Thereafter
            
            
            247,000$
            1,323,000




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.




The
components of the income tax provision for the years ended March 31, 2008 and
2009, were as follows:




March
      31, 2008
            
            
            March
      31, 2009Current
            
            $
            64,000
            
            
            $
            95,000Deferred
            
            $
            (1,819,000
            )
            
            $
            296,000$
            (1,755,000
            )
            
            $
            391,000




Differences
between the benefit from income taxes and income taxes at the statutory federal
income tax rate for years ended March 31, 2008 and 2009 are as
follows:




March
      31, 2008
            
            
            March
      31, 2009Amount
            
            
            Percent
            
            
            Amount
            
            
            PercentIncome
      tax expense/ (benefit) at statutory federal rate
            
            $
            140,000
            
            
            
            34.0
            %
            
            $
            459,000
            
            
            
            34.0
            %State
      income taxes, net of federal income taxtax effect
            
            
            187,000
            
            
            
            45.6
            
            
            
            20,000
            
            
            
            1.5Effect
      of permanent differences
            
            
            49,000
            
            
            
            11.9
            
            
            
            41,000
            
            
            
            3.0Tax
      credits
            
            
            (124,000
            )
            
            
            -30.2
            
            
            
            (129,000
            )
            
            
            -9.6Change
      in valuation allowance
            
            
            (1,993,000
            )
            
            
            -486.0
            
            
            
            0
            
            
            
            0.0Other
            
            
            (14,000
            )
            
            
            -3.4
            
            
            
            0
            
            
            
            0.0$
            (1,755,000
            )
            
            
            -428.1
            %
            
            $
            391,000
            
            
            
            28.9
            %




35




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.  In 2008, the Company reversed its valuation allowance as
management believes it is more likely than not that all deferred tax assets will
be realized.




A
detail of the Company's deferred tax assets and liabilities as of March 31, 2009
follows:





Inventory
      reserves
            
            $
            139,000Allowance
      for doubtful
      accounts
            
            
            42,000Accrued
      vacation
            
            
            91,000Non-cash
      employee compensation
            
            
            20,000Accrued
      warranty and customer support
            
            
            14,000Other
            
            
            (422,000
            )General
      tax credit
      carry-forwards
            
            
            2,750,000Net
      operating loss
      carry-forwards
            
            
            3,107,000Depreciation
            
            
            (61,000
            )Intangible
      Assets
            
            
            (897,000
            )4,783,000Valuation
      allowance
            
            
            -$
            4,783,000




As of
March 31, 2009, the Company had federal net operating loss carry-forwards of
approximately $7.7 million, expiring at various dates through
2027.




A detail
of the Company’s deferred tax assets and liabilities as of March 31, 2008
follows:




Inventory
      reserves
            
            $
            175,000Allowance
      for doubtful accounts
            
            
            41,000Accrued
      vacation
            
            
            94,000Non-cash
      employee compensation
            
            
            12,000Accrued
      warranty and customer support
            
            
            13,000Other
            
            
            (295,000
            )General
      tax credit carry-forwards
            
            
            2,366,000Net
      operating loss carry-forwards
            
            
            3,419,000Depreciation
            
            
            (33,000
            )Intangible
      Assets
            
            
            (1,328,000
            )4,464,000Valuation
      allowance
            
            
            —$
            4,464,000




As of
March 31, 2008, the Company had federal net operating loss carry-forwards
of approximately $8.7 million, expiring at various dates through
2024.




In July 2006, the FASB issued FASB
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN
48”), an interpretation of FASB Statement No. 109, “Accounting for Income
Taxes,” (“FASB 109”). FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in an enterprise’s financial statements in accordance with FASB
109. This Interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN 48 also provides
guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure, and transition. FIN 48 is effective for fiscal
years beginning after December 15, 2006.  As of March 31, 2009,
the Company does not have any unrecognized tax benefits and no corresponding
interest or penalties.  The Company’s policy is to record interest and
penalties as income tax expense. The tax years 2004 through 2007 remain open to
examination by the major taxing jurisdictions to which the Company is
subject.  The Company does not anticipate any material amount of
unrecognized tax benefits within the next 12 months.


