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

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FORM 10-QSB

|(Mark One)                                         |                                                                                         
|-------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|For the quarterly period ended:  December 31, 2002
|or                                                
|o                                                  | TRANSITION REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|For the transition period from
 to                

Commission File Number:    0-27252

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AML COMMUNICATIONS, INC.(Exact name of small business issuer as specified in its charter)

|Delaware(State or Other jurisdiction of
incorporation or organization)           |  | 77-0130894(IRS Employer
Identification No.)
|-------------------------------------------------------------------------------- |  | -------------------------------------------
|1000 Avenida Acaso
Camarillo, California(Address of principal executive offices) |  | 93012(Zip Code)                            
|(805) 388-1345(Issuer's telephone number including area code)                   

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

Yes  ý        No  o

State
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common
Stock Outstanding as of February 14, 2003:7,829,456

Transitional
Small Business Disclosure
Format:    Yes  o        No  ý

Number
of pages in this Form 10-QSB    20

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AML COMMUNICATIONS, INC.  INDEX

|PART I  |  | FINANCIAL INFORMATION                                                                                                         |  | PAGE
|------- |  | ----------------------------------------------------------------------------------------------------------------------------- |  | ----
|Item 1. |  | Financial Statements                                                                                                          |  |     
|        |  | Balance Sheets (unaudited) at December 31, 2002 and March 31, 2002                                                            |  | 3   
|        |  | Statements of Operations (unaudited) for the three month and nine month periods ended December 31, 2002 and December 31, 2001 |  | 4   
|        |  | Statements of Cash Flows (unaudited) for the nine month periods ended December 31, 2002 and December 31, 2001                 |  | 5   
|        |  | Notes to the Financial Statements                                                                                             |  | 6   
|Item 2. |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                         |  | 8   
|Item 3. |  | Controls & Procedures                                                                                                         |  | 15  
|PART II |  | OTHER INFORMATION                                                                                                             |  |     
|Item 6. |  | Exhibits and Reports on Form 8-K                                                                                              |  | 16  
|        |  | SIGNATURES                                                                                                                    |  | 17  

2

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PART IFINANCIAL INFORMATION

Item 1.    Financial Statements

AML COMMUNICATIONS, INC.        BALANCE SHEETS        (unaudited)

