** **

**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM10-QSB**

 
| **ý** | ** ** | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|------------|------------|----------------------------------------------------------------------------------------------|

 

**For the quarterly period ended:**           **June 30, 2004**

 

**or**

 
| **o** | ** ** | **TRANSITION REPORT PURSUANT TO  SECTION 13 0R 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|------------|-----------------------------------------------------------------------------------------------|

 

**Forthe transition period from                 to                 **

** **

**CommissionFileNumber:           0-27252**

 

**AMLCOMMUNICATIONS, INC.**

(Exact name of small business issuer as specified in its charter)

 

| **Delaware**                                                    | ** ** | **77-0130894**                     |
|-----------------------------------------------------------------|------------|------------------------------------|
| (State or Other jurisdiction of  incorporation or organization) |       | (IRS Employer  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 the issuer (1)has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.

 

Yes ý  No o

 

State the number of sharesoutstanding of each of the issuer’s classes of common stock, as of the latestpracticable date.

 

Common Stock Outstanding as ofJuly 23, 2004:  9,954,692  shares

 

Transitional Small BusinessDisclosure Format: Yes o  No ý

 

 

----

 

**AML COMMUNICATIONS, INC.**

 

**INDEX TO FORM 10QSB**

 
| **PART I**  | **FINANCIAL INFORMATION**                                                                   |       |
|-------------|---------------------------------------------------------------------------------------------|------------|
|        |                                                                                        |       |
| Item 1.     | Financial Statements                                                                        |       |
|        |                                                                                        |       |
|        | Balance Sheet at June 30, 2004                                                              |       |
|        |                                                                                        |       |
|        | Statements of Operations for the three  month periods ended June 30, 2004 and June 30, 2003 |       |
|        |                                                                                        |       |
|        | Statements of  Cash Flows for the three month periods ended June 30, 2004 and June 30, 2003 |       |
|        |                                                                                        |       |
|        | Notes to Financial Statements                                                               |       |
|        |                                                                                        |       |
| Item  2.    | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |       |
|        |                                                                                        |       |
| Item 3.     | Controls and Procedures                                                                     |       |
|        | ** **                                                                                  | ** ** |
| **PART II** | **OTHER INFORMATION**                                                                       | ** ** |
| ** **  | ** **                                                                                  | ** ** |
| Item  1.    | Legal  Proceedings                                                                          |       |
|        |                                                                                        |       |
| Item 2.     | Changes in 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 and Reports on Form 8-K                                                            |       |
|        |                                                                                        |       |
|        | SIGNATURES                                                                                  |       |

 

2

----

 

**PART I****- FINANCIAL INFORMATION**

 

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

 

**AML COMMUNICATIONS, INC.**

**CONSOLIDATED CONDENSED BALANCE SHEET**

**(unaudited)**

** **
| ** **                                                                                                                   | ** ** | **June 30,  2004** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|
|                                                                                                                         |       |               |       |
| **ASSETS**                                                                                                                   |       |               |       |
| Current Assets:                                                                                                              |       |               |       |
| Cash and cash equivalents                                                                                                    |       | $                  | 1,752,000  |   |
| Accounts receivable, net of allowance for  doubtful accounts of $39,000 at June 30, 2004                                     |       | 937,000            |       |
| Inventories, net                                                                                                             |       | 1,584,000          |       |
| Other receivables                                                                                                            |       | 184,000            |       |
| Other current assets                                                                                                         |       | 148,000            |       |
| Total current assets                                                                                                         |       | 4,605,000          |       |
|                                                                                                                         |       |               |       |
| Property and Equipment, at cost                                                                                              |       | 4,014,000          |       |
| Less: Accumulated depreciation and  amortization                                                                             |       | (3,523,000         | )          |
| Property and Equipment, net                                                                                                  |       | 491,000            |       |
| Intangible Assets:                                                                                                           |       |               |       |
| Technologies, net                                                                                                            |       | 950,000            |       |
| Patents                                                                                                                      |       | 185,000            |       |
| Customer lists, net                                                                                                          |       | 330,000            |       |
| Trademarks                                                                                                                   |       | 181,000            |       |
| Other Assets                                                                                                                 |       | 43,000             |       |
| Total Assets                                                                                                                 |       | $                  | 6,785,000  |   |
|                                                                                                                         |       |               |       |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                |       |               |       |
|                                                                                                                         |       |               |       |
| Current Liabilities:                                                                                                         |       |               |       |
| Accounts payable                                                                                                             |       | $                  | 311,000    |   |
| Current portion of capital lease  obligations                                                                                |       | 109,000            |       |
| Accrued expenses:                                                                                                            |       |               |       |
| Accrued payroll and payroll related  expenses                                                                                |       | 203,000            |       |
| Accrued income taxes                                                                                                         |       | 292,000            |       |
| Other accrued liabilities                                                                                                    |       | 180,000            |       |
| Total current liabilities                                                                                                    |       | 1,095,000          |       |
|                                                                                                                         |       |               |       |
| Notes payable - officers                                                                                                     |       | 280,000            |       |
| Notes payable - investors                                                                                                    |       | 40,000             |       |
| Deferred Taxes                                                                                                               |       | 11,000             |       |
| Capital Lease Obligations, net of current  portion                                                                           |       | 45,000             |       |
| Total liabilities                                                                                                            |       | 1,472,000          |       |
| Stockholders’ Equity:                                                                                                   |       |               |       |
| Common stock, $.01 par value:15,000,000  shares authorized;  7,837,587 shares  issued and outstanding at June 30, 2004. |       | 73,000             |       |
| Committed stock:  2,138,232 shares                                                                                      |       | 3,058,000          |       |
|                                                                                                                         |       |               |       |
| Capital in excess of par value                                                                                               |       | 10,338,000         |       |
| Accumulated deficit                                                                                                          |       | (8,155,000         | )          |
| Total stockholders’ equity                                                                                              |       | 5,314,000          |       |
| Total liabilities and stockholder’s equity                                                                              |       | $                  | 6,785,000  |   |

 

The accompanying notes are an integral partof these financial statements.