36




5.
Stockholders’ Equity




Stock
Option Plan




The
Company’s 2005 Stock Incentive Plan provides for the granting of non-qualified
and incentive stock options to purchase up to 3,500,000 shares of common stock
for periods not to exceed 10 years. Options typically vest 20% after one
year from the date of grant with remaining options vesting at a rate of 20% per
year thereafter. Options may be granted to employees, officers, directors and
consultants.




Plan
Duration




In 1995,
the board of directors approved the creation of the 1995 Stock Option Plan. In
November 2005, the board established the 2005 Equity Incentive Plan (“2005
Plan”) with 150,000 shares initially approved. The number of shares available
for grant and issuance increases on the first day of January of each year so
that the total of all shares of common stock available for grant and issuance
under the 2005 Plan is the maximum allowed under Regulation 260.140.45 of Title
10 of the California Code of Regulations.  Incentive stock option
awards may be granted under the 2005 Plan only to employees (including officers
and directors who are also employees) of the Company or of a Parent or
subsidiary of the Company. All other awards (including nonqualified stock
options, restricted stock or stock awards) under the 2005 Plan may be granted to
employees, officers, directors, consultants, independent contractors and
advisors of the Company or any Parent or Subsidiary of the Company, provided
such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction.




Activity
under the 2005 plan is as follows (1):




Number
      of
                Shares
            
            
            Weighted
      Average
                Exercise
      Price
            
            
            Aggregate
                Intrinsic
      Value2005
      Equity Incentive PlanOutstanding
      at March 31, 2008
            
            
            4,016,305
            
            
            $
            1.12
            
            
            $
            925,036Granted
            
            
            292,500
            
            
            
            0.93Exercised
            
            
            (45,000
            )
            
            
            0.67Canceled
            
            
            (1,339,355
            )
            
            
            1.20Outstanding
      at March 31, 2009
            
            
            2,924,450
            
            
            $
            1.07Exercisable
      at March 31, 2009
            
            
            1,781,431
            
            
            $
            0.99




The
weighted average fair value for options granted during each year was $0.47 and
$0.57 for our 2009 and 2008 fiscal years, respectively.




The
number of common stock options available for grant as of each year was 1,795,900
for our 2009 fiscal year and 662,145 for our 2008 fiscal year.




Options
outstanding at March 31, 2009 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
            
            
            
            86,200
            
            
            
            3.94
            
            
            $
            0.16
            
            
            
            86,200
            
            
            $
            0.16$
            0.51
      - $1.00
            
            
            
            1,620,250
            
            
            
            4.91
            
            
            $
            0.91
            
            
            
            1,348,415
            
            
            $
            0.92$
            1.01
      - $2.00
            
            
            
            1,187,000
            
            
            
            7.57
            
            
            $
            1.30
            
            
            
            315,816
            
            
            $
            1.28$
            2.01
      - $5.00
            
            
            
            31,000
            
            
            
            0.95
            
            
            $
            3.19
            
            
            
            31,000
            
            
            $
            3.19$
            0.11
      - $5.00
            
            
            
            2,924,450
            
            
            
            6.07
            
            
            $
            1.07
            
            
            
            1,781,431
            
            
            $
            0.99




37




GRANTED




Pursuant
to the 2005 Plan, during the year ended March 31, 2009, the Company granted
292,500 stock options to the Company’s employees and its two external
directors.




On July
25, 2008, the Company granted 10,000 stock options to its employee as employee
compensation. All of the 10,000 stock options have a term of ten (10) years
measured from the grant date and shall accordingly expire at the close of
business on the expiration date, unless sooner terminated in accordance with the
2005 Plan.  These options are vested at the rate of twenty (20)
percent per year over a five year period.  The option exercise price
is $1.08, which is the fair market value of our common stock at the time these
options were granted.





