**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-QSB**
| **x**                                                                                                                                           | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)  OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|-------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|
|                                                                                                                                            |                                                                                          |
| **For the  quarterly period ended:**      **June 30, 2007**                                                       |
|                                                                                                                                            |
| **or**                                                                                                                                          |
|                                                                                                                                            |
| **o**                                                                                                                                           | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(D) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|                                                                                                                                            |                                                                                          |
| **For the  transition period from          to           ** |
| ** **                                                                                                                                      |
| **Commission  File  Number:            0-27252**                                    |

 

**AMLCOMMUNICATIONS, INC.**

(Exact name ofsmall business issuer as specified in its charter)
| **Delaware**                                          |   | **77-0130894**       |
|-------------------------------------------------------|--------|----------------------|
| (State or Other  jurisdiction of                      |   | (IRS Employer        |
| incorporation or  organization)                       |   | Identification  No.) |
|                                                  |   |                 |
| **1000  Avenida Acaso**                               |   |                 |
| **Camarillo,  California**                            |   | **93012**            |
| (Address of principal  executive offices)             |   | (Zip Code)           |
|                                                  |   |                 |
| **(805)  388-1345**                                   |
| (Issuer’s  telephone number including area code) |

 

Check whether theissuer (1) has filed all reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the small business issuer was required to file suchreports), and (2) has been subject to such filing requirements for the past 90days.  Yes xNo o

Indicate by check markwhether the small business issuer is a shell company (as defined in Rule 12b-2of the Exchange Act).

Yes oNo x

State the number ofshares outstanding of each of the issuer’s classes of common stock, as of thelatest practicable date.

Common Stock Outstanding as of August 3, 2007: 10,256,666 shares

Transitional Small Business Disclosure Format: Yes oNo x

 

----

| **AML Communications, Inc.** |
|------------------------------|
| ** **                   |
| ** **                   | **Index to Form 10-QSB** | ** ** |
| ** **                   | ** ** | ** ** |
| Item 1.                      | Financial Statements  (Unaudited) |   |
|                         |   |   |
|                         | Unaudited Consolidated  Balance Sheet as of June 30, 2007 |   |
|                         |   |   |
|                         | Unaudited  Consolidated Statements of Operations for the three month periods ended June 30, 2007 and June 30, 2006 |   |
|                         |   |   |
|                         | Unaudited  Consolidated Statements of Cash flows for the three month periods ended June  30, 2007 and June 30, 2006 |   |
|                         |   |   |
|                         | Notes to  Unaudited Consolidated Financial Statements |   |
|                         |   |   |
| Item 2.                      | Management’s  Discussion and Analysis or Plan of Operation |   |
|                         |   |   |
| Item 3.                      | Controls and  Procedures |   |
|                         |   |   |
| Part II                      | Other Information |   |
|                         |   |   |
| Item 1.                      | Legal Proceedings |   |
|                         |   |   |
| Item 2.                      | Unregistered  Sales of Equity Securities and Use of Proceeds |   |
|                         |   |   |
| Item 3.                      | Defaults Upon  Senior Securities |   |
|                         |   |   |
| Item 4.                      | Submission of  Matters to a Vote of Security Holders |   |
|                         |   |   |
| Item 5.                      | Other Information |   |
|                         |   |   |
| Item  6.                     | Exhibits |   |
|                         |   |   |
| ** **                   | SIGNATURES |   |

 

2

----

**PART I - FINANCIAL INFORMATION**

**Item 1.****           Financial Statements**

**AML COMMUNICATIONS, INC.**

**CONSOLIDATED BALANCE SHEET**

**(unaudited)**
| ** **                                                                                                                     | ** ** | **June 30**,  2007 | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                                                                     | ** ** | ** **              | ** ** |
| **ASSETS**                                                                                                                     | ** ** | ** **              | ** ** |
| Current Assets:                                                                                                                |       |                    |       |
| Cash and cash  equivalents                                                                                                     |       | $                       | 583,000    |   |
| Accounts  receivable, net                                                                                                      |       | 1,994,000               |       |
| Inventories, net                                                                                                               |       | 2,524,000               |       |
| Note receivable                                                                                                                |       | 9,000                   |       |
| Prepaid Expenses                                                                                                               |       | 147,000                 |       |
| Deferred Tax  Asset - current                                                                                                  |       | 709,000                 |       |
| Total current  assets                                                                                                          |       | 5,966,000               |       |
|                                                                                                                           |       |                    |       |
| Property and  Equipment, at cost                                                                                               |       | 6,816,000               |       |
| Less:  Accumulated depreciation                                                                                                |       | (4,077,000              | )          |
| Property and  Equipment, net                                                                                                   |       | 2,739,000               |       |
|                                                                                                                           |       |                    |       |
| Deferred Tax  Asset                                                                                                            |       | 2,615,000               |       |
| Intangible Assets:                                                                                                             |       |                    |       |
| Technologies,  net                                                                                                             |       | 2,364,000               |       |
| Patents, net                                                                                                                   |       | 116,000                 |       |
| Customer  relationship, net                                                                                                    |       | 304,000                 |       |
| Backlog, net                                                                                                                   |       | 102,000                 |       |
| Trademarks and  brand names                                                                                                    |       | 241,000                 |       |
|                                                                                                                           |       | 3,127,000               |       |
| Deposits                                                                                                                       |       | 30,000                  |       |
|                                                                                                                           |       | $                       | 14,477,000 |   |
| ** **                                                                                                                     | ** ** | ** **              | ** ** |
| **LIABILITIES AND STOCKHOLDERS’  EQUITY**                                                                                 |       |                    |       |
|                                                                                                                           |       |                    |       |
| Current Liabilities:                                                                                                           |       |                    |       |
| Line of Credit                                                                                                                 |       | $                       | 1,034,000  |   |
| Accounts payable                                                                                                               |       | 772,000                 |       |
| Current portion  of long term debt                                                                                             |       | 11,000                  |       |
| Accrued  expenses:                                                                                                             |       |                    |       |
| Accrued payroll  and payroll related expenses                                                                                  |       | 392,000                 |       |
| Accrued  income taxes                                                                                                     |       | 8,000                   |       |
| Other accrued  liabilities                                                                                                     |       | 292,000                 |       |
| Total current  liabilities                                                                                                     |       | 2,509,000               |       |
|                                                                                                                           |       |                    |       |
| Notes Payable                                                                                                                  |       | 1,225,000               |       |
| Commitments                                                                                                                    |       | —                  |       |
|                                                                                                                           |       |                    |       |
| Stockholders’ Equity:                                                                                                     |       |                    |       |
| Common stock,  $0.01 par value:15,000,000 shares authorized;   10,256,666 shares issued and outstanding at June 30, 2007. |       | 103,000                 |       |
| Capital in  excess of par value                                                                                                |       | 13,651,000              |       |
| Accumulated  deficit                                                                                                           |       | (3,789,000              | )          |
| Minority  Interest                                                                                                             |       | 777,000                 |       |
| Total  stockholders’ equity                                                                                               |       | 10,742,000              |       |
|                                                                                                                           |       | $                       | 14,477,000 |   |

 

The accompanying notes are an integral part of these financialstatements.

3

----

**AMLCOMMUNICATIONS, INC.**

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

**(Unaudited)**
| ** **                                                             | ** ** | **Three Month Periods Ended** | ** ** |
|------------------------------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                             | ** ** | **June 30,**                            | ** ** | **June 30,** | ** ** |
| ** **                                                             | ** ** | **2007**                                     | ** ** | **200**6 | ** ** |
|                                                                   |       |                                         |       |   |   |
| Net sales                                                              |       | $                                            | 2,704,000  |   | $ | 2,302,000 |   |
| Cost of goods  sold                                                    |       | 1,546,000                                    |       | 1,323,000 |   |
| Gross profit                                                           |       | 1,158,000                                    |       | 979,000 |   |
|                                                                   |       |                                         |       |   |   |
| Operating  expenses:                                                   |       |                                         |       |   |   |
| Selling, general & administrative                                  |       | 784,000                                      |       | 618,000 |   |
| Research and development                                               |       | 575,000                                      |       | 319,000 |   |
| Total operating expenses                                               |       | 1,359,000                                    |       | 937,000 |   |
|                                                                   |       |                                         |       |   |   |
| Income/(loss)  from operations                                         |       | (201,000                                     | )          | 42,000 |   |
|                                                                   |       |                                         |       |   |   |
| Other income/(expense), net                                            |       | (36,000                                      | )          | (8,000 | ) |
| Income/(loss)  before provision for income taxes and minority interest |       | (237,000                                     | )          | 34,000 |   |
| Provision for  income taxes                                            |       | 7,000                                        |       | 8,000 |   |
| Minority  Interest                                                     |       | 198,000                                      |       | ... |   |
| Net  income/(loss)                                                     |       | $                                            | (46,000    | ) | $ | 26,000 |   |
|                                                                   |       |                                         |       |   |   |
| Basic earnings  (loss) per common share                                |       | $                                            | (0.00      | ) | $ | 0.00 |   |
|                                                                   |       |                                         |       |   |   |
| Basic weighted  average number of shares of common stock outstanding   |       | 10,257,000                                   |       | 10,234,000 |   |
|                                                                   |       |                                         |       |   |   |
| Diluted earnings  (loss) per common share                              |       | $                                            | (0.00      | ) | $ | 0.00 |   |
|                                                                   |       |                                         |       |   |   |
| Diluted weighted  average number of shares of common stock outstanding |       | 10,257,000                                   |       | 10,833,000 |   |

 

The accompanying notes are an integral part of these financialstatements.