 

3

----

 

**AML COMMUNICATIONS, INC.**

**CONSOLIDATEDSTATEMENTS OF OPERATIONS**

**(unaudited)**

 
| ** **                                                             | ** ** | **Three Months Ended** | ** ** |      |
|------------------------------------------------------------------------|------------|------------------------|------------|-----------|
| **June 30,  2004**                                                     | ** ** | **June 30,  2003**     |            |
|                                                                        |
|                                                                   |       |                   |       |      |   |   |
| Net sales                                                              |       | $                      | 2,174,000  |      | $ | 1,548,000 |   |   |
| Cost of goods sold                                                     |       | 1,240,000              |       | 831,000   |   |   |
| Gross profit                                                           |       | 934 ,000               |       | 717,000   |   |   |
|                                                                   |       |                   |       |      |   |   |
| Operating expenses:                                                    |       |                   |       |      |   |   |
| Selling, general & administrative                                  |       | 409,000                |       | 265,000   |   |   |
| Research and development                                               |       | 183,000                |       | 199,000   |   |   |
|                                                                   |       | 592,000                |       | 464,000   |   |   |
| Profit from operations                                                 |       | 342,000                |       | 253,000   |   |   |
|                                                                   |       |                   |       |      |   |   |
| Other income (expense), net                                            |       | (16,000                | )          | (30,000   | ) |   |
| Profit before provision for income taxes                               |       | 326,000                |       | 223,000   |   |   |
|                                                                   |       |                   |       |      |   |   |
| Provision for income taxes                                             |       | —                 |       | —    |   |   |
|                                                                   |       |                   |       |      |   |   |
| Net profit                                                             |       | $                      | 326,000    |      | $ | 223,000 |   |   |
|                                                                   |       |                   |       |      |   |   |
| Basic earnings profit per common share                                 |       | $                      | 0.04       |      | $ | 0.03 |   |   |
|                                                                   |       |                   |       |      |   |   |   |   |
| Basic weighted average number of shares of  common stock outstanding   |       | 8,143,000              |       | 7,829,000 |   |   |
|                                                                   |       |                   |       |      |   |   |
| Diluted earnings profit per common share                               |       | $                      | 0.03       |      | $ | 0.02 |   |   |
|                                                                   |       |                   |       |      |   |   |
| Diluted weighted average number of shares  of common stock outstanding |       | 9,709,000              |       | 9,393,000 |   |   |

 

The accompanying notes are an integral partof these financial statements.

 

4

----

 

**AML COMMUNICATIONS, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(unaudited)**

 
| ** **                                                                            | ** ** | **Three Months Ended** | ** ** |
|---------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                            | ** ** | **June 30,  2004**     | ** ** | **June 30,  2003** | ** ** |
| Cash Flows from Operating Activities:                                                 |       |                   |       |   |   |
| Net Profit                                                                            |       | $                      | 326,000    |   | $ | 223,000 |   |
| Adjustments to reconcile net profit (loss)  to net cash used in operating activities: |       |                   |       |   |   |
| Debt discount fees                                                                    |       | 4,000                  |       |   |   |
| Depreciation and amortization                                                         |       | 64,000                 |       | 85,000 |   |
| Bad debt expense                                                                      |       | 5,000                  |       |   |   |
| (Gain) on sale of fixed assets                                                        |       |                   |       |   |   |
| Changes in assets and liabilities:                                                    |       |                   |       |   |   |
| Decrease (increase) in:                                                               |       |                   |       |   |   |
| Accounts receivable                                                                   |       | (141,000               | )          | (538,000 | ) |
| Inventories                                                                           |       | (97,000                | )          | 84,000 |   |
| Inventory Reserves                                                                    |       | 122,000                |       |   |   |
| Other current assets                                                                  |       | (24,000                | )          | 18,000 |   |
| Other assets                                                                          |       | 23,000                 |       |   |   |
| Increase (decrease) in:                                                               |       |                   |       |   |   |
| Accounts payable                                                                      |       | (303,000               | )          |   |   |
| Accrued state income taxes                                                            |       |                   |       | (106,000 | ) |
| Accrued expenses                                                                      |       | 52,000                 |       | (119,000 | ) |
| Net cash from operating activities                                                    |       | 31,000                 |       | (353,000 | ) |
|                                                                                  |       |                   |       |   |   |
| Cash Flows from Investing Activities:                                                 |       |                   |       |   |   |
| Purchases of property and equipment                                                   |       | (84,000                | )          | (2,000 | ) |
| Cash received in the MPI acquisition                                                  |       | 1,150,000              |       | — |   |
| Net cash provided by investing activities                                             |       | 1,066,000              |       | (2,000 | ) |
|                                                                                  |       |                   |       |   |   |
| Cash Flows from Financing Activities:                                                 |       |                   |       |   |   |
| Proceeds from exercise of stock options                                               |       | —                 |       | — |   |
| Proceeds from line of credit, net                                                     |       | (265,000               | )          | 179,000 |   |
| Proceeds from notes payable - related  parties                                        |       |                   |       | 100,000 |   |
| Proceeds from notes payable - investors                                               |       | (22,000                | )          | — |   |
|                                                                                  |       |                   |       |   |   |
| Principal payments on capital lease  obligations, net                                 |       | (35,000                | )          | (65,000 | ) |
| Net cash (used in) provided by financing  activities                                  |       | (322,000               | )          | 214,000 |   |
|                                                                                  |       |                   |       |   |   |
| Net increase (decrease) in Cash and Cash  Equivalents                                 |       | 775,000                |       | (141,000 | ) |
| Cash and Cash Equivalents, beginning of  period                                       |       | 977,000                |       | 195,000 |   |
| Cash and Cash Equivalents, end of period                                              |       | $                      | 1,752,000  |   | $ | 54,000 |   |
| Supplemental disclosures of cash flow  information:                                   |       |                   |       |   |   |
| Cash paid during the period for:                                                      |       |                   |       |   |   |
| Interest                                                                              |       | $                      | 21,000     |   | $ | 30,000 |   |
| Income Taxes                                                                          |       | —                 |       | — |   |
|                                                                                  |       |                   |       |   |   |
| Unamortized debt discount fees                                                        |       | $                      | 17,542     |   | — |   |

 

The accompanying notes are an integral partof these financial statements.