On
September 11, 2008, the Company granted a total of 207,500 stock options to
fifteen employees and two external directors as follows: 85,000 stock options to
three AML’s officers as employee compensation, 92,500 stock options to twelve
employees as employee compensation and 30,000 non qualified stock options to two
external directors.




Of the
first 85,000 stock options granted, 60,000 stock options have a term of five (5)
years and 25,000 stock options have a term of ten (10) years, measured from the
grant date and shall accordingly expire at the close of business on the
expiration date, unless sooner terminated in accordance with the 2005
Plan.  All of the 85,000 stock options are vested at the rate of
thirty three (33) percent per year over a three year period.




The
second 92,500 stock options have a term of ten (10) years measured from the
grant date and shall accordingly expire at the close of business on the
expiration date, unless sooner terminated in accordance with the 2005
Plan.  These options are vested at the rate of twenty (20) percent per
year over a five year period.




The last
30,000 non qualified stock options granted have a term of ten (10) years
measured from the grant date and shall accordingly expire at the close of
business on the expiration date, unless sooner terminated in accordance with the
2005 Plan.  The options are vested at the rate of twenty-five (25)
percent per year over a four year period.




The
option exercise price is $1.01 for all of the 207,500 stock options granted on
September 11, 2008, which is the fair market value of our common stock at the
time these options were granted.





On
October 30, 2008, the Company granted a total of 75,000 stock options to its
four employees as employee compensation.




The first
70,000 stock options granted to Mica-Tech’s three employees have a term of ten
(10) years measured from the grant date and shall accordingly expire at the
close of business on the expiration date, unless sooner terminated in accordance
with the 2005 Plan.  The options are vested at the rate of twenty-five
(25) percent per year over a four year period.




The  remaining
5,000 stock options granted to AML’s employee have a term of ten (10) years
measured from the grant date and shall accordingly expire at the close of
business on the expiration date, unless sooner terminated in accordance with the
2005 Plan.  The options are vested at the rate of twenty (20) percent
per year over a five year period.




The
option exercise price is $0.68 for all of the 75,000 stock options granted on
October 30, 2008, which is the fair market value of our common stock at the time
these options were granted.




The
assumptions used in calculating the fair value of options granted using the
Black-Scholes option-pricing model are as follows:




Stock
Options Granted on July 25, 2008:





10,000
stock options with a term of 10 years and five year vesting
periods:





Risk-free
      interest rate
            4.10%Expected
      life of the options
            6.50
      yearsExpected
      volatility
            58.56%Expected
      dividend yield
            0





Stock Options Granted on
September 11, 2008:





60,000 stock options with a term of 5
years and three year vesting periods:




38


Risk-free
      interest rate
              2.86%Expected
      life of the options
              3.50
      yearsExpected
      volatility
              51.38%Expected
      dividend yield
              0


25,000
stock options with a term of 10 years and three year vesting
periods:





Risk-free
      interest rate
            3.61%Expected
      life of the options
            6.00
      yearsExpected
      volatility
            51.38%Expected
      dividend yield
            0





92,500
stock options with a term of 10 years and five year vesting
periods:





Risk-free
      interest rate
            3.61%Expected
      life of the options
            6.50
      yearsExpected
      volatility
            51.38%Expected
      dividend yield
            0





30,000
stock options with a term of 10 years and four year vesting
periods:





Risk-free
      interest rate
            3.61%Expected
      life of the options
            6.25
      yearsExpected
      volatility
            51.38%Expected
      dividend yield
            0





Stock
Options Granted on October 30, 2008:





70,000 stock options with a term of 10
years and four year vesting periods:





Risk-free
      interest rate
            3.95%Expected
      life of the options
            6.25
      yearsExpected
      volatility
            52.09%Expected
      dividend yield
            0





5,000
stock options with a term of 10 years and five year vesting
periods:





Risk-free
      interest rate
            3.95%Expected
      life of the options
            6.50
      yearsExpected
      volatility
            52.09%Expected
      dividend yield
            0




Details
of the Company’s non-vested options are as follows:




Non-Vested
                Options
            
            
            Weighted
                Average
                Exercise
      Price
            
            Weighted
                Average
                Vesting
      Period
            
            Grant
      Date
                Fair
      ValueNon-vested—March 31,
      2008
            
            
            2,377,973
            
            
            $
            1.22
            
            1.44
      YearsGranted
            
            
            292,500
            
            
            
            0.93
            
            
            
            
            138,803Forfeited
            
            
            (1,306,855
            )
            
            
            1.20Vested
            
            
            (220,599
            )
            
            
            1.09Exercised
            
            
            -Non-vested—March 31,
      2009
            
            
            1,143,019
            
            
            
            1.20
            
            1.84
      Years






39


The total
compensation cost not yet recognized related to non-vested stock options is
$268,000, which is expected to be recognized over a period of
2.37 years.


Warrants
  In
connection with Mica-Tech merger, the Company granted 816 shares of warrant to a
Mica-Tech’s shareholder on February 19, 2008 and 25,000 shares of warrant
to an outside consultant on February 26, 2008. All these Warrants were
expired on December 1, 2008 when the conditions for option exercisability did
not meet the deadline.


Following
is a summary of the warrant activity:





Warrants
      outstanding
            
            
            Weighted
      Average Exercise Price
            
            
            Aggregate
      Intrinsic ValueOutstanding,
      March 31, 2008
            
            
            213,315
            
            
            $
            0.39
            
            
            $
            236,000Granted
            
            
            -Forfeited
            
            
            25,816Exercised
            
            
            (187,499
            )Outstanding,
      March 31, 2009
            
            
            -
            
            
            
            -
            
            
            $
            -





No
warrants were outstanding as of March 31, 2009.




6.
Employee Benefit Plan




The
Company has a defined contribution 401(k) employee retirement plan (the “Plan”).
Under the terms of this Safe Harbor Plan, (covering the period of 4/1/08 to
3/31/09) the Qualified Matching Contribution is defined as follows: The matching
contribution of 100% of salary deferral contributions up to 3% of pay, plus 50%
of salary deferral contributions from 3% to 5% of pay for the plan year, fiscal
year ended March 31, 2009. The pay may be restricted to the annual pay
limit announced by the IRS*. (* This limit will be adjusted to reflect any
annual cost-of living increases announced by the IRS.) All eligible employees
may participate in this plan. After meeting the three-month minimum of
employment with the Company, employees become eligible and may choose to enroll
at the next quarterly open enrollment. Contributions to the Plan for the 2009
and 2008 fiscal years were $155,000 and $122,000, respectively.




7.
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.




8.
Supplemental Disclosure of Cash Flows




The
Company prepares its statements of cash flows using the indirect method as
defined under the Financial Accounting Standard 95.




The
Company paid $118,000 and $0 income tax and $105,000 and $198,000 interest
during the years ended March 31, 2009 and 2008, respectively.




9.
Acquisition of Mica-Tech’s Remaining Interest




On
April 11, 2007, the Company acquired a controlling position in Mica-Tech,
in a cash-for-stock transaction. Under the terms of the agreement, AML purchased
51% or 4,146,400 shares of Mica-Tech’s outstanding common stock for an aggregate
price of $800,000. Prior to the acquisition, Mica-Tech owed two promissory notes
to AML and as a result part of the purchase consideration was paid through
cancellation of these notes amounting to $210,000 while the remaining $590,000
of the purchase price was paid in cash as per the details below. The Company
capitalized $70,000 in acquisition cost.