4

----

**AML COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(unaudited)**
| ** **                                                                                | ** ** | **Three Month Periods Ended** | ** ** |
|-------------------------------------------------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                                                | ** ** | **June 30**,  2007                      | ** ** | **June 30**,  2006 | ** ** |
| Cash Flows from  Operating Activities:                                                    |       |                                         |       |   |   |
| Net income (loss)                                                                         |       | $                                            | (46,000    | ) | $ | 26,000 |   |
| Adjustments to  reconcile net income (loss) to net cash provided by operating activities: |       |                                         |       |   |   |
| Depreciation                                                                              |       | 154,000                                      |       | 89,000 |   |
| Bad debt expense                                                                          |       | (6,000                                       | )          | — |   |
| Inventory Reserves                                                                        |       | (2,000                                       | )          | 3,000 |   |
| Stock Options Granted for Compensation                                                    |       | 36,000                                       |       | 26,000 |   |
| Amortization                                                                              |       | 130,000                                      |       | 54,000 |   |
| Minority Interest                                                                         |       | (198,000                                     | )          | — |   |
| Changes in  assets and liabilities:                                                       |       |                                         |       |   |   |
| Decrease  (increase) in:                                                                  |       |                                         |       |   |   |
| Accounts receivable                                                                       |       | (634,000                                     | )          | (264,000 | ) |
| Inventories                                                                               |       | (492,000                                     | )          | (22,000 | ) |
| Other current assets                                                                      |       | (50,000                                      | )          | 161,000 |   |
| Increase  (decrease) in:                                                                  |       |                                         |       |   |   |
| Accounts payable                                                                          |       | (218,000                                     | )          | 20,000 |   |
| Accrued income taxes                                                                      |       | 8,000                                        |       | 8,000 |   |
| Accrued expenses                                                                          |       | (117,000                                     | )          | (257,000 | ) |
| Net cash used in  operating activities                                                    |       | (1,435,000                                   | )          | (156,000 | ) |
|                                                                                      |       |                                         |       |   |   |
| Cash Flows from  Investing Activities:                                                    |       |                                         |       |   |   |
| Purchases of property and equipment                                                       |       | (68,000                                      | )          | (364,000 | ) |
| Cash used in Mica-Tech acquisition                                                        |       | (13,000                                      | )          | — |   |
| Net cash used in  investing activities                                                    |       | (81,000                                      | )          | (364,000 | ) |
|                                                                                      |       |                                         |       |   |   |
| Cash Flows from  Financing Activities:                                                    |       |                                         |       |   |   |
| Proceeds from line of credit                                                              |       | 103,000                                      |       | (42,000 | ) |
| Payments on notes payable                                                                 |       | (78,000                                      | )          | (2,000 | ) |
| Principle payments capital lease obligations                                              |       | (4,000                                       | )          | — |   |
| Net cash provided  by (used in) financing activities                                      |       | 21,000                                       |       | (44,000 | ) |
|                                                                                      |       |                                         |       |   |   |
| Net increase  (decrease)  in Cash and Cash  Equivalents                              |       | (1,495,000                                   | )          | (564,000 | ) |
| Cash and Cash  Equivalents, beginning of period                                           |       | 2,078,000                                    |       | 2,368,000 |   |
| Cash and Cash  Equivalents, end of period                                                 |       | $                                            | 583,000    |   | $ | 1,804,000 |   |
| Supplemental  disclosure of cash flow information:                                        |       |                                         |       |   |   |
| Cash paid during the period for:                                                          |       |                                         |       |   |   |
| Interest                                                                                  |       | $                                            | 43,000     |   | $ | 19,000 |   |
| Income Taxes                                                                              |       | $                                            | —     |   | $ | 8,000 |   |
| Supplemental disclosure  of non-cash flow investing and financing activity:               |       |                                         |       |   |   |
| Debt incurred to  purchase property and equipment                                         |       | $                                            | 398,000    |   | $ | 264,000 |   |

 

The accompanying notes are an integral part of thesefinancial statements.

5

----

**AML COMMUNICATIONS,INC.**

**NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

**June 30, 2007**

**1.****             Basis of Presentation**

AML Communications (the “Company” or “We”) currentlydesigns, manufactures, and markets radio frequency (RF) and microwave, lownoise, medium and high power amplifiers and subsystems serving primarily thedefense microwave market.  Our businessis comprised of three reportable segments.  AML Communications, Inc. (AML) designs, manufactures, and marketsamplifiers and related products for the defense microwave.  Our division Microwave Power, Inc. (MPI)designs, manufactures, and markets high power microwave amplifiers for thedefense market.  Our defense industry productsare used primarily in electronic systems for tactical aircraft, ships, groundsystems, and missile systems.  Theseproducts are sold directly by us as well as through independent salesrepresentatives.  On April 11, 2007, weacquired a controlling interest of Mica-Tech, Inc. (Mica-Tech).  Our fifty-one (51) percent subsidiary Mica-Techdesigns, manufactures, and markets an intelligent communication system toprovide Supervisory Control And Data Acquisition (SCADA) of the electric powergrid.  We had two reportable segments(AML) and (MPI) for the three month periods ended June 30, 2006 and the three reportable segments (AML), (MPI),and (Mica-Tech) for the three month periods ended June 30, 2007. 

We were incorporated in California in 1986 as AdvancedMilliwave Laboratories, Inc.  Early in1994, we changed our name to AML Communications, Inc.  In December 1995, in conjunction with theinitial public offering of our common stock, we changed our state ofincorporation from California to Delaware. In May 1996, we moved our principle office and manufacturing facility toour current location, 1000 Avenida Acaso, Camarillo, California 93012.  

The accompanying financial statements have beenprepared in conformity with accounting principles generally accepted in theUnited States.  However, certaininformation and footnote disclosures normally included in financial statementsprepared in accordance with accounting principles generally accepted in theUnited States have been omitted or condensed pursuant to the rules andregulations of the Securities and Exchange Commission (“SEC”).  In the opinion of management, all adjustments(consisting of normal recurring adjustments) necessary for a fair presentationhave been included.  The results ofoperations and cash flows for the three-month period presented are not necessarily indicative of theresults of operations for a full year. These financial statements should be read in conjunction with theCompany’s March 31, 2007 auditedfinancial statements and notes thereto included in the Company’s Annual Reporton Form 10-KSB.

**Principles of Consolidation**

The accompanyingconsolidated financial statements include the accounts of AML Communications,Inc., its wholly owned division, Microwave Power, Inc., and its fifty-one (51)percent owned subsidiary, Mica-Tech, Inc. from the acquisition date, April 11,2007.  While the historical financialstatements includes the accounts of AML Communications, Inc., and its whollyowned division, Microwave Power, Inc. All significant inter-company accountsand transactions have been eliminated in consolidation.  The three month period ended June 30, 2007includes 81 days of Mica-Tech, Inc.’s results of operations prospectively fromthe date of the acquisition, or April 11, 2007 through June 30, 2007.

**2.****             Earnings Per Share**

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

Basic earnings per share is computed by dividing netincome or loss by the weighted average number of shares outstanding for theyear.  “Diluted” earnings per share iscomputed by dividing net income or loss by the total of the weighted averagenumber of shares outstanding, and the dilutive effect of outstanding stockoptions and warrants (applying the treasury stock method). 

6

----

The Company had approximately 1,922,000 of grantedstock options and warrants that were exercisable as of June 30, 2007 and approximately 1,822,000 of granted stock options andwarrants exercisable at June 30, 2006.