 

5

----

 

**AML COMMUNICATIONS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**June 30, 2004**

** **

**1.**             **Basis ofPresentation**

 

AMLCommunications, Inc. (the “Company”) is a designer, manufacturer, and marketerof amplifiers and related products that address the defense microwave markets.

 

Theaccompanying unaudited financial statements have been prepared in conformitywith accounting principles generally accepted in the United States.  However, certain information and footnotedisclosures normally included in financial statements prepared in accordancewith accounting principles generally accepted in the United States have beenomitted or condensed pursuant to the rules and regulations of the Securitiesand Exchange Commission (“SEC”).  In theopinion of management, all adjustments (consisting of normal recurringadjustments) necessary for a fair presentation have been included.  The results of operations and cash flows forthe three-month period presented are not necessarily indicative of the resultsof operations for a full year.  Thesefinancial statements should be read in conjunction with the Company’s March 31,2004 audited financial statements and notes thereto included in the Company’sAnnual Report on Form 10-KSB.

 

***2.***             **Acquisitions**

* *

On May 25,2004, the Company signed a definitive agreement for the acquisition ofMicrowave Power, Inc. (“MPI”), which was completed on June 18, 2004. MPI wasmerged into the Company’s wholly owned subsidiary, with the subsidiary as thesurviving entity. The total consideration for the acquisition was $3,028,000payable by the issuance of 2,117,362 shares of the Company’s common stock at$1.43 per share in exchange for all the issued and outstanding shares of MPIstock. There was no change in MPI’s management and the Company entered intoemployment agreements with two of MPI’s senior officers, its past President andSecretary. MPI will continue to operate as the Company’s division from itsfacility in Santa Clara, which is owned by MPI’s prior shareholders and leasedto the Company.

 

A summary of the unaudited condensed balance sheet of MPI as of June18, 2004 is as follows:

 
| ** **                  | ** ** | **June 18, 2004** | ** ** |
|-----------------------------|------------|-------------------|------------|
| ** **                  | ** ** | **(Unaudited)**   | ** ** |
|                        |       |              |       |
| Cash                        |       | $                 | 1,150,000  |   |
| Receivables                 |       | 124,000           |       |
| Inventory                   |       | 494,000           |       |
| Property and equipment, net |       | 61,000            |       |
| Intangible assets           |       | 1,670,000         |       |
| Total assets acquired       |       | $                 | 3,499,000  |   |
| Current liabilities         |       | (295,000          | )          |
| Net assets acquired         |       | $                 | 3,204,000  |   |

 

Of the1,670,000 of acquired intangible assets, $189,000 was assigned to patents (8year useful life), $961,000 was assigned to Existing Technology (12 year usefullife), and $339,000 was assigned to Customer Lists (3 year useful life).  All are subject to amortization.  The balance of $181,000 was assigned totrademarks, which have an infinite life and therefore should not be amortized.

 

6

----

 

Unaudited pro forma results of operations as if the Company hadacquired MPI as of April 1, 2004 and 2003 are as follows:

 
| **AML & MPI Consolidated Pro  forma** | ** ** | **June 30,  2004** | ** ** | **June 30,  2003** | ** ** |
|-------------------------------------------|------------|--------------------|------------|--------------------|------------|
|                                      |       |               |       |               |       |
| Revenue                                   |       | $                  | 2,428,000  |               | $          | 2,067,000 |   |
| Net Income                                |       | 136,000            |       | 503,000            |       |
| Basic earnings per share                  |       | $                  | 0.01       |               | $          | 0.05 |   |
| Diluted earnings per share                |       | $                  | 0.01       |               | $          | 0.04 |   |

 

**3.**             **Earnings PerShare**

 

**Statement of FinancialAccounting Standards No. 128, “Earnings per share” requires the presentation ofbasic earnings per share and diluted earnings per share.  Basic and diluted earnings per sharecomputations are presented by the Company conform to the standard and are basedon the weighted average number of shares of Common Stock outstanding during theyear.**

 

Basic earnings per share is computed by dividing net incomeor loss by the weighted average number of shares outstanding for the year.  “Diluted” earnings per share is computed bydividing net income or loss by the total of the weighted average number ofshares outstanding, and the dilutive effect of outstanding stock options(applying the treasury stock method).

** **

**The Company had 1,566,000 ofgranted stock options that were exercisable as of June 30, 2004 and 1,564,000of granted stock options exercisable at June 30, 2003.**

** **

**The following is areconciliation of the numerators and denominators of the basic and dilutedearnings per share computations:**

** **
| **Three months ended June 30,  2004**        | ** ** | **Net Income** | ** ** | **Shares** | ** ** | **Per Share** | ** ** |
|----------------------------------------------|------------|----------------|------------|------------|------------|---------------|------------|
| Basic earnings per shares:                   |       |           |       |       |       |          | ** ** |
| Net income available to common  stockholders |       | 326,000        |       | 8,143,000  |       | $             | 0.04       | ** ** |
| Effect of dilutive securities:               |       |           |       |       |       |          | ** ** |
| Stock options                                |       |           |       | 1,566,000  |       |          | ** ** |
| Diluted earnings per share:                  |       | 326,000        |       | 9,709,000  |       | $             | 0.03       | ** ** |

 
| **Three months ended June 30,  2003**        | ** ** | **Net Income** | ** ** | **Shares** | ** ** | **Per Share** | ** ** |
|----------------------------------------------|------------|----------------|------------|------------|------------|---------------|------------|
| Basic earnings per shares:                   |       |           |       |       |       |          | ** ** |
| Net income available to common  stockholders |       | 233,000        |       | 7,829,000  |       | $             | 0.03       | ** ** |
| Effect of dilutive securities:               |       |           |       |       |       |          | ** ** |
| Stock options                                |       |           |       | 1,564,000  |       |          | ** ** |
| Diluted earnings per share:                  |       | 233,000        |       | 9,393,000  |       | $             | 0.02       | ** ** |