|                                                  |                                                                                                                                                                 | December 31,
2002                            |                           | March 31,
2002 |          
|------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------- | -------------- | ---------
|
|ASSETS                                            |                                                                                                                                                                 |                                              |                           |                |          
|Current Assets:                                   |                                                                                                                                                                 |                                              |                           |                |          
|                                                  | Cash and cash equivalents                                                                                                                                       |                                              | $                         | 319,000        |          
|                                                  | Accounts receivable, net of allowance for doubtful accounts of $51,435 at December 31, 2002 and $57,150 at March 31, 2001                                       |                                              |                           | 695,000        |          
|                                                  | Inventories, net                                                                                                                                                |                                              |                           | 964,000        |          
|                                                  | Other current assets                                                                                                                                            |                                              |                           | 209,000        |          
|                                                  |                                                                                                                                                                 |                                              |                           |                |          
|                                                  |                                                                                                                                                                 | Total current assets                         |                           |                | 2,187,000
|                                                  |                                                                                                                                                                 |                                              |                           |                |          
|Property and Equipment, at cost:                  |                                                                                                                                                                 |                                              | 4,268,000                 |                |          
|                                                  | LessAccumulated depreciation and amortization                                                                                                                  |                                              |                           | (3,496,000     | )        
|                                                  |                                                                                                                                                                 |                                              |                           |                |          
|                                                  |                                                                                                                                                                 |                                              | 772,000                   |                |          
|Other Assets                                      |                                                                                                                                                                 |                                              | 47,000                    |                |          
|                                                  |                                                                                                                                                                 |                                              |                           |                |          
|                                                  |                                                                                                                                                                 | $                                            | 3,006,000                 |                | $        
|                                                  |                                                                                                                                                                 |                                              |                           |                |          
|LIABILITIES AND STOCKHOLDERS' EQUITY              |                                                                                                                                                                 |                                              |                           |                |          
|Current Liabilities:                              |                                                                                                                                                                 |                                              |                           |                |          
|                                                  | Accounts payable                                                                                                                                                |                                              | $                         | 448,000        |          
|                                                  | Line of credit                                                                                                                                                  |                                              |                           | 412,000        |          
|                                                  | Current portion of capital lease obligations                                                                                                                    |                                              |                           | 208,000        |          
|                                                  | Accrued expenses:                                                                                                                                               |                                              |                           |                |          
|                                                  |                                                                                                                                                                 | Accrued payroll and payroll related expenses |                           |                | 116,000  
|                                                  |                                                                                                                                                                 | Customer deposits                            |                           |                | 5,000    
|                                                  |                                                                                                                                                                 | Other accrued liabilities                    |                           |                | 244,000  
|                                                  |                                                                                                                                                                 |                                              |                           |                |          
|                                                  |                                                                                                                                                                 |                                              | Total current liabilities |                |          
|                                                  |                                                                                                                                                                 |                                              |                           |                |          
|Note PayableOfficer                              |                                                                                                                                                                 |                                              | 50,000                    |                |          
|Capital Lease Obligations, net of current portion |                                                                                                                                                                 |                                              | 149,000                   |                |          
|                                                  |                                                                                                                                                                 |                                              |                           |                |          
|Stockholders' Equity:                             |                                                                                                                                                                 |                                              |                           |                |          
|                                                  | Preferred stock, $.01 par value:
1,000,000 shares authorized; no shares issued or outstanding                                                                   |                                              |                           |               |          
|                                                  | Common stock, $.01 par value:
15,000,000 shares authorized; 7,943,959 shares issued and 7,829,459 shares outstanding at December 31, 2002 and at March 31, 2002 |                                              |                           | 73,000         |          
|                                                  | Capital in excess of par value                                                                                                                                  |                                              |                           | 10,524,000     |          
|                                                  | Treasury stock-114,500 shares, at cost                                                                                                                          |                                              |                           | (223,000       | )        
|                                                  | Accumulated deficit                                                                                                                                             |                                              |                           | (9,000,000     | )        
|                                                  |                                                                                                                                                                 |                                              |                           |                |          
|                                                  |                                                                                                                                                                 |                                              | 1,374,000                 |                |          
|                                                  |                                                                                                                                                                 |                                              |                           |                |          
|                                                  |                                                                                                                                                                 | $                                            | 3,006,000                 |                | $        
|                                                  |                                                                                                                                                                 |                                              |                           |                |          

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

3

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AML COMMUNICATIONS, INC.        STATEMENTS OF OPERATIONS        (Unaudited)

|                                                                                |                                   | Three Months Ended |           | Nine Months Ended |  
|------------------------------------------------------------------------------- | --------------------------------- | ------------------ | --------- | ----------------- | -
|
|Net sales                                                                       |                                   | $                  | 1,266,000 |                   | $
|Cost of goods sold                                                              |                                   |                    | 857,000   |                   |  
|                                                                                |                                   |                    |           |                   |  
|                                                                                | Gross profit                      |                    |           | 409,000           |  
|Operating expenses:                                                             |                                   |                    |           |                   |  
|                                                                                | Selling, general & administrative |                    |           | 287,000           |  
|                                                                                | Research and development          |                    |           | 313,000           |  
|                                                                                |                                   |                    |           |                   |  
|                                                                                |                                   |                    | 600,000   |                   |  
|                                                                                |                                   |                    |           |                   |  
|Loss from operations                                                            |                                   |                    | (191,000  | )                 |  
|                                                                                | Other income (expense), net       |                    |           | (9,000            | )
|                                                                                |                                   |                    |           |                   |  
|Loss before provision for income taxes                                          |                                   |                    | (200,000  | )                 |  
|Provision for income taxes                                                      |                                   |                    |          |                   |  
|                                                                                |                                   |                    |           |                   |  
|Net loss                                                                        |                                   | $                  | (200,000  | )                 | $
|                                                                                |                                   |                    |           |                   |  
|Basic and diluted loss per common share                                         |                                   | $                  | (0.03     | )                 | $
|                                                                                |                                   |                    |           |                   |  
|Basic and diluted weighted average number of shares of common stock outstanding |                                   |                    | 7,829,000 |                   |  
|                                                                                |                                   |                    |           |                   |  