The following is areconciliation of the numerators and denominators of the basic and dilutedearnings per share computations:
| **Three months ended **June 30, 2007 | ** ** | **Net Income** | ** ** | **Shares** | ** ** | **Per Share** | ** ** |
|---------------------------------------------------------------|------------|---------------------|------------|------------|------------|--------------------|------------|
| Basic and  diluted loss per shares:                           |       |                |       |       |       |               |       |
| Net loss available to common stockholders                     |       | $                   | (46,000    | )          | 10,257,000 |               | $          | (0.00 | ) |
|                                                               |            |                     |            |            |            |                    |            |  |  |

 
| **Three months ended **June 30, 2006 | ** ** | **Net Income** | ** ** | **Shares** | ** ** | **Per Share** | ** ** |
|---------------------------------------------------------------|------------|---------------------|------------|------------|------------|--------------------|------------|
| Basic earnings  per shares:                                   |       |                |       |       |       |               |       |
| Net income available to common stockholders                   |       | $                   | 26,000     |       | 10,234,000 |               | $          | 0.00 |   |
| Effect of  dilutive securities:                               |       |                |       |       |       |               |       |
| Stock options & warrants                                  |       |                |       | 599,000    |       |               |       |
| Diluted earnings  per share:                                  |       | $                   | 26,000     |       | 10,833,000 |               | $          | 0.00 |   |

 

**3.**             **Accounts Receivable**

Accounts receivable as ofJune 30, 2007 are asfollows:
| Accounts receivable      |       | $       | 2,101,000 |       |
|--------------------------|------------|---------|-----------|------------|
| Allowance for  bad debts |       | 107,000 |      |
|                     | ** ** | $       | 1,994,000 | ** ** |

 

**4.**             **Inventories**

Inventories include costs of material, labor andmanufacturing overhead and are stated at the lower of cost (first-in,first-out) or market and consist of the following:
|                               | ** ** | **June 30, 2007** | ** ** |
|-------------------------------|------------|-----------------------------|------------|
|                          |       |                        |       |
| Raw material,  net of reserve |       | $                           | 2,154,000  |   |
| Work-in-process               |       | 441,000                     |       |
| Finished goods                |       | 320,000                     |       |
| Inventory  reserve            |       | (391,000                    | )          |
|                          |       | $                           | 2,524,000  |   |

 

**5.****             Property& equipment**

Property and equipment are being depreciated and amortized on thestraight-line basis over the following estimated useful lives: 
| Machinery and equipment |   | 3 to 5 years  |   |
|-------------------------|--------|---------------|--------|
| Furniture and  fixtures |   | 5 years       |   |
| Leasehold  improvements |   | Life of lease |   |
| Building                |   | 30 years      |   |

 

Depreciation expense was $154,000 and $89,000 for the three months ended June 30, 2007 and June 30, 2006respectively.

7

----

The Company capitalizes expenditures that materiallyincrease asset lives and charges ordinary repairs and maintenance to operationsas incurred.  When assets are sold orotherwise disposed of, the cost and related depreciation or amortization isremoved from the accounts and any resulting gain or loss is included in otherincome (expense) in the accompanying statements of operations. 

Property and equipment consist of the following:
|                           | ** ** | **June 30,  200**7 | ** ** |
|---------------------------|------------|-------------------------|------------|
| Building                  |       | $                       | 800,000    |   |
| Machinery and  equipment  |       | 5,152,000               |       |
| Furniture and  fixtures   |       | 174,000                 |       |
| Leasehold  improvements   |       | 690,000                 |       |
| Accumulated  depreciation |       | (4,077,000              | )          |
|                      |       | $                       | 2,739,000  |   |

 

**6.****             Intangible Assets**

The Company accounts for its intangible assets underthe 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 thatthe asset has been impaired.  The Companyevaluates if the assets are impaired annually or on an interim basis if anevent occurs or circumstances change to suggest that the assets value hasdiminished.  Under SFAS 142 intangibleassets with indefinite useful lives are required to be tested annually forimpairment or whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable.  Recoverability of assets is measured by acomparison of the carrying amount of the assets to future net cash flowsexpected to be generated by the assets. If the assets are considered to be impaired, the impairment to berecognized is measured by the amount by which the carrying amount exceeds thefair value of the assets.  During the threemonths ended June 30, 2007, the Company recognized no impairment.

At June 30, 2007, intangibles consist of the following:
| **Intangibles**            | ** ** | **Gross Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** | **Net**    | ** ** |
|----------------------------|------------|---------------------------------|------------|-------------------------------|------------|------------|------------|
|                       |       |                            |       |                          |       |       |       |
| Amortized  intangibles:    |       |                            |       |                          |       |       |       |
| Patents                    |       | $                               | 464,000    |                          | $          | (348,000   | )          | $ | 116,000 |   |
| Existing Technology        |       | 2,641,000                       |       | (277,000                      | )          | 2,364,000  |       |
| Customer List              |       | 339,000                         |       | (339,000                      | )          | —     |       |
| Customer Relationship      |       | 328,000                         |       | (24,000                       | )          | 304,000    |       |
| Backlog                    |       | 132,000                         |       | (30,000                       | )          | 102,000    |       |
|                       |       |                            |       |                          |       |       |       |
| Unamortized intangibles:   |       |                            |       |                          |       |       |       |
| Trademarks and Brand Names |       | 241,000                         |       | —                        |       | 241,000    |       |
|                       |       | $                               | 4,145,000  |                          | $          | (1,018,000 | )          | $ | 3,127,000 |   |

 

Due to the acquisition of MPI in the quarter endedJune 30, 2004 and the acquisition of Mica-Tech on April 11, 2007, we recordedthe intangible assets above.  We assigned an 8 year life to patents, a 12year life to Existing Technology, a 3 year life to Customer Lists, a 3 yearlife to Customer Relationship, and a 1 year life to Backlog.  All are subject to amortization.  The value assigned to trademarks and brandnames, which have an indefinite life, should not be amortized.

Amortization expense from continuing operation for thethree months ended June 30, 2007 was $130,000.  We expect amortization expense for the nextfive years to be as follows:
| Year Ending March 31: | ** ** | ** ** | ** ** |
|--------------------------------------|------------|------------|------------|
| 2008                                 |       | $          | 493,000    |   |
| 2009                                 |       | $          | 357,000    |   |
| 2010                                 |       | $          | 353,000    |   |
| 2011                                 |       | $          | 247,000    |   |
| 2012                                 |       | $          | 244,000    |   |

 

8

----

**7.****             Debt and leasecommitments**

Line of credit

At June 30, 2007, we had a line of credit agreement with Bridge Bank.On August 15, 2006, we signed a Business Financing Modification Agreement withBridge Bank to renew our line of credit, with a credit facility of $2.0million. Of this $2.0 million, $1.0 million may be used for cash advancesagainst accounts receivables and $1.0 million may be used for equipmentadvances. On April 5, 2007, we modified this agreement to add a new $600,000equipment term loan to our existing line of credit and then increased this termloan by an additional $300,000 for a total of $900,000 on June 22, 2007.  Ourability to borrow under this agreement varies based upon eligible accountsreceivable and eligible equipment purchases. We are obligated to pay the bank afinance charge at a rate per year equal to the prime rate, which in no event shallbe less than 5.50%, plus .25% with respect to cash advances and a rate of suchprime rate plus 2.0% with respect to equipment advances and prime rate plus0.50% for the additional equipment term loans. We are obligated to pay an annual facility fee of $5,000 (0.50% of thefacility amount) and $2,500 the second year. We must maintain certain financial requirements, including a Quick Ratioof 1.50 to 1.00, and to stay within 80% of planned quarterly revenue.  We failed to maintain a monthly Quick Ratioof 1.50 to 1.00 for the month ended June 30, 2007. This agreement terminates onAugust 15, 2008 or upon a date that the bank or AML chooses to terminate theagreement.  Any unpaid balance is due andpayable pursuant to the agreement on the termination date.  If the agreement is terminated within thefirst 12 months following its execution on July 17, 2006, we will be requiredto pay an early termination fee of 1.0% of the credit facility amount under theterms of the agreement. At June 30, 2007,we had an outstanding balance of $0 under the accounts receivable agreement and$119,715 under the equipment financing agreement whose rate is prime rate plus2.00% and $913,996 under the equipment financing agreement whose rate is primerate plus 0.50%.  Our remaining borrowingcapacity is approximately $1,000,000 under the accounts receivable agreementand $302,831 available under the equipment financing agreement whose rate isprime rate plus 0.50%.

Note Payable 

On February 3, 2006 the Company purchased the building thathouses MPI located at 3350 Scott Blvd. 25 Santa Clara, California for apurchase price of $800,000.  The Companymade a down payment of $160,000.  Thebuilding 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 eachwhich includes principle and interest and one irregular last payment of$556,594.48.  The Company’s final paymentis due February 10, 2013 and will be for all principle and interest not yetpaid.  The note payable is secured by thedeed of trust on the building.  As of June 30,2007, the outstanding note amounted to $615,000 with $11,000 in currentportion.

On December 20, 2006, Mica-Tech raised $200,000 from anoutside investor in the form of short term note payable.  The funds were used for working capital.  The promissory note bears interest at therate of 10%.  Mica-Tech makes equal monthlypayments of $25,000, which includes a principal and an accrued interest on theremaining principal balance.  The totalamount remaining on the note at June 30 2007 was $125,000.

Mica-Tech was advancing working capital from Steven Ow, thepresident and also a major shareholder of Mica-Tech, over a period of time andthe total was amounted to $685,000 as of April 10, 2007.  On April 10, 2007, Mica-Tech converted theseadvancements in the form of a single note for the amount of $685,000, with anannual interest rate of 10%.  Of the$685,000, $200,000 was converted into 200,000 shares of Mica-Tech’s commonstock and issued to Steven Ow at the closing of the acquisition on April 11,2007.  Under the terms of the note, nopayment is required until April 2, 2009. As of June 30, 2007, the outstanding note amounted to $485,000.

9

----

Operating LeaseObligations

AML leases its office space, manufacturing facilityunder an operating lease expiring April 2008. Total rent expense under this operating lease was approximately $49,000and $47,000 during the threemonths ended June 30, 2007 and 2006, respectively. Mica-Tech leases its office space, manufacturing facility under an operatinglease expiring October 2007.  Total rentexpense under this operating lease was approximately $13,000 and $15,000 during the threemonths ended June 30, 2007 and 2006, respectively.