** **

**7**

----

** **

**4.**             **Inventories**

 

Inventoriesinclude costs of material, labor and manufacturing overhead and are stated atthe lower of cost (first-in, first-out) or market and consist of the following:

 

| ** **      | ** ** | **June 30, 2004** | ** ** |
|-----------------|------------|-------------------|------------|
|            |       |              |       |
| Raw materials   |       | $                 | 902,000    |   |
| Work-in-process |       | 449,000           |       |
| Finished goods  |       | 233,000           |       |
|            |       | $                 | 1,584,000  |   |

 

**5.**             **Intangible Assets**

 

The Company accounts for its intangible assets under the applicable guidelines of SFAS 142 “goodwill and other intangible assets” and SFAS 144 “accounting for the impairment or disposal of long lived assets”. Where intangible assets have finite lives, they are amortized over their useful life unless factors exist to indicate that the asset has been impaired. The Company evaluates if the assets are impaired annually or on an interim basis if an event occurs or circumstances change to suggest that the assets value has diminished. Under SFAS 142 intangible assets with indefinite useful lives are required to be tested annually for impairment or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of the assets to future net cash flows expected to be generated by the assets. If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets.  During the three months ended June 30 2004, the Company recognized no impairment.

 

At June 30, 2004, intangibles consist of the following:

 
| ** **               | ** ** | **June 30, 2004**          | ** ** |
|--------------------------|------------|----------------------------|------------|
| **Intangibles**          | ** ** | **Gross Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** | **Net** | ** ** |
|                     |       |                       |       |   |   |   |   |
| Amortized intangibles:   |       |                       |       |   |   |   |   |
| Patents                  |       | $                          | 189,000    |   | $ | (4,000 | ) | $ | 185,000 |   |
| Existing Technology      |       | 961,000                    |       | (11,000 | ) | 950,000 |   |
| Customer List            |       | 339,000                    |       | (9,000 | ) | 330,000 |   |
|                     |       |                       |       |   |   |   |   |
| Unamortized intangibles: |       |                       |       |   |   |   |   |
| Trademarks               |       | 181,000                    |       | — |   | 181,000 |   |
|                     |       | $                          | 1,670,000  |   | $ | (24,000 | ) | $ | 1,646,000 |   |

 

During thequarter ended June 30, 2004, due to the acquisition of MPI, we recorded the intangible assets above. We assigned an 8 yearlife to patents, a 12 year life to Existing Technology, and a 3 year life toCustomer Lists. All are subject to amortization.  The value assigned to trademarks, which haveinfinite life, should not be amortized.

 

Amortizationexpense from continuing operation for quarter ended June 30, 2004 was$24,000.  We expect amortization expensefor the next five years to be as follows:

 
| **Year Ending March 31:** | ** ** | ** ** | ** ** |
|---------------------------|------------|------------|------------|
| 2005                      |       | $          | 180,026    |   |
| 2006                      |       | $          | 216,305    |   |
| 2007                      |       | $          | 216,305    |   |
| 2008                      |       | $          | 122,200    |   |
| 2009                      |       | $          | 103,379    |   |

 

8

----

 

**6**.             **AccountsReceivable Financing**

 

In September 2003, the Company modified its agreement with SiliconValley Bank. Under the modification agreement, the aggregate amount of allreceivables purchased by the bank could not exceed $2,000,000. The Company wasobligated to pay the bank a monthly finance charge which was computed as thegreater of $6,500 or 1% above the prime rate, per annum, on the average dailyaccount balance outstanding for each month. The Company was also required topay the bank a monthly collateral handling fee of 0.75% per month on theaverage daily account balance outstanding for the month. The bank refunded anyamount remaining from paid accounts after deducting the 80% advance, themonthly finance charge, the collateral handling fee and any other adjustmentsmade or fees due pursuant to the Account Receivable Purchase Agreement. Thebank required the Company to repurchase receivables it had purchased if theyremained unpaid after 90 days from the invoice date, if the account debtorfiled (or has filed against it) bankruptcy or other insolvency proceedings, ifthe Company breached the Accounts Receivable Purchase Agreement or if theaccount debtor asserted any claim relating to the receivable.  As of June 30, 2004, there was $184,000 ofrefundable reserves due to the Company under the borrowings agreement.  On July 6, 2004, the Company terminated itsagreement with Silicon Valley Bank and entered into a new financing agreementwith Bridge Bank.

 

Under the asset-based financing agreement with Bridge Bank, the Companyis required to pay the bank $7,500 upon execution of the contract and on eachanniversary thereafter prior to termination of the agreement. The credit limitunder this agreement is $1,500,000, of which $1,000,000 may be used for cashadvances against accounts receivables and $500,000 may be used for equipmentadvances. The Company is obligated to pay the bank a finance charge at a rateper year equal to the prime rate, which in no event shall be less than 4.0%,plus 2.0% with respect to cash advances and a rate of such prime rate plus 3.5%with respect to equipment advances.  TheCompany is required to maintain certain financial requirements, including netprofit after tax, on a quarterly basis, of at least $0.01, and a debt servicecoverage ratio of at least 1.25 to 1.00 with respect to equipment advances.This agreement terminates on July 7, 2005, or upon a date that the bank choosesto terminate the agreement. Any unpaid balance is due and payable pursuant tothe agreement on the termination date. If the agreement is terminated withinthe first 12 months, the Company generally is required to pay a $15,000 fee tothe bank.