On
February 19, 2008, the Company entered into an agreement and plan of merger
to acquire the remaining interest in Mica-Tech or 49% of the outstanding common
stock of Mica-Tech. Under the terms of the agreement, a wholly-owned subsidiary
of the Company would merge with Mica-Tech. Following the merger, Mica-Tech would
become wholly-owned by the Company. Mica-Tech and its major shareholders
provided customary representations and warranties regarding due authority, good
standing, operations, and financial conditions.




The
Mica-Tech shareholders in the aggregate received $1,000 for their Mica-Tech
common stock. Since AML owned 51% of Mica-Tech shares on this date, the cash
distribution to other Mica-Tech shareholders was $490. In addition, the Company
granted approximately 109,000 options to purchase Company common stock to Larry
Janssen, and other current employees of Mica-Tech at the Company common stock
trading price on February 19, 2008. The Company granted 1,200,000 options
to purchase Company common stock to Steven Ow at the Company common stock
trading price on February 19, 2008. Another shareholder, Jeff Romney was
granted a warrant to purchase 816 shares of Company common stock. The options
granted to Steven Ow and the warrants granted to Jeff Romney were expired on
December 1, 2008 when the conditions for option exercisability did not meet the
deadline.




40




Here is a
summary of cash inflows (outflows) in connection to Mica-Tech
acquisition:





Cash
      received (paid)
            
            Description$
            604,000
            
            
            
            Mica-Tech’s
      cash balance as of April 11, 2007 (inflow to the Company’s total
      cash)(
            590,000
            )
            
            
            Cash
      paid to Mica-Tech during April 07 acquisition (51%
    ownership)(
            490
            )
            
            
            Cash
      paid to Mica-Tech’s shareholders during February 08 acquisition (remaining
      49% ownership)(
            70,000
            )
            
            
            Cash
      paid for acquisition costs in our 2008 fiscal year15,000
            
            
            
            Cash
      paid for acquisition costs in our 2007 fiscal year *($
            41,490
            )
            
            
            Net
      cash used in Mica-Tech acquisition




* This
amount was an advance payment made in March 2007 in the course of acquisition
process. It was classified as “Prepaid Assets” and included in “Cash Flows from
Operating Activities” on the Consolidated Statements of Cash Flows for the
fiscal year ending March 31, 2007. When the acquisition transaction was
completed during our 2008 fiscal year, we had to reclass this amount from “Cash
Flows from Operating Activities” to “Cash Flows from Investing Activities” and
the reclassification resulted in an addition to “Cash Flows from Investing
Activities”.





A summary
of the assets acquired and liabilities assumed in the acquisition
follows:





February 19,
      2008Cash
            
            $
            40,000Receivables,
      net
            
            
            121,000Inventory
            
            
            286,000Property
      and equipment, net
            
            
            48,000Prepaid
      assets
            
            
            23,000Intangible
      assets
            
            
            3,158,000Total
      assets acquired
            
            $
            3,676,000Current
      liabilities
            
            
            (1,089,000
            )Notes
      payable
            
            
            (583,000
            )Net
      assets acquired
            
            $
            2,004,000Consideration
      paid in:Cash
            
            
            801,000Capitalization
      of acquisition cost
            
            
            70,000Loss
      from operations from April 11, 2007—February 19, 2008
    *
            
            
            (484,000
            )Negative
      Goodwill
            
            
            (1,617,000
            )




The
acquisition of Mica Tech by the Company resulted in negative goodwill of
$1,617,000, which was allocated against the intangible assets of the
Company.




Of the
$1,540,000 in acquired intangible assets from the Mica-Tech acquisition, $84,000
was assigned to Customer Relationship (6-year useful life), $1,416,000 to
Existing Technology (15-year useful life), and $40,000 to Trademarks and Brand
Name (15-year useful life). All items stated are subject to
amortization.