Total minimum lease payments under the above leasesare as follows: 
|                             | ** ** | **Operating  Leases** | ** ** |
|-----------------------------|------------|-----------------------|------------|
| Year ending  March 31, |       |                  |       |
| 2008                        |       | $                     | 231,000    |   |
| 2009                        |       | 16,000                |       |
| Thereafter                  |       | —                |       |
|                        |       | $                     | 247,000    |   |

 

**8.**             EquityTransactions

Stock Options

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 tomeasure and recognize the cost of employee services received in exchange for anaward of equity instruments based on the grant-date fair value.  Share-based compensation recognized under themodified-prospective transition method of SFAS No. 123R includesshare-based compensation based on the grant-date fair value determined inaccordance with the original provisions of SFAS No. 123, *Accounting for Stock-Based Compensation,*forall 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 determinedin accordance with SFAS No. 123R for all share-based payments grantedafter April 1, 2006. SFAS No. 123R eliminates the ability to account forthe award of these instruments under the intrinsic value method proscribed byAccounting 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 valuemethod in accordance with the provisions of APB Opinion No. 25 and relatedinterpretations.

Primarily as a result of adopting SFAS No. 123R,the Company recognized $36,000 or $0.00 per basic and diluted earnings pershare in share-based compensation expense for the three months ended June 30, 2007 and $26,000 or $0.00 per basic and dilutedearnings per share in share-based compensation expense for the three monthsended June 30, 2006. The fairvalue of our stock options was estimated using the Black-Scholes option pricingmodel.

For periods presented prior to the adoption of SFASNo. 123R, pro forma information regarding net income and earnings pershare as required by SFAS No. 123R has been determined as if we hadaccounted for our employee stock options under the original provisions of SFASNo. 123.  The fair value of theseoptions was estimated using the Black-Scholes option pricing model. Forpurposes of pro forma disclosure, the estimated fair value of the options isamortized to expense over the option’s vesting period.  There is no pro forma expense to recognizeduring the threemonths ended June 30, 2007.

In 1995, the board of directors approved the creationof the 1995 Stock Option Plan.  InNovember 2005, the board established the 2005 Equity Incentive Plan (“2005 Plan”).  The total aggregate number of sharesinitially reserved and available for grant and issuance pursuant to the 2005Plan is 150,000 shares.  Incentive stockoption awards may be granted under the 2005 Plan only to employees (includingofficers and directors who are also employees) of the Company or of a Parent orsubsidiary of the Company.  All other awards (including nonqualified stockoptions, restricted stock or stock awards) under the 2005 Plan may be grantedto employees, officers, directors, consultants, independent contractors andadvisors of the Company or any Parent or Subsidiary of the Company, providedsuch consultants, contractors and advisors render bona fide services not inconnection with the offer and sale of securities in a capital-raisingtransaction.

10

----

Pursuant to the 2005 Plan, during the three months ended June 30, 2007, the Company granted68,000 stock options to the Company’s employees and an external director ofMica-Tech.

On April 5, 2007, the Company granted 28,000 stockoptions to three employees as employee compensation. All of the 28,000 stockoptions have a term of ten (10) years measured from the Grant Date and shallaccordingly expire at the close of business on the Expiration Date, unlesssooner terminated in accordance with the plan. The options will become vested twenty (20) percent per year over a fiveyear period.  The option exercise pricewas $1.42 which wasthe same as fair value of the shares at the time of granting of the options.

On May 1, 2007, the Company granted 5,000 Non Qualified Stock Optionsto Mica-Tech’s external director.  All ofthe 5,000 stock options have a term of ten (10) years measured from the GrantDate and shall accordingly expire at the close of business on the ExpirationDate, unless sooner terminated in accordance with the plan.  The options will become vested twenty-five(25) percent per year over a four year period. The option exercise price was $1.45 which was the same as fair value ofthe shares at the time of granting of the options.

On June 8, 2007, the Company granted 7,000 stockoptions to two employees as employee compensation. All of the 7,000 stockoptions have a term of ten (10) years measured from the Grant Date and shallaccordingly expire at the close of business on the Expiration Date, unless soonerterminated in accordance with the plan. The options will become vested twenty (20) percent per year over a fiveyear period.  The option exercise pricewas $1.43 which wasthe same as fair value of the shares at the time of granting of the options.

On June 27, 2007, the Company granted 28,000 stockoptions to fifty employees as employee compensation. All of the 28,000 stockoptions have a term of ten (10) years measured from the Grant Date and shallaccordingly expire at the close of business on the Expiration Date, unlesssooner terminated in accordance with the plan. Of the 28,000 shares granted, 4,000 shares will become vested twenty(20) percent per year over a five year period. The remaining 24,000 shares will become vested as follows; fifty (50)percent after one month from the Grant Date and the other fifty (50) percentafter one year from the Grant Date. The option exercise price was $1.36 for allof the 28,000 stock options granted, which was the same as fair value of theshares at the time of granting of the options.

Following is a summary ofthe stock option activity:
|                              | ** ** | **Options  outstanding** | ** ** | **Weighted  Average  Exercise   Price** | ** ** | **Aggregate   Intrinsic Value** | ** ** |
|------------------------------|------------|--------------------------|------------|----------------------------------------------|------------|-------------------------------------------|------------|
|                         |       |                     |       |                                         |       |                                      |       |
| Outstanding,  March 31, 2007 |       | 2,232,750                |       | $                                            | 0.97       |                                      | $          | 341,982 |   |
| Granted                      |       | 68,000                   |       | $                                            | 1.40       |                                      |       |   |
| Forfeited                    |       | 0                        |       | $                                            | 1.77       |                                      |       |   |
| Exercised                    |       | 0                        |       | $                                            | 0.15       |                                      |       |   |
| Outstanding, June 30, 2007   |       | 2,300,750                |       | $                                            | 0.98       |                                      | $          | 376,574 |   |

 

Following is a summary ofthe status of options outstanding at June 30, 2007:
| 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           |       | 243,700                         |       | 6.38                                                  |       | $                                                   | 0.15       |                     | 238,700    |                                       | $          | 0.14 |   |
| $ 0.51 - $ 1.00           |       | 1,588,250                       |       | 5.78                                                  |       | $                                                   | 0.92       |                     | 1,217,000  |                                       | $          | 0.92 |   |
| $ 1.01 - $ 2.00           |       | 410,300                         |       | 7.16                                                  |       | $                                                   | 1.32       |                     | 192,900    |                                       | $          | 1.38 |   |
| $ 2.01 - $ 5.00           |       | 43,500                          |       | 2.69                                                  |       | $                                                   | 3.19       |                     | 43,500     |                                       | $          | 3.19 |   |
| $ 5.01 - $ 15.75          |       | 15,000                          |       | 0.16                                                  |       | $                                                   | 5.44       |                     | 15,000     |                                       | $          | 5.44 |   |
| $ 0.11 - $ 15.75          |       | 2,300,750                       |       | 5.99                                                  |       | $                                                   | 0.98       |                     | 1,707,100  |                                       | $          | 0.96 |   |

 

11

----

For optionsgranted during the threemonths ended June 30, 2007, theweighted-average fair value of such options was $0.65.

The assumptionsused in calculating the fair value of options granted using the Black-Scholesoption- pricing model are as follows:

Stock OptionsGranted on April 5, 2007:
| Risk-free interest rate       |   | 4.68       | %      |
|-------------------------------|--------|------------|--------|
| Expected life of  the options |   | 6.50 years |   |
| Expected  volatility          |   | 38.52      | %      |
| Expected dividend yield       |   | 0          |   |

 

Stock OptionsGranted on May 1, 2007:
| Risk-free interest rate       |   | 4.62       | %      |
|-------------------------------|--------|------------|--------|
| Expected life of  the options |   | 6.25 years |   |
| Expected  volatility          |   | 38.28      | %      |
| Expected dividend yield       |   | 0          |   |

 

Stock OptionsGranted on June 8, 2007:
| Risk-free interest rate       |   | 4.95       | %      |
|-------------------------------|--------|------------|--------|
| Expected life of  the options |   | 6.50 years |   |
| Expected  volatility          |   | 39.08      | %      |
| Expected dividend yield       |   | 0          |   |

 

Stock Options Granted onJune 27, 2007:

24,000 stockoptions with one year vesting periods:
| Risk-free interest rate       |   | 5.07       | %      |
|-------------------------------|--------|------------|--------|
| Expected life of  the options |   | 5.50 years |   |
| Expected  volatility          |   | 39.13      | %      |
| Expected dividend yield       |   | 0          |   |

 

4,000 stockoptions with five year vesting periods:
| Risk-free interest rate       |   | 5.07       | %      |
|-------------------------------|--------|------------|--------|
| Expected life of  the options |   | 6.50 years |   |
| Expected  volatility          |   | 39.13      | %      |
| Expected dividend yield       |   | 0          |   |

 

Details of the Company’snon-vested options are as follows:
| ** **                       | ** ** | **Non-Vested   Options** | ** ** | **Weighted   Average  Exercise Price** | ** ** | **Weighted   Average Vesting   Period** | ** ** | **Grant Date Fair   Value** | ** ** |
|----------------------------------|------------|-------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------------|------------|--------------------------------------------|------------|
| Non-vested - March 31,  2007     |       | 582,700                       |       | $                                                | 1.01       |                                                   | 1.55 Years |                                       |       |   |
| Granted                          |       | 68,000                        |       | 1.40                                             |       |                                                   |       | 44,023                                     |       |
| Forfeited                        |       | —                        |       | —                                           |       |                                                   |       |                                       |       |
| Vested                           |       | (57,050                       | )          | 1.21                                             |       |                                                   |       |                                       |       |
| Exercised                        |       | —                        |       | —                                           |       |                                                   |       |                                       |       |
| Non-vested – June  30, 2007 |       | 593,650                       |       | 1.04                                             |       | 1.51 Years                                             |       | 2.3 Years                                  |       |
|                                  |            |                               |            |                                                  |            |                                                        |            |                                            |            |  |

 

The total compensationcost not yet recognized related to non-vested stock options is $315,000 whichis expected to be recognized over a period of 1.46 years.