 

**7.**             EquityTransactions

* *

In connectionwith the acquisition of MPI, the Company issued 2,117,362 shares of its commonstock to shareholders of MPI for total consideration of $3,028,000.  In this connection, the Company also issuedto a business broker 20,090 shares of its common stock valued at a fair marketvalue of $30,000.  These transactionswere effected under Section 4(2) of the Securities Act of 1933, as amended.

 

*Therecipients of securities in the above-described transactions represented theirintention to acquire the securities for investment only and not with a view toor for sale in connection with any distribution thereof and appropriate legendswere affixed to the share certificates and other instruments issued in suchtransactions. The recipients either received adequate information about theCompany or had access, through other relationships, to such information.*

* *

During quarter, the Board of Directors granted stock options of 119,500shares as employee compensation.  Theoptions prices range from $1.40 to $1.55 per share.

 

In December 2002, the FASB issued Statement of Financial AccountingStandards No. 148 (“SFAS 148”), “Accounting for Stock-BasedCompensation-Transition and Disclosure”. This Statement amends SFAS 123,“Accounting for Stock-Based Compensation”, to provide alternative methods oftransition for a voluntary change to the fair value based method of accountingfor stock-based employee compensation. In addition, SFAS 148 amends thedisclosure requirements of Statement 123 to require prominent disclosures inboth annual and interim financial statements about the method of accounting forstock-based employee compensation and the effect of the method used on reportedresults.

 

9

 

The following table presents pro forma disclosures required by SFAS No.148 of net income (loss) and basic and diluted earnings (loss) per share as ifstock-based employee compensation had been recognized during the three monthsended June 30, 2004. The compensation expense for these periods has beendetermined under the fair value method using the Black-Scholes pricing model,and assumes graded vesting.

 
| ** **                                                         | ** ** | **For the three months ended** | ** ** |
|--------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                         | ** ** | **June 30, 2004**              | ** ** | **June 30, 2003** | ** ** |
|                                                               |       |                           |       |   |   |
| Net income (loss) as reported                                      |       | 326,000                        |       | 223,000 |   |
| Less: stock-based compensation  expense,net of related tax effects |       | (26,000                        | )          | (4,000 | ) |
| Pro forma net loss                                                 |       | 300,000                        |       | 219,000 |   |
|                                                               |       |                           |       |   |   |
| Basic earnings per share - as  reported                            |       | 0.04                           |       | 0.03 |   |
| Diluted earnings per share - as  reported                          |       | 0.03                           |       | 0.02 |   |
| Basic earnings per share - pro  forma                              |       | 0.03                           |       | 0.02 |   |
| Diluted earnings per share -  pro forma                            |       | 0.03                           |       | 0.02 |   |

 

8.             **RelatedParty**

 

During the quarter ended June 30, 2004, theCompany paid $2,000 to the previous stockholders of MPI in connection with theproperty rent for the premises located in Santa Clara.

 

9.             **ListingHistory**

 

The Company’s common stock currentlytrades on Nasdaq’s OTC Bulletin Board under the symbol “AMLJ.OB”. Its commonstock traded on the Nasdaq Small Cap Market from October 8, 2001 toAugust 13, 2002 and on the Nasdaq National Market prior to that time.  The Company was de-listed from NASDAQ because of its failure to meet the $1.00 minimumbid price requirement.

** **

**Item 2**.  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations.

 

This filing contains forward-looking statements, which involve risksand uncertainties.  Our actual futureresults may differ materially from the results discussed in the forward-lookingstatements.  When used in this report,the words “expects” “anticipates” and “estimates” and similar expressions areintended to identify forward-looking statements. Factors that could causeactual results to differ materially from those expressed in any forward-lookingstatement made by us include, but are not limited to:

 

•      our ability to finance our activities andmaintain our financial liquidity;

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

•      the impact of general economic conditions on ourbusiness;

•      postponements, reductions, or cancellations inorders from new or existing customers;

•      the limited number of potential customers for ourproducts;

•      the variability in gross margins on our products;

•      our ability to design and market new productssuccessfully;

 

10

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•      our failure to acquire new customers in thefuture;

•      deterioration of business and economic conditionsin our markets;

•      intensely competitive industry conditions withincreasing price competition; and

•      the rate of growth in the defense markets.

 

Please read the following information in conjunction with the factorsset forth in the section below titled “Additional Factors That May AffectFuture Results” and other risk factors detailed in our filings with theSecurities and Exchange Commission (the “SEC”), including our Annual Report onForm 10-KSB filed with the SEC on June 29, 2004.  We undertake no obligation to publiclyrelease any revisions to these forward-looking statements to reflect events orcircumstances after the date this report is filed with the SEC or to reflectthe occurrence of unanticipated events**.**

 

**Overview**

 

We are based in southern California and design, manufacture and marketRadio Frequency (“RF”) and Microwave power and low noise amplifiers for avariety of frequency ranges and transmission protocols serving the defensemicrowave and wireless communications markets. Our defense industry products,which represents approximately 90% of our sales, are used in communications andradar equipment integrated into electronic systems for tactical aircraft,ships, ground systems, and missile systems. Our wireless products consist of anarray of low noise and power amplifiers serving the wireless, PCS, and two-waymessaging market, as well as Cellular Coverage Enhancement amplifiers.  These products, representing approximately10% of our sales, are sold to cellular operators and to original equipmentmanufactures. The demand for products manufactured by us and used in thedefense industry has been growing at a fast pace during the last 2 years and isexpected to continue to grow. This growth is attributable to an increase indemand for our products by government prime contractors, as well as to ourstrategy to acquire market share by offering leading edge products.  The demand for wireless products has seen arecent increase due to the competition among cellular operators and originalequipment manufactures to provide improved products and services. The acquisition of MPI is part of a strategicmove to complement the existing AML product line and expand our technologybase. We plan to operate MPI from the current facility in Santa Clara, with thecurrent management in place, but plan to unify the Web-site of MPI with oursfor better market exposure with intent to offer a “one stop shop” for customersseeking low noise and high power amplifier solutions.