UNAUDITED
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION DISCLOSURE


FOR
THE TWELVE MONTH PERIOD ENDED MARCH 31, 2008








41




Twelve
      month period ended March 31, 2008(un-audited
      and in thousands of dollars)Net
      Revenues
            
            $
            9,296Operating
      loss
            
            $
            (1,676
            )Net
      loss
            
            $
            (73
            )Loss
      per share—basic
            
            $
            (0.01
            )Loss
      per share—diluted
            
            $
            (0.01
            )




10.
Settlement of Debts




During
our 2009 fiscal year, Mica-Tech realized a gain of $521,000 from the
settlement of a promissory note and a gain of $45,000 from the settlement
of royalties payable to Southern California Edison. These are considered a
one-time event.






11.
Subsequent Events




On May
13, 2009, the Company announced that its Board of Directors has authorized the
repurchase of up to one million shares of the Company’s common
stock.  As of March 31, 2009, the Company had 10,654,665 shares of
common stock outstanding. Purchases are being made in the open market as
determined by AML management and in accordance with Securities and Exchange
Commission requirements.  As of the close of business June 5, 2009,
the Company repurchased 35,800 shares of common stock at the weighted average
price of $0.69 per share.




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




There are not and have not been any
disagreements between us and our accountants on any matter of accounting
principles, practices, or financial statement disclosure during our two most
recent fiscal years and subsequent interim period.




ITEM
9A.  CONTROLS AND PROCEDURES




Disclosure
Controls and Procedures




Our
management, with the participation of our Chief Executive Officer and Principal
Financial Officer, has evaluated the effectiveness of the Company’s disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) as of the end of the period covered by this Report (March 31, 2009).
Based on such evaluation, our Chief Executive Officer and Principal Financial
Officer have concluded that, as of the end of such period, the Company’s
disclosure controls and procedures are effective in recording, processing,
summarizing and reporting, on a timely basis, information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act and are effective in ensuring that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including the Company’s Chief Executive Officer and Principal Financial Officer,
as appropriate to allow timely decisions regarding required
disclosure.




Management’s
Report on Internal Control over Financial Reporting




Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting. The Company’s internal control over financial
reporting has been designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles generally accepted in the United States of America.




The
Company’s internal control over financial reporting includes policies and
procedures that pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect transactions and dispositions of assets of
the Company; provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America, and
that receipts and expenditures are being made only in accordance with
authorization of management and directors of the Company; and provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the Company’s assets that could have a material effect on
the Company’s financial statements.




42




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.




Management
assessed the effectiveness of the Company’s internal control over financial
reporting at March 31, 2009. In making this assessment, management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) in Internal Control—Integrated
Framework. Based on that assessment under those criteria, management has
determined that, at March 31, 2009, the Company’s internal control over
financial reporting was effective.




This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the SEC that permit the
Company to provide only management’s report in this annual report.




Changes
in Internal Control Over Financial Reporting




There
have been no changes in the Company’s internal control over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fourth quarter of our 2009 fiscal year that have
materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.




ITEM
9B.  OTHER INFORMATION




On
September 16, 2008, we modified our line of credit agreement with Bridge Bank to
add a new $300,000 equipment term loan to our existing line of credit and modify
the terms on the agreement.




PART
III




ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE




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 that will be delivered to our shareholders in
connection with our 2009 Annual Meeting of Stockholders to be held on
September 10, 2009.




ITEM
11.  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 that will be delivered to our shareholders in
connection with our 2009 Annual Meeting of Stockholders to be held on
September 10, 2009.




ITEM
12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS




Information
required by this item is incorporated by reference to the information under the
caption “Principal Stockholders” in the Company’s definitive proxy statement
that will be delivered to our shareholders in connection with our 2009 Annual
Meeting of Stockholders to be held on September 10, 2009.




ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE




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 that will be delivered to our shareholders in
connection with our 2009 Annual Meeting of Stockholders to be held on
September 10, 2009.