12

----

Warrants

Following is a summary ofthe warrant activity:
|                              | ** ** | **Warrants   outstanding** | ** ** | **Weighted   Average  Exercise   Price** | ** ** | **Aggregate  Intrinsic Value** | ** ** |
|------------------------------|------------|---------------------------------|------------|----------------------------------------------------|------------|-------------------------------------|------------|
|                         |       |                            |       |                                               |       |                                |       |
| Outstanding,  March 31, 2007 |       | 214,928                         |       | $                                                  | 0.49       |                                | $          | 187,000 |   |
| Granted                      |       | —                          |       |                                               |       |                                |       |
| Forfeited                    |       | —                          |       |                                               |       |                                |       |
| Exercised                    |       | —                          |       |                                               |       |                                |       |
| Outstanding, June 30, 2007   |       | 214,928                         |       | 0.49                                               |       | $                                   | 196,000    |   |
|                              |            |                                 |            |                                                    |            |                                     |            |  |  |

 

Following is a summary ofthe status of warrants outstanding at June 30, 2007:
| **Range of  Exercise Prices** | ** ** | **Total  Warrants  Outstanding** | ** ** | **Weighted  Average  Remaining  Life  (Years)** | ** ** | **Total  Weighted  Average  Exercise  Price** | ** ** | **Warrants  Exercisable** | ** ** | **Weighted  Average  Exercise Price** | ** ** |
|-----------------------------------------|------------|----------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|---------------------------|------------|--------------------------------------------|------------|
|                                    |       |                             |       |                                            |       |                                          |       |                      |       |                                       |       |
| $ 0.24 - $ 1.00               |       | 187,499                          |       | 1.04                                            |       | $                                             | 0.24       |                      | 187,499    |                                       | $          | 0.24 |   |
| $ 1.01 - $ 5.00               |       | 27,429                           |       | 0.42                                            |       | $                                             | 2.19       |                      | 27,429     |                                       | $          | 2.19 |   |
| $ 0.24 - $ 5.00               |       | 214,928                          |       | 0.88                                            |       | $                                             | 0.49       |                      | 214,928    |                                       | $          | 0.49 |   |

 

**9.             Segments**

The Company has three reportable segments consisting of (1) AML Communications, Inc., (2) Microwave Power, Inc. and (3) Mica-Tech, Inc.  Our AML Communications 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.  Microwave Power, Inc. 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 SCADA (Supervisory Control And Data Acquisition) 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 reportable segments for the three month period ended June 30, 2007 and the three month period ended June 30, 2006.

**For the three months ended****June 30, 2007**
| **(In thousands)**                                                    | ** ** | **AML** | ** ** | **MPI** | ** ** | **Mica-  Tech** | ** ** | **Unallocated** | ** ** | **Total** | ** ** |
|----------------------------------------------------------------------------|------------|---------|------------|---------|------------|-----------------|------------|-----------------|------------|-----------|------------|
|                                                                       |       |    |       |    |       |            |       |            |       |      |       |
| Revenue                                                                    |       | $       | 2,241      |    | $          | 419             |       | $               | 44         |      | —     |   | $ | 2,704 |   |
|                                                                       |       |    |       |    |       |            |       |            |       |      |       |
| Gross Profit                                                               |       | 912     |       | 239     |       | 7               |       | —          |       | $         | 1,158      |   |
| Depreciation &  amortization (includes intangibles)                    |       | 127     |       | 63      |       | 94              |       | —          |       | $         | 284        |   |
|                                                                       |       |    |       |    |       |            |       |            |       |      |       |
| Interest expense                                                           |       | 27      |       | —  |       | 16              |       | —          |       | $         | 43         |   |
|                                                                       |       |    |       |    |       |            |       |            |       |      |       |
| Other, net                                                                 |       | 632     |       | 135     |       | 300             |       | —          |       | $         | 1,067      |   |
| Income/(Loss) from  continuing Operations before tax and minority interest |       | $       | 126        |    | $          | 41              |       | $               | (404       | )         | —     |   | $ | (237 | ) |
|                                                                       |       |    |       |    |       |            |       |            |       |      |       |
| Identifiable assets                                                        |       | $       | 7,138      |    | $          | 4,743           |       | $               | 2,596      |      | —     |   | $ | 14,477 |   |
|                                                                       |       |    |       |    |       |            |       |            |       |      |       |
| Capital Expenditures                                                       |       | $       | 459        |    | 5          |            | 2          |            | —     |      | $          | 466 |   |

 

13

----

**For the****three****months ended****June 30, 2006**
| **(In thousands)**                                 | ** ** | **AML** | ** ** | **MPI** | ** ** | **Mica-  Tech** | ** ** | **Unallocated** | ** ** | **Total** | ** ** |
|---------------------------------------------------------|------------|---------|------------|---------|------------|-----------------|------------|-----------------|------------|-----------|------------|
|                                                    |       |    |       |    |       |            |       |            |       |      |       |
| Revenue                                                 |       | $       | 1,820      |    | $          | 482             |       | —          |       | —    |       | $ | 2,302 |   |
|                                                    |       |    |       |    |       |            |       |            |       |      |       |
| Gross Profit                                            |       | 686     |       | 293     |       | —          |       | —          |       | $         | 979        |   |
| Depreciation &  amortization (includes intangibles) |       | 76      |       | 67      |       | —          |       | —          |       | $         | 143        |   |
|                                                    |       |    |       |    |       |            |       |            |       |      |       |
| Interest expense                                        |       | 19      |       | —  |       | —          |       | —          |       | $         | 19         |   |
|                                                    |       |    |       |    |       |            |       |            |       |      |       |
| Other, net                                              |       | 672     |       | 111     |       | —          |       | —          |       | $         | 783        |   |
| Income/(Loss) from  continuing Operations before tax    |       | $       | (78        | )       | $          | 112             |       | —          |       | —    |       | $ | 34 |   |
|                                                    |       |    |       |    |       |            |       |            |       |      |       |
| Identifiable assets                                     |       | $       | 5,131      |    | $          | 4,572           |       | —          |       | —    |       | $ | 9,703 |   |
|                                                    |       |    |       |    |       |            |       |            |       |      |       |
| Capital Expenditures                                    |       | $       | 235        |    | 129        |            | —     |            | —     |      | $          | 364 |   |

 

**10.          Acquisition of Mica Tech Inc**

On April 11, 2007, the Companycompleted the acquisition of a controlling position in Mica-Tech, Inc., ina cash-for-stock transaction. Under the terms of the agreement, AML purchased51% or 4,146,400 shares of Mica-Tech’s outstanding common stock for anaggregate price of $840,850. Mica-Tech, Inc., designs, manufactures, andmarkets an intelligent satellite communication system to provide SupervisoryControl And Data Acquisition (SCADA) of the electric power grid. The satellitesystem is marketed to power utility companies and enables remote control ofsubstations for reducing black-outs and enhancing power/load regulation duringpeak demand hours.

The Company paid $210,000 of the purchaseprice through the cancellation of Mica-Tech’s two promissory notes in theaggregate principal amount of $210,000 and $590,000 of the purchase price waspaid in cash. The cash portion of the purchase consideration was paid fromworking capital of the Company.

A summary of the assets acquired andliabilities assumed in the acquisition follows: 
|                             | ** ** | **April 11, 2007** | ** ** |
|-----------------------------|------------|------------------------------|------------|
| ** **                  | ** ** | ** **                   | ** ** |
| Cash                        |       | $                            | 604,000    |   |
| Receivables, net            |       | 46,000                       |       |
| Inventory                   |       | 315,000                      |       |
| Property and equipment, net |       | 76,000                       |       |
| Prepaid assets              |       | 12,000                       |       |
| Intangible assets           |       | 2,205,000                    |       |
| Total assets acquired       |       | $                            | 3,258,000  |   |
| Current liabilities         |       | (757,000                     | )          |
| Notes Payable               |       | (685,000                     | )          |
| Net assets acquired         |       | $                            | 1,816,000  |   |

 

14

----

Of the 2,205,000 of acquired intangibleassets, $328,000 was assigned to Customer Relationship (3 year useful life),$1,685,000 was assigned to Existing Technology (12 year useful life), and$132,000 was assigned to Backlog (1 year useful life).  All are subject toamortization.  The balance of $60,000 was assigned to Trademarks and BrandName, which have an indefinite life and therefore should not be amortized.

****UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATIONDISCLOSURE****

****FOR THE THREE MONTH PERIODS ENDED JUNE 30, 2007 AND2006****

The followingun-audited pro forma consolidated financial information for the three monthsperiod ended June 30, 2007 and 2006, as presented below, reflects the resultsof operations of the Company assuming the acquisition occurred on April 1, 2007and 2006 respectively. These pro forma results have been prepared forinformation purposes only and do not purport to be indicative of what operatingresults would have been had the acquisitions actually taken place on April 1,2007 and 2006 respectively, and may not be indicative of future operatingresults.
|                          | ** ** | **Three month periods ended June 30**          | ** ** |
|--------------------------|------------|-------------------------------------------------------------------------|------------|
| ** **               | ** ** | **2007**                                                                | ** ** | **2006** | ** ** |
| ** **               | ** ** | **(UN-AUDITED AND IN THOUSANDS   OF DOLLARS)** | ** ** |
|                     |       |                                                                    |       |   |   |
| Revenues                 |       | $                                                                       | 2,704      |   | $ | 2,560 |   |
| Operating loss           |       | $                                                                       | (353       | ) | $ | (160 | ) |
| Net loss                 |       | $                                                                       | (126       | ) | $ | (78 | ) |
| Loss per share - basic   |       | $                                                                       | (0.01      | ) | $ | (0.01 | ) |
| Loss per share - diluted |       | $                                                                       | (0.01      | ) | $ | (0.01 | ) |

 

**11.                   Majorcustomers and vendors**

Two customers provided 26% and 32% of netrevenue for the three months ended June 30, 2007 and 2006,respectively.  Total accounts receivabledue from these customers was approximately $472,000 as of June 30,2007.

The Company extends credit to its customers based upon itsassessment of their credit worthiness and generally does not requirecollateral.  Credit losses have not beensignificant.

Two vendors accounted for 34% and 26% of the Company’s netpurchases for the three months ended June 30, 2007 and 2006,respectively.  Total accounts payable dueto these vendors was $69,000 as of June 30, 2007.

**12.          Reclassifications**

**Certain comparative amounts have been reclassified toconform to the current year’s presentation.**

15

----

**Item 2.**           Management’sDiscussion and Analysis or Plan of Operation

Someof the statements made by us in this Quarterly Report on Form 10-QSB areforward-looking in nature, including but not limited to, statementsrelating to our future revenue, product development, demand, acceptance andmarket share, gross margins, levels of research and development, our management’splans and objectives for our current and future operations, and otherstatements 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 thewords “intend”, “believe”, “will”, “may”, “could”, “expect”, “anticipate”, “plan”,“possible”, and similar terms. Actual results could differ materially from theresults implied by the forward looking statements due to a variety of factors,many of which are discussed throughout this Quarterly Report and particularlyin the section titled “Additional Factors That May Affect Future Results” whichis included in the section titled “Management’s Discussion and Analysis or Planof Operation”. Readers are cautioned not to place undue reliance on theseforward-looking statements, which speak only as of the date hereof.  We undertake no obligation to publiclyrelease any revisions to these forward-looking statements that may reflectevents or circumstances after the date hereof or to reflect the occurrence ofunanticipated events.  Factorsthat could cause actual results to differ materially from those expressed inany forward-looking statement made by us include, but are not limited to:

·                      ourability to finance our activities and maintain our financial liquidity;

·                      ourability to attract and retain qualified, knowledgeable employees;

·                      theimpact of general economic conditions on our business;

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

·                      thelimited number of potential customers for our products;

·                      thevariability in gross margins on our products;

·                      ourability to design and market new products successfully;

·                      ourfailure to acquire new customers in the future;

·                      deteriorationof business and economic conditions in our markets;

·                      intenselycompetitive industry conditions with increasing price competition; and

·                      the rate of growth in thedefense markets.

**Inthis document, the words “we,” “our,” “ours,” and “us” refer to AMLCommunications, Inc. and our sub divisions, Microwave Power, Inc. andMica-Tech, Inc.**

**Overview**

Our business is comprised of three reportable segments, AMLCommunications, Inc., Microwave Power, Inc., and Mica-Tech, Inc.  AML and MPI design, manufacture, and marketRF and microwave, low noise, medium and high power amplifiers and subsystemsserving, primarily, the defense microwave market.  AML represented 76.6% of our 2007 product revenueand MPI represented 23.4% of our 2007 product revenue.  Mica-Tech, our Fifty-one (51) percentsubsidiary acquired on April 11, 2007, designs, manufactures, and markets anintelligent communication system to provide Supervisory Control And Data Acquisition(SCADA) of the electric power grid.

Our AML segment includes low noise, power amplifiers andintegrated sub assemblies with frequencies that range from 50 kHz to 26GHz.  In February 2001, we made astrategic decision to focus our resources on the defense markets.  As such, we moved rapidly to utilize ourknowledge base in Defense Microwave related design and manufacturing to offernew products, as well as variations of existing products.  The results of this strategy have been anincrease in revenues for Defense related products from $3.7 million in fiscal2003 to $6.3 million in fiscal 2004, and further increases to $6.6 million infiscal 2005, and $9.1 million in fiscal 2006.

We consider the AML segment to be our core business since ithas a larger revenue base and investments were made in this segment thataddress long term growth.  We devote mostof our management time and other resources to improving the prospects for thissegment.  Most of our sales and marketingexpenses are in the AML segment.  Themajority of our research and development spending is dedicated to this segmentas well.

Our MPI segment includes solid state microwave amplifiersoperating in the frequency range from 1 to 40 GHz with output power from 10mWto 500 W.  In June 2004, we acquiredMicrowave Power, Inc. and operate it as a division of AML.  The MPI division operates independently, withits own marketing, production, and general management team. We continue to expandMPI’smanagerial and technical capabilities to address the potential for growth ofthe division.

16

----

Our Mica-Tech segment designs and manufactures theUltraSatNet, an Intelligent Satellite Utility Communication Solution for themonitoring and control of power grid distribution.  The operating software and hardware aredesigned in-house with support from outside consultants.  Mica-Tech is located in Camarillo, CA andoperates independently, with its own management team.

**Results of Operations**

**Three Months Ended**June 30, 2007 Compared to Three Months Ended June 30, 2006

*Netsales. *Net sales forthe three months ended June 30, 2007 were $2.7 million, as compared to netsales of $2.3 million for the three months ended June 30, 2006, a increase of$402,000 or 17.5%. Sales for AML segment for the three months ended June 30,2007 were higher than sales during the same period of the prior year by$421,000 or 24.1% primarily due to large program orders received during thesecond part of FY 2007.  During thisquarter, we commenced production on these orders.  Sales for MPI segment decreased by $63,000,compared to the same period of the prior year, due to reduced incidentalorders.  Mica-Tech contributed $44,000 tothe total sales during the quarter.  AMLand, to a lesser extent MPI, have devoted significant resources during the lastthree fiscal years towards the development of products that address long termcontracts to reduce reliance on spot-market and incidental orders.

*Gross profit. *Gross profit for the three months ended June 30, 2007was $1.2 million, or 42.8% of net sales, compared to a gross profit of $979,000,or 42.5% of net sales for the three months ended June 30, 2006.  Change in gross profit, as a percentage ofnet sales, is insignificant.

*Selling,general and administrative costs. *Selling,general, and administrative costs were $784,000, or 29.0% of net sales, for thethree months ended June 30, 2007, as compared to $618,000, or 26.8% of netsales, for the three months ended June 30, 2006.  The increase is mainly attributed toadministrative cost in connection with maintaining our Mica-Tech segment, whichwe acquired on April 11, 2007.  We hadMica-Tech for 81 days during the three months ended June 30, 2007.  Selling, general and administrative costs forboth AML and MPI decreased, compared to the same period of the prior year, dueto decreased spending in salary and related benefits, advertising, andconsulting expense.

*Researchand development costs. *Researchand development costs were $575,000, or 21.3% of net sales, for the threemonths ended June 30, 2007, as compared to $319,000, or 13.9% of net sales, forthe three months ended June 30, 2006. The increase reflects the hiring of additional R&D employees andcontinued investment in R&D projects. Additionally $143,000 is attributable to Mica-Tech’s research anddevelopment expenses for 81 days during the quarter.

*Otherexpense net. *Otherexpense was $36,000 for the three months ended June 30, 2007 and $8,000 for thethree months ended June 30, 2006. Interest expense of $43,000 is attributed tothe outstanding notes payable and line of credit. Interest income on short temand long term cash investments was $8,000.

*Provisionfor income taxes.* We recorded a provision of $7,000 forfederal and state AMT taxes for the three months ended June 30, 2007 and $8,000for the three months ended June 30, 2006.

*Netincome(loss). *Net losswas $46,000, or $(0.00) per share, for the three months ended June 30, 2007,compared to a net profit of $26,000, or $0.00 per share, for the three monthsended June 30, 2006.

**Liquidity and Capital Resources**

Historically, we have financed our operations primarily from internallygenerated funds and, to a lesser extent, loans from stockholders, and capitallease obligations.