 

**RecentEvent**

 

On June 18, 2004, we completed our acquisition ofMicrowave Power, Inc., a designer, manufacturer and marketer of broadband highpower microwave amplifiers. The total consideration for the acquisition was$3,028,000 payable by the issuance of 2,117,362 shares of our common stock at$1.43 per share in exchange for all the issued and outstanding shares of MPIstock.. There was no change in MPI’s management and we entered into employmentagreements with two of MPI’s senior officers, its past President and Secretary.MPI will continue to operate as our division from its facility in Santa Clara,which is owned by MPI’s prior shareholders and leased to us.

 

**Resultsof Operations**

** **

**ThreeMonths Ended June 30, 2004 Compared to Three Months Ended June 30, 2004**

* *

*Net sales. *Netsales for the three months ended June 30, 2004 were $2.17 million, as comparedto net sales of $1.54 million for the three months ended June 30, 2003 anincrease of $600,000 or 40%.  Theincrease in net sales is attributable to the higher volume of shipments of thedefense related MIC products which accounted for $1.7 million, or 79.6% of netsales for the three months ended June 30, 2004, compared to $1.5 million or98.6% of net sales for the three months ended June 30, 2003. Additionally, thecellular and wireless messaging market produced $431,000, or 20.5% of net salesfor the three months ended June 30, 2004, as compared to $22,000, or 1.4% ofnet sales for the three months ended June 30, 2003.

 

11

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*Gross profit. *Gross profit for the three months ended June 30, 2004was $934,000, or 42.9% of net sales, compared to a gross profit of $717,000, or46.3% of net sales for the three months ended June 30, 2003. Gross profit, as apercentage of net sales, decreased due to price reductions in order to acquiremarket share, and increased due to the allocation of $18,000 from the Researchand Development department.

* *

*Selling, general and administrative costs. *Selling, general, andadministrative costs were $409,000, or 18.8% of net sales, for the three monthsended June 30, 2004, compared to $265,000, or 17.1% of net sales, for the threemonths ended June 30, 2003.  The increaseis attributed to higher professional fees; salary increases, bonus payments,and 401K contributions for all employees; increased commission expense, andincreased spending in the area of investor relations.

* *

*Research and development costs. *Research and developmentcosts were $183,000, or 8.4% of net sales, for the three months ended June 30,2004, as compared to $199,000, or 12.9% of net sales, for the three monthsended June 30, 2003. These costs declined due to the reallocation of $18,000for certain expenses to manufacturing overhead.

 

*Other expense and income, net. *Other net expenses were$16,000 for the three months ended June 30, 2004, as compared to other netexpenses of $30,000 for the three months ended June 30, 2003.  The decrease is attributed to lower interestand finance charges associated with reduced borrowing, offset by a $4,000 gainon the sale of a fixed asset.

* *

*Provision for income taxes.* Forthe three months ended June 30, 2004, we recorded no provision for state incometaxes, due to the California Franchise Tax Board reversing its suspension ofthe utilization of loss carry forwards.

 

*Net profit. *Netprofit was $326,000, or $0.04 per share, for the three months ended June 30,2004, compared to a net profit of $223,000, or $0.03 per share, for the threemonths ended June 30, 2003.

 

**Liquidityand Capital Resources**

 

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

 

Between July 1, 2000 and December31, 2001, we entered into capital leases for the purpose of acquiring productionand test equipment valued in aggregate at $740,000.  The terms of the leases range from 36 monthsto 60 months and the interest charges range from 8.6% to 15.6%. The totalamount remaining on the leases at June 30, 2004 is $126,000.

 

In December2001, we received a loan of $50,000 from Dr. Tiberiu Mazilu, PhD, our officerand director.  The promissory note callsfor quarterly interest payments to Dr. Mazilu commencing on September 30, 2002,with the interest payment calculated quarterly and based on the prime interestrate plus 1.25%.  The principal amount ofthe note is due on January 2, 2005 but would become due and payable by usimmediately upon the consolidation or merger of us into another entity, thedeath of Dr. Mazilu, or our termination of Dr. Mazilu’s employment with us.

 

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

 

In July 2003, we raised $245,000 ($100,000 of which was a conversionfrom an advance received in June 2003) from current officers and directors and$43,000 from other investors in the form of notes payable with warrantsattached. The funds were used for working capital. The promissory notes bearinterest at the rate of 8% and have a two-year maturity. Warrants to purchase atotal of 240,000 shares of our common stock were issued in connection with thefunding.  The per share exercise price ofthe warrants is $0.24.  The warrantsexpire five years from the date of issuance. We have valued these warrants at $35,000 and are expensing this valueover the term of 

 

12

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the notespayable.  For the three months ended June30, 2004, a total of $4,000 was charged to the consolidated statement ofoperations.

 

In September 2003, we modified our agreement with Silicon Valley Bank.Under the modification agreement, the aggregate amount of all receivablespurchased by the bank could not exceed $2,000,000. We were obligated to pay thebank a monthly finance charge which was computed as the greater of $6,500 or 1%above the prime rate, per annum, on the average daily account balanceoutstanding for each month. We were also required to pay the bank a monthlycollateral handling fee of 0.75% per month on the average daily account balanceoutstanding for the month. The bank refunded any amount remaining from paidaccounts after deducting the 80% advance, the monthly finance charge, thecollateral handling fee and any other adjustments made or fees due pursuant tothe Account Receivable Purchase Agreement. The bank required us to repurchasereceivables it had purchased if they remained unpaid after 90 days from theinvoice date, if the account debtor filed (or has filed against it) bankruptcyor other insolvency proceedings, if we breached the Accounts ReceivablePurchase Agreement or if the account debtor asserted any claim relating to thereceivable.  As of June 30, 2004, therewere $184,000 of refundable reserves due to the Company under the borrowingsagreement.  On July 6, 2004, weterminated our agreement with Silicon Valley Bank and entered into a newfinancing agreement with Bridge Bank.