43




ITEM
14.  PRINCIPAL ACCOUNTING FEES AND SERVICES




The
following table sets forth fees billed to us by our auditors during the fiscal
years ended March 31, 2009 and March 31, 2008 for: (i) services
rendered for the audit of our annual financial statements and the review of our
quarterly financial statements, (ii) services by our auditor that are
reasonably related to the performance of the audit or review of our financial
statements and that are not reported as Audit Fees, (iii) services rendered
in connection with tax compliance, tax advice and tax planning, and
(iv) all other fees for services rendered. “All other fees” include fees
related to (or paid for) in the fiscal year ended March 31, 2009 and fees
related to fiscal year ended March 31, 2008.




For
      the period endedMarch 31, 2009
            
            
            March 31, 2008(i)
            Audit
      fees
            
            $
            66,000
            
            
            $
            71,000(ii)
            Audit
      related
      fees
            
            
            —
            
            
            
            —(iii)
            Tax
      fees
            
            
            —
            
            
            
            —(iv)
            All
      other
      fees
            
            
            —
            
            
            
            —$
            66,000
            
            
            $
            71,000










44




PART
IV




ITEM
15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES




(a)           The
financial statements for the fiscal year ended March 31, 2009 are filed with
this report under Item 8.




(b)           The
following are attached as exhibits to this Annual Report:




Exhibit
                Number
            
            Description2.1
            
            Merger
      Agreement entered into as of May 25, 2004 by and among AML
      Communications Inc., a Delaware corporation, AML Holdings, LLC,
      a California limited liability company and Microwave Power, Inc., a
      California corporation(1)3.1
            
            Certificate
      of Incorporation(2)3.2
            
            Bylaws(2)10.1
            
            Form
      of Indemnity Agreement(2)10.2
            
            Lease,
      dated March 11, 1996, between the Company and Parr-Bohn
      Properties, Ltd. II, a California Limited
    Partnership(3)10.3
            
            Fourth
      Amended and Restated 1995 Stock Option Agreement at June 10,
      2002(4)10.4
            
            Parr-Bohn
      Properties First Amendment to lease of 1000 Avenida Acaso, Camarillo,
      CA.(4)10.5
            
            Employment
      Agreement with Dr. Marina Bujatti, of MPI, dated June 18,
      2004(4)10.6
            
            Employment
      Agreement with Dr. Franco Sechi, of MPI, dated June 18,
      2004(4)10.7
            
            Interim
      Lease and Proposed Lease Terms(5)10.8
            
            Financing
      Agreement dated July 8, 2004 with Bridge Bank(6)10.9
            
            Enterprise
      Agreement Number 4627 dated August 26,
2004(7)10.10
            
            Business
      Financing Modification with Bridge Bank, dated December 23,
      2005(8)10.11
            
            Business
      Financing Modification with Bridge Bank dated
      January 19,2006(8)10.12
            
            Fifth
      Amended and Restated 1995 Stock Option Agreement at July 12,
      2005(9)10.13
            
            Loan
      Agreement with Bank of America for purchase of MPI
    building(8)10.14
            
            2005
      Equity Incentive Plan(10)10.15
            
            Business
      Financing Agreement with Bridge Bank dated July 17,
      2006(11)10.16
            
            Stock
      Purchase Agreement with Mica-Tech, dated April 11,
      2007(12)10.17
            
            Option
      Agreement with shareholders and optionholders of Mica-Tech, dated
      April 11, 2007(12)10.18
            
            Agreement
      and Plan of Merger by and among AML Communications, Inc.,
      Mica-Tech, Inc., Mica-Tech Acquisition, Inc. and the
      shareholders of Mica-Tech, Inc. dated as of February 19,
      2008(13)10.19
            