17

----

At June 30, 2007, we had a line of credit agreementwith Bridge Bank. On August 15, 2006, we signed a Business FinancingModification Agreement with Bridge Bank to renew our line of credit, with acredit facility of $2.0 million. Of this $2.0 million, $1.0 million may be usedfor cash advances against accounts receivables and $1.0 million may be used forequipment advances. On April 5, 2007, we modified this agreement to add a new$600,000 equipment term loan to our existing line of credit and then increasedthis term loan by an additional $300,000for a total of $900,000 on June 22,2007.  Our ability to borrow under thisagreement varies based upon eligible accounts receivable and eligible equipmentpurchases. We are obligated to pay the bank a finance charge at a rate per yearequal to the prime rate, which in no event shall be less than 5.50%, plus .25%with respect to cash advances and a rate of such prime rate plus 2.0% withrespect to equipment advances and prime rate plus 0.50% for the additionalequipment term loans.  We are obligatedto pay an annual facility fee of $5,000 (0.50% of the facility amount) and$2,500 the second year.  We must maintaincertain financial requirements, including a Quick Ratio of 1.50 to 1.00, and tostay within 80% of planned quarterly revenue. We failed to maintain a monthly Quick Ratio of 1.50 to 1.00 for themonth ended June 30, 2007. This agreement terminates on August 15, 2008 or upona date that the bank or AML chooses to terminate the agreement.  Any unpaid balance is due and payablepursuant to the agreement on the termination date.  If the agreement is terminated within thefirst 12 months following its execution on July 17, 2006, we will be requiredto pay an early termination fee of 1.0% of the credit facility amount under theterms of the agreement. At June 30, 2007, we had an outstanding balance of $0under the accounts receivable agreement and $119,715 under the equipmentfinancing agreement whose rate is prime rate plus 2.00% and $913,996 under theequipment financing agreement whose rate is prime rate plus 0.50%.  Our remaining borrowing capacity isapproximately $1,000,000 under the accounts receivable agreement and $302,831available under the equipment financing agreement whose rate is prime rate plus0.50%.

At June 30, 2007, we had $583,000 in cash and cashequivalents.  For the three months ended June30, 2007, our operating activities used cashof approximately $1.4 million, as compared to $156,000 in cash used in ouroperating activities for the three months ended June 30, 2006.  Net cashused in investing activities, primarily for the acquisition of productionequipment, amounted to $81,000 for the three months ended June 30, 2007 and $364,000 for the three months ended June30, 2006. Net cash provided by financing activities was $21,000 for the threemonths ended June 30, 2007, ascompared to $44,000 in cash used in our financing activities for the threemonths ended June 30, 2006.

We anticipatecapital expenditures of approximately $800,000 in fiscal 2008.  We believe that funds for these expenditureswill be provided by our operating activities. However, we may choose to finance some of these expenditures through ourfinancing agreement with Bridge Bank.  AtJune 30, 2007, we had a line of credit agreement with Bridge Bank and ourremaining borrowing capacity under this financing agreement for equipment advanceswas $302,831.

In addition to thefunds we raised in July 2003, we may attempt to procure additional sources offinancing in the event that the capital available as of June 30, 2007 isinsufficient for our operating needs and capital expenditures. These sourcesmay include, but are not limited to, additional sales of our securities.  There are, however, no assurances that wewill be able to successfully obtain additional financing at terms acceptable tous.  Failure to obtain such financingcould have a material adverse effect on our ability to operate as a goingconcern.

Successful completion of our development program andattaining profitable operations are dependent upon our maintaining a level ofsales adequate to support our cost structure. In addition, realization of a major portion of the assets in theaccompanying balance sheet is dependent upon our ability to meet our financingrequirements and the success of our plans to sell our products.  The financial statements do not include anyadjustments relating to the recoverability and classification of recorded assetamounts or amounts and classifications of liabilities that might be necessaryshould we be unable to continue in existence.

**Critical Accounting Policies**

Ourdiscussion and analysis of our financial conditions and results of operationsare based upon our financial statements, which have been prepared in accordancewith generally accepted accounting principles in the United States. Thepreparation of financial statements requires managers to make estimates anddisclosures on the date of the financial statements.  On an on-going basis, we evaluate ourestimates, including, but not limited to, those related to revenue recognition.  We use authoritative pronouncements,historical experience, and other assumptions as the basis for makingjudgments.  Actual results could differfrom those estimates.  We believe thatthe following critical accounting policies affect our more significantjudgments and estimates in the preparation of our financial statements.

18

----

*Revenue recognition.*  We generate our revenue through the sale ofproducts.  Our policy is to recognizerevenue when the applicable revenue recognition criteria have been met, whichgenerally include the following:

·                                          *Persuasive evidence of an arrangement exists;*

·                                          *Delivery has occurred or services have been rendered;*

·                                          *Price is fixed or determinable; and*

·                                          *Collectibility is reasonablyassured*

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

Recording revenue from the sale of products involves the use ofestimates and management judgment.  Wemust make a determination at the time of sale whether the customer has theability 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 inmaking our assessment, the determination of whether collectibility isreasonably assured is ultimately a judgment decision that must be made bymanagement.

*Allowancefor Doubtful Accounts*. We maintain an allowance for doubtful accounts receivable based oncustomer-specific allowances, as well as a general allowance.  Specific allowances are maintained forcustomers which are determined to have a high degree of collectibility riskbased on such factors, among others, as: (i) the aging of the accountsreceivable balance; (ii) the customer’s past payment experience; or (iii) adeterioration in the customer’s financial condition, evidenced by weakfinancial condition and/or continued poor operating results, reduced creditratings, and/or a bankruptcy filing.  Inaddition to the specific allowance, we maintain a general allowance for all itsaccounts receivables which are not covered by a specific allowance.  The general allowance is established based onsuch factors, among others, as: (i) the total balance of the outstandingaccounts receivable, including considerations of the aging categories of thoseaccounts receivable; (ii) past history of uncollectible accounts receivablewrite-offs; and (iii) the overall creditworthiness of the customer base.  A considerable amount of judgment is requiredin assessing the realizability of accounts receivables.  Should any of the factors considered indetermining the adequacy of the overall allowance change, an adjustment to theprovision for doubtful accounts receivable may be necessary.

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

*Intangible Assets*.  We test intangible assets with indefinitelives for impairment on an annual basis or more frequently if certain eventsoccur.  If the assets are considered tobe impaired, the impairment to be recognized will be measured by the amount inwhich the carrying amount exceeds the fair value of the assets.  For our intangible assets with finite lives,including our customer lists, existing technology, and patents, we amortize thecosts of the assets over their useful lives and assess impairment at leastannually or whenever events and circumstances suggest the carrying value of anasset may not be recoverable.  Determiningthe life of the assets with finite lives is judgmental in nature and involvesthe use of estimates and assumptions. These estimates and assumptions involve a variety of factors, includingfuture market growth and conditions, forecasted revenues and costs and astrategic review of our business and operations.  We base our fair value estimates onassumptions we believe to be reasonable but that are unpredictable andinherently uncertain.  Actual futureresults may differ from those estimates. In the event we determine that an intangible asset is impaired in thefuture, an adjustment to the value of the asset would be charged to earnings inthe period such determination is made.

*ExistingTechnology. *Ourexisting technology is based on a patent issued in 1990, which continues to bethe main technology of MPI.  It is asubstrate deposition technology that is mature and with no replacementtechnology forecasted.

19

----

**Additional Factors That May Affect FutureResults**

Future operating results may be impacted by a number of factors thatcould cause actual results to differ materially from those stated herein, whichreflect management’s current expectations. These factors include:

·                                          industry-specific factors (including thereliance upon growth of the defense microwave market, significant competitioncharacterized by rapid technological change, new product development, productobsolescence, and significant price erosion over the life of a product);

·                                          our ability to timely develop and producecommercially viable products at competitive prices;

·                                          our ability to produce products which meet thequality standards of both existing and potential new customers;

·                                          our ability to accurately anticipate customerdemand;

·                                          our ability to manage expense levels, in light ofvarying revenue streams;

·                                          the availability and cost of components;

·                                         the impact of worldwide economic and politicalconditions on our business; and

·                                         theability to integrate potential futureacquisitions into our existing operations.

Webelieve that, to the extent that foreign sales are recognized, we may faceincreased risk associated with political and economic instability, compliancewith foreign regulatory rules governing export requirements, tariffs and othertrade barriers, differences in intellectual property protections, longeraccounts receivable cycles, currency fluctuations and general traderestrictions.  If any of these risksmaterialize, they could have a material adverse effect on our business, resultsof operations, and financial condition.

We have evaluated the credit exposure associated withconducting business with foreign customers and have concluded that such risk isacceptable.  Nevertheless, anysignificant change in the economy or deterioration in United States traderelations or the economic or political stability of foreign markets could havea material adverse effect on our business, results of operations, and financialcondition.

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

We experience significantprice competition and expect price competition in the sale of our products toremain intense.  We cannot assure youthat our competitors will not develop new technologies or enhancements toexisting products or introduce new products that will offer superior price or performancefeatures.  We expect our competitors tooffer new and existing products at prices necessary to gain or retain marketshare.  Several of our competitors havesubstantial financial resources, which may enable them to withstand sustainedprice competition or a downturn in the pricing of their products in thefuture.  Substantially all of ourcompetitors have, and potential future competitors could have, substantiallygreater technical, marketing, distribution and other resources than we do andhave, or could have, greater name recognition and market acceptance of theirproducts and technologies.