 

Under the asset-based financing agreement with Bridge Bank, we arerequired to pay the bank $7,500 upon execution of the contract and on eachanniversary thereafter prior to termination of the agreement. The credit limitunder this agreement is $1,500,000, of which $1,000,000 may be used for cashadvances against accounts receivables and $500,000 may be used for equipmentadvances. 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 4.00%, plus 2.0%with respect to cash advances and a rate of such prime rate plus 3.5% withrespect to equipment advances. We must maintain certain financial requirements,including net profit after tax, on a quarterly basis, of at least $0.01, and adebt service coverage ratio of at least 1.25 to 1.00 with respect to equipmentadvances. This agreement terminates on July 7, 2005 or upon a date that thebank chooses to terminate the agreement. Any unpaid balance is due and payable pursuant to the agreement on thetermination date.  If the agreement isterminated within the first 12 months, we generally are required to pay a$15,000 fee to the bank.

 

At June 30,2004, we had $1,752,000 in cash and cash equivalents, compared to cash and cashequivalents of $54,000 at June 30, 2003. Our operating activities provided cashof approximately $31,000, a result of increased profits due to higher revenuescombined with a decrease in accounts payable. Cash provided from investingactivities amounted to $1,066,000, primarily as a result of the MPIacquisition, offset by $84,000 for the purchase of property and equipment. Cashused in financing activities was $322,000; $265,000 as a result of paying downour balance on our accounts receivable financing with Silicon Valley Bank,along with payments on lease obligations of $35,000 and payments on NotesPayable of $22,000. We anticipate capital expenditures of approximately$530,000 in fiscal 2005. At June 30, 2003, cash used in operating activitieswas $353,000, a result of increased receivables combined with a decrease ininventories and accrued liabilities. Cash provided by financing activities was $214,000; $179,000 of whichwas provided from our accounts receivable financing agreement and $100,000 wasprovided by investors.

 

In addition tothe funds raised in July 2003, we may attempt to procure additional sources offinancing in the event that the capital available as of June 30, 2004, isinsufficient for our operating needs.  These sources may include, but are not limited to, additional sales ofour securities.  There are, however, noassurances that we will be able to successfully obtain additional financing atterms acceptable to us.  Failure toobtain such financing could have a material adverse effect on our ability tooperate as a going concern.

 

**CriticalAccounting Policies**

 

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

 

13

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*Revenue recognition.*  We arerequired to make judgments based on historical experience and futureexpectations, as to the realizability of shipments made to our customers. Thesejudgments are required to assess the propriety of the recognition of revenuebased on Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition,”and (“SAB’s”) No. 103 and 104, “Update of Codification of Staff AccountingBulletins” and related guidance. We make these assessments based on thefollowing factors: I) customer-specific information, II) returnpolicies, III) historical experience for issues not yet identified.

 

*Inventory.*  We are required to make judgments based onhistorical experience and future expectations as to the essential level ofinventories necessary to maintain the business. We make these assessments basedon existing orders, age of the inventory, and historical experience.

 

*Intangible Assets.*  We test intangible assets with infinite livesfor impairment on an annual basis or more frequently if certain eventsoccur.  Recoverability of assets ismeasured by a comparison of the carrying amount of the assets to future netcash flows expected to be generated by the assets. If the assets are consideredto be impaired, the impairment to be recognized will be measured by the amountby which the carrying amount exceeds the fair value of the assets.

 

For our intangible assets with finite lives, including our Customerlists, existing technology, and patents, we amortize the costs of the assetsover their useful lives and assess impairment at least annually or wheneverevents and circumstances suggest the carrying value of an asset may not berecoverable.

 

**AdditionalFactors That May Affect Future Results**

 

Future operating results may be impacted by anumber of factors that could cause actual results to differ materially fromthose stated herein, which reflect management’s current expectations. Thesefactors include:

 

•              industry-specific factors (including the relianceupon 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;

 

•              theavailability and cost of components;

 

•              theimpact of worldwide economic and political conditions on our business; and

 

•              The ability tointegrate MPI into our existing operations.

 

 

We believe that, to the extent that foreign salesare recognized, we may face increased risk associated with political andeconomic instability, compliance with foreign regulatory rules governing exportrequirements, tariffs and other trade barriers, differences in intellectualproperty protections, longer accounts receivable cycles, currency fluctuationsand general trade restrictions. If any of these risks materialize, they couldhave a material adverse effect on our business, results of operations, andfinancial condition.

 

We have evaluated the credit exposure associatedwith conducting business with foreign customers and have concluded that suchrisk is acceptable. Nevertheless, any significant change in the economy or adeterioration in United

 

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States trade relations or the economic or political stability of foreignmarkets could have a material adverse effect on our business, results ofoperations, and financial condition.

 

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

 

We experience significant pricecompetition and expect price competition in the sale of our products to remainintense. We cannot assure you that our competitors will not develop newtechnologies or enhancements to existing products or introduce new productsthat will offer superior price or performance features. We expect ourcompetitors to offer new and existing products at prices necessary to gain orretain market share. Several of our competitors have substantial financialresources, which may enable them to withstand sustained price competition or adownturn in the pricing of their products in the future. Substantially all ofour competitors have, and potential future competitors could have,substantially greater technical, marketing, distribution and other resourcesthan we do and have, or could have, greater name recognition and marketacceptance of their products 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, that meet orexceed industry standards, that compete effectively on the basis of price,performance and quality, that adequately address OEM customer and end-user customerrequirements, and that achieve market acceptance.  We believe that to remain competitive in thefuture we will need to continue to develop new products, which will require theinvestment of significant financial resources in new product development.  In the event our newly developed products arenot timely developed or do not gain market acceptance, our business, results ofoperations and financial condition could be materially adversely affected.