            Option
      Agreement—Steven Ow, dated February 19, 2008(13)10.20
            
            Parr-Bohn
      Properties Second Amendment to lease of 1000 Avenida Acaso, Camarillo, CA,
      dated February 20, 2008(14).10.21
            
            Business
      Financing Modification with Bridge Bank, dated April 5,
      2007(14)10.22
            
            Business
      Financing Modification with Bridge Bank, dated September 16,
      2008(15)14.1
            
            Code
      of Ethics (16)21.1
            
            List
      of Subsidiaries (16)31.1
            
            Certification
      by the Chief Executive Officer(16)31.2
            
            Certification
      by the Principal Financial Officer(16)32.1
            
            Certification
      pursuant to Section 906 of the Sarbanes Oxley
  Act(16)32.2
            
            Certification
      pursuant to Section 906 of the Sarbanes Oxley
  Act(16)





(1)
            Previously
      filed with the Securities and Exchange Commission as Exhibit 10.13 to
      the Company’s Form 10-KSB for the fiscal year ended March 31,
      2004.




(2)
            Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Registration Statement on Form SB-2 (No. 33-99102-LA) and
      incorporated herein by reference.




(3)
            Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Company’s Form 10-KSB for fiscal year ended March 31, 1996 and
      incorporated herein by reference




(4)
            Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Company’s Form 10-KSB for the fiscal year ended March 31, 2004
      and incorporated herein by
reference.




45




(5)
            Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Company’s Form 8-K dated July 6, 2004 and incorporated herein by
      reference.




(6)
            Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Company’s Form 10-QSB for the quarter ended June 30, 2004 and
      incorporated herein by reference.




(7)
            Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Company’s Form 8-K/A dated May 4, 2007 (unredacted version) and
      incorporated herein by reference.




(8)
            Previously
      filed with Securities and Exchange Commission as an exhibit to the
      Company’s Form 10-QSB for the quarter ended December 31, 2005
      and incorporated herein by
reference.




(9)
            Previously
      filed with the Securities and Exchange Commission as an attachment to the
      Company’s Proxy Statement dated July 29,
  2005.




(10)
            Previously
      filed with Securities and Exchange Commission as an exhibit to the
      Company’s Form S-8 Registration Statement (no. 333-131588) dated
      February 6, 2006 and incorporated herein by
  reference.




(11)
            Previously
      filed with Securities and Exchange Commission as an exhibit to the
      Company’s Form 10-QSB for the quarter ended June 30, 2006 and
      incorporated herein by reference.




(12)
            Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Company’s Form 8-K dated April 20, 2007 and incorporated herein
      by reference.




(13)
            Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Company’s Form 8-K dated March 3, 2008 and incorporated herein
      by reference.




(14)
            Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Company’s Form 10-KSB for the fiscal year ended March 31, 2008
      and incorporated herein by
reference.




(15)
            Previously
      filed with Securities and Exchange Commission as an exhibit to the
      Company’s Form 10-Q for the quarter ended September 30, 2008 and
      incorporated herein by reference.




(16)
            Filed
      herewith







46




SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly 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 29, 2009







Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.




Signature
            
            Title
            Date/s/
      Jacob Inbar
            
            President,
      Chief Executive Officer and
            June
      29, 2009Jacob
      Inbar
            
            Chairman
      of the Board (Principal Executive Officer)/s/
      Tiberiu Mazilu
            
            Vice
      President-Engineering and Director
            June
      29, 2009Tiberiu
      Mazilu/s/
      Edwin J. McAvoy
            
            Secretary,
      Vice President-Sales, and
            June
      29, 2009Edwin
      J. McAvoy
            
            Director/s/
      Heera Lee
            
            Principal
      Financial Officer and
            June
      29, 2009Heera
      Lee
            
            Director
      of Finance/s/
      Richard W. Flatow
            
            Director
            June
      29, 2009Richard
      W. Flatow/s/
      Gerald M. Starek
            
            Director
            June
      29, 2009Gerald
      M. Starek






47