The markets inwhich we compete are characterized by rapidly changing technology andcontinuous improvements in products and services.  Our future success depends on our ability toenhance our current products and to develop and introduce, in a timely manner,new products that keep pace with technological developments and that meet orexceed industry standards that compete effectively on the basis of price,performance and quality, that 

20

----

adequately addressOEM customer and end-user customer requirements, and that achieve marketacceptance.  We believe that to remaincompetitive in the future, we will need to continue to develop new products,which will require the investment of significant financial resources in newproduct development.  In the event ournewly developed products are not timely developed or do not gain marketacceptance, our business, results of operations and financial condition couldbe materially adversely affected.

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

**Item 3.    Controls and Procedures**

(a)                                  *Evaluation of disclosure controlsand procedures*.  As of the end of the period covered by thisreport, we carried out an evaluation, under the supervision and with theparticipation of our management, including our Chief Executive Officer andDirector of Finance, of the effectiveness of the design and operation of ourdisclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)under the Securities Exchange Act of 1934, as amended.  Based upon that evaluation, our ChiefExecutive Officer and Director of Finance concluded that our disclosurecontrols and procedures were effective as of the end of the applicable periodto ensure that the information required to be disclosed by the Company inreports that it files or submits under the Exchange Act (i) is recorded,processed, summarized and reported within the time periods specified inSecurities and Exchange Commission rules and forms and (ii) is accumulated andcommunicated to our management, including our Chief Executive Officer andDirector of Finance, as appropriate to allow timely decisions regarding requireddisclosures.

(b)                                 *Changes in internal controls overfinancial reporting*. There was nochange in our internal control over financial reporting during our most recentfiscal quarter that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting.

21

----

#### **PARTII – OTHER INFORMATION**

**Item 1.  Legal Proceedings**

**Not Applicable.**

**Item 2.  Unregistered Sales of Equity Securities andUse of Proceeds**

Not Applicable.

**Item 3.  Defaults Upon Senior Securities**

**Not Applicable.**

**Item 4.  Submission of Matters to a Vote of SecurityHolders**

**NotApplicable.**

**Item 5.  Other Information**

**Not applicable.**

**Item 6.**    Exhibits

The exhibits listed in the Exhibit Index are filed as part of thisreport.

22

----

#### **SIGNATURES**

Inaccordance with Section 13 or 15(d) of the Exchange Act, the registrantcaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.
|        |   | AML Communications Inc. |                          |   |
|--------|--------|-------------------------|-------------------------------|--------|
|   |   |                    |                          |   |
|   |   |  /s/: Jacob Inbar  |                          |   |
|   |   |  By:               | Jacob Inbar, President and    |   |   |
|   |   |                    | Chief Executive Officer       |   |   |
|   |   |                    | (Principal Executive Officer) |   | Dated: August 20, 2007 |

 

 

 
|        |   |  /s/: Heera Lee |                           |   |
|--------|--------|----------------------|--------------------------------|--------|
|   |   |  By:            | Heera Lee, Director of Finance |   |   |
|   |   |                 | (Principal Accounting Officer) |   | Dated:  August 20, 2007 |

 

 

23

----

**EXHIBITINDEX**
| **Exhibit Number** | ** ** | **Description**                                                                                                                                                                                                                              |
|--------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1                |       | 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               |       | Intellectual Property Security Agreement(4)                                                                                                                                                                                                  |
| 10.4               |       | Loan and Security Agreement dated November 10,  2000 between the Company and Silicon Valley Bank(5)                                                                                                                                     |
| 10.5               |       | Intellectual Property Security Agreement dated  November 10, 2000 between the Company and Silicon Valley Bank(5)                                                                                                                        |
| 10.6               |       | Warrant to purchase stock dated November 9,  2000 between the Company and Silicon Valley Bank(5)                                                                                                                                        |
| 10.7               |       | Accounts Receivable Purchase Agreement dated  November 20, 2001 between AML Communications, Inc. and Silicon Valley  Bank(6)                                                                                                            |
| 10.8               |       | Promissory Note dated December 30, 2001 between  Tiberiu, Mazilu, and AML Communications Inc.(6)                                                                                                                                        |
| 10.9               |       | Accounts Receivable Purchase Modifications Agreement  dated September 24, 2003 between Silicon Valley Bank and AML  Communications(7)                                                                                                   |
| 10.10              |       | Form of Promissory Note date July 16, 2003  between the Company and the following: Jacob Inbar, Tiberiu Mazilu, Edwin  McAvoy, Gerald Starek, Bob M. Hawkins, and The Oliver Family Trust(7)                                       |
| 10.11              |       | Form of Warrant dated July 16, 2003  between the Company and the following: Jacob Inbar, Tiberiu Mazilu, Edwin  McAvoy, Gerald Starek, Bob M. Hawkins, and The Oliver Family Trust(7)                                              |
| 10.12              |       | Fourth Amended and Restated 1995 Stock Option  Agreement at June 10, 2002(8)                                                                                                                                                            |
| 10.13              |       | Parr-Bohn Properties First Amendment to lease of 1000  Avenida Acaso, Camarillo, CA.(8)                                                                                                                                                      |
| 10.14              |       | Employment Agreement with Dr. Marina Bujatti,  of MPI, dated June 18, 2004.(8)                                                                                                                                                     |
| 10.15              |       | Employment Agreement with Dr. Franco Sechi, of  MPI, dated June 18, 2004.(8)                                                                                                                                                       |
| 10.16              |       | Interim Lease and Proposed Lease Terms(9)                                                                                                                                                                                                    |
| 10.17              |       | Financing Agreement dated July 8, 2004 with  Bridge Bank(10)                                                                                                                                                                            |
| 10.18              |       | Enterprise Agreement Number 4627 dated  August 26, 2004(11)                                                                                                                                                                             |
| 10.19              |       | Business Financing Modification with Bridge Bank,  dated December 23, 2005(12)                                                                                                                                                          |
| 10.20              |       | Business Financing Modification with Bridge Bank  dated January 19,2006(12)                                                                                                                                                             |
| 10.21              |       | Fifth Amended and Restated 1995 Stock Option  Agreement at July 12, 2005(13)                                                                                                                                                            |
| 10.22              |       | Loan Agreement with Bank of America for purchase of  MPI building(12)                                                                                                                                                                        |
| 10.23              |       | 2005 Equity Incentive Plan(14)                                                                                                                                                                                                               |
| 10.24              |       | Business Financing Agreement with Bridge Bank dated  July 17, 2006(15)                                                                                                                                                                  |
| 10.25              |       | Stock Purchase Agreement with Mica-Tech, dated  April 11, 2007(16)                                                                                                                                                                      |
| 10.26              |       | Option Agreement with shareholders and optionholders  of Mica-Tech, dated April 11, 2007(16)                                                                                                                                            |
| 31.1               |       | Certification by the Chief Executive Officer(17)                                                                                                                                                                                             |
| 31.2               |       | Certification by the Director of Finance(17)                                                                                                                                                                                                 |
| 32.1               |       | Certification pursuant to Section 906 of the  Sarbanes Oxley Act(17)                                                                                                                                                                    |
| 32.2               |       | Certification pursuant to Section 906 of the  Sarbanes Oxley Act(17)                                                                                                                                                                         |

 

----

| (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-QSB for the quarter  ended December 31, 1999 and incorporated herein by reference.  |
|   |   |                                                                                                                                                                                                    |
| (5)    |   | Previously filed with the Securities and Exchange  Commission as an exhibit to the Company’s Form 10-QSB for the quarter  ended September 30, 2000 and incorporated herein by reference. |

 

24

----

 
| (6)    |   | Previously filed with the Securities and Exchange  Commission as an exhibit to the Company’s Form 10-QSB for the quarter  ended December 31, 2001 and incorporated herein by reference.                  |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                    |
| (7)    |   | Previously filed with the Securities and Exchange  Commission as an exhibit to the Company’s Form 10-QSB for the quarter  ended December 31, 2002 and incorporated herein by reference.                  |
|   |   |                                                                                                                                                                                                                    |
| (8)    |   | 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.                 |
|   |   |                                                                                                                                                                                                                    |
| (9)    |   | 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.                                          |
|   |   |                                                                                                                                                                                                                    |
| (10)   |   | 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.                      |
|   |   |                                                                                                                                                                                                                    |
| (11)   |   | 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.                    |
|   |   |                                                                                                                                                                                                                    |
| (12)   |   | 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.                      |
|   |   |                                                                                                                                                                                                                    |
| (13)   |   | Previously filed with the Securities and Exchange  Commission as an attachment to the Company’s Proxy Statement dated  July 29, 2005.                                                                         |
|   |   |                                                                                                                                                                                                                    |
| (14)   |   | 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. |
|   |   |                                                                                                                                                                                                                    |
| (15)   |   | 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.                          |
|   |   |                                                                                                                                                                                                                    |
| (16)   |   | 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.                                        |
|   |   |                                                                                                                                                                                                                    |
| (17)   |   | Filed herewith.                                                                                                                                                                                                         |

 

25

----