 

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

 

**Item3**.        Controls andProcedures

 

(a)  *Evaluation of disclosurecontrols and 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 pursuant to Exchange Act Rule 13a-14.Based upon that evaluation, the Chief Executive Officer and Director of Financeconcluded that our disclosure controls and procedures are effective in timelyalerting them to material information relating to us required to be included inour periodic SEC filings.

 

(b)  *Changes in internalcontrols over financial reporting*. There was no change in ourinternal control over financial reporting during our most recent fiscal quarterthat has materially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting.

 

15

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#### **PART II** – OTHER INFORMATION

** **

**Item 1.  Legal Proceedings**

** **

**Not Applicable**

** **

**Item 2.  Changesin Securities and Use of Proceeds**

** **

**On June 18, 2004, in connection with the acquisition ofMPI, we issued 2,117,362 shares of our Common Stock to shareholders of MPI fortotal consideration of $3,028,000.  Inthis connection, we also issued to a business broker 20,090 shares of ourCommon Stock valued at a fair market value of $30,000.  These transactions were effected underSection 4(2) of the Securities Act of 1933, as amended.**

 

The recipientsof securities in the above-described transactions represented their intentionto acquire the securities for investment only and not with a view to or forsale in connection with any distribution thereof and appropriate legends wereaffixed to the share certificates and other instruments issued in suchtransactions. The recipients either received adequate information about us orhad access, through other relationships, to such information.

** **

**Item 3.  DefaultsUpon Senior Securities**

** **

**Not Applicable**

** **

**Item 4.  Submissionof Matters to a Vote of Security Holders**

** **

**Not Applicable**

** **

**Item 5.**    OtherInformation

** **

**Not applicable**

** **

**Item 6.**    Exhibits and Reports on Form 8-K

 
| (a) |   | Exhibits |
|-----|--------|----------|

 
| 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)                                                                                                                                   |

 

16

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| 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)                                                                                                                  |
| 10.14 |   | Parr-Bohn  Properties First Amendment to lease of 1000 Avenida Acaso, Camarillo, CA. (8)                                                                                                       |
| 10.15 |   | Employment  Agreement with Dr. Marina Bujalti, of MPI, dated June 18, 2004.(8)                                                                                                                 |
| 10.16 |   | Employment  Agreement with Dr. Franco Sechi, of MPI, dated June 18, 2004.(8)                                                                                                                   |
| 10.17 |   | Interim  Lease and Proposed Lease Terms (9)                                                                                                                                                    |
| 10.18 |   | Financing  Agreement dated July 8, 2004 with Bridge Bank.(10)                                                                                                                                  |
| 31.1  |   | Certification  of Chief Executive Officer Pursuant to 302 of the Sarbanes-Oxley Act of 2002  (10)                                                                                              |
| 31.2  |   | Certification of Director of Finance Pursuant to 302 of the  Sarbanes-Oxley Act of 2002 (10)                                                                                                   |
| 32.1  |   | Certification  of Chief Executive Officer Pursuant to 906 of the Sarbanes-Oxley Act of 2002  (10)                                                                                              |
| 32.2  |   | Certification  of Director of Finance Pursuant to 906 of the Sarbanes-Oxley Act of 2002 (10)                                                                                                   |

 

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

(2)   Previously filed with the Securities and ExchangeCommission 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 ExchangeCommission as an exhibit to the Company’s Form 10-KSB for fiscal year endedMarch 31, 1996 and incorporated herein by reference.

(4)   Previously filed with the Securities and ExchangeCommission as an exhibit to the Company’s Form 10-QSB for the quarter endedDecember 31, 1999 and incorporated herein by reference.

(5)   Previously filed with the Securities and ExchangeCommission as an exhibit to the Company’s Form 10-QSB for the quarter endedSeptember 30, 2000 and incorporated herein by reference.

(6)    Previously filed with the Securities and ExchangeCommission as an exhibit to the Company’s Form 10-QSB for the quarter endedDecember 31, 2001 and incorporated herein by reference.

(7)    Previously filed with the Securities and ExchangeCommission as an exhibit to the Company’s Form 10-QSB for the quarter endedDecember 31, 2002 and incorporated herein by reference.

(8)    Previously filed with the Securities and ExchangeCommission as an exhibit to the Company’s Form 10-KSB for the fiscal year endedMarch 31, 2004.

(9)   Previously filed with the Securities and ExchangeCommission as an exhibit to the Company’s Form 8-K dated July 6, 2004.

(10)Filed herewith.

 
| (b) |   | Reports on Form 8-K |
|-----|--------|---------------------|

 

1.     8K, May 26,2004 AML Signs Definitive Agreement to acquire Microwave Power, Inc.

2.     8K, June 15, 2004 EarningsRelease for Quarter 4 and fiscal year ended March 31, 2004.

 

17

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#### **SIGNATURES**

 

In accordancewith the requirements of the Exchange Act, the registrant caused this report tobe signed on its behalf by the undersigned, thereunto duly authorized.

 
|   |             | AML  Communications, Inc.         |
|--------|------------------|-----------------------------------|
|   |             |                              |
|   |             |                              |
| Date:  | August 20,  2004 | /s/ Jacob  Inbar                  |   |
|   |             | Jacob Inbar                       |
|   |             | Chairman of  the Board, President |
|   |             | and Chief Executive Officer       |
|   |             |                              |
|   |             |                              |
| Date:  | August 20,  2004 | /s/ Susan J.  Fite                |   |
|   |             | Susan J.  Fite                    |
|   |             | Director of  Finance and          |
|   |             | Chief Accounting Officer          |

 

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