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

4

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AML COMMUNICATIONS, INC.        STATEMENTS OF CASH FLOWS        (Unaudited)

|                                                     |                                                                                           | Nine Months Ended                  |                        
|---------------------------------------------------- | ----------------------------------------------------------------------------------------- | ---------------------------------- | -----------------------
|
|Cash Flows from Operating Activities:                |                                                                                           |                                    |                        
|                                                     | Net profit (income (loss))                                                                |                                    | $                      
|                                                     | Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |                                    |                        
|                                                     |                                                                                           | Depreciation and amortization      |                        
|                                                     |                                                                                           | Changes in assets and liabilities: |                        
|                                                     |                                                                                           |                                    | Decrease (increase) in:
|                                                     |                                                                                           |                                    |                        
|                                                     |                                                                                           |                                    |                        
|                                                     |                                                                                           |                                    |                        
|                                                     |                                                                                           |                                    |                        
|                                                     |                                                                                           |                                    | Increase (decrease) in:
|                                                     |                                                                                           |                                    |                        
|                                                     |                                                                                           |                                    |                        
|                                                     |                                                                                           |                                    |                        
|Net cash from (used in) operating activities         |                                                                                           |                                    | 190,000                
|                                                     |                                                                                           |                                    |                        
|Cash Flows from Investing Activities:                |                                                                                           |                                    |                        
|                                                     | Purchases of property and equipment                                                       |                                    |                        
|                                                     | Proceeds from the sale of property and equipment                                          |                                    |                        
|                                                     |                                                                                           |                                    |                        
|Net cash from (used in) investing activities         |                                                                                           |                                    | 4,000                  
|                                                     |                                                                                           |                                    |                        
|Cash Flows from Financing Activities:                |                                                                                           |                                    |                        
|                                                     | Exercise of stock options                                                                 |                                    |                        
|                                                     | Proceeds from private placement                                                           |                                    |                        
|                                                     | Proceeds from line of credit, net                                                         |                                    |                        
|                                                     | Principal payments on capital lease obligations                                           |                                    |                        
|                                                     |                                                                                           |                                    |                        
|Net cash from (used in) financing activities         |                                                                                           |                                    | (35,000                
|                                                     |                                                                                           |                                    |                        
|Net Increase (Decrease) in Cash and Cash Equivalents |                                                                                           |                                    | 159,000                
|Cash and Cash Equivalents, beginning of period       |                                                                                           |                                    | 160,000                
|                                                     |                                                                                           |                                    |                        
|Cash and Cash Equivalents, end of period             |                                                                                           | $                                  | 319,000                
|                                                     |                                                                                           |                                    |                        
|Supplemental disclosures of cash flow information:   |                                                                                           |                                    |                        
|                                                     | Cash paid during the period for:                                                          |                                    |                        
|                                                     |                                                                                           | Interest                           |                        
|                                                     |                                                                                           |                                    |                        
|Non-cash transactions:                               |                                                                                           |                                    |                        
|                                                     | Debt incurred to purchased property and equipment                                         |                                    | $                      
|                                                     |                                                                                           |                                    |                        

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

5

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AML COMMUNICATIONS, INC.        NOTES TO FINANCIAL STATEMENTS        DECEMBER 31, 2002

1.    Basis of Presentation

AML Communications, Inc. (the "Company") is a designer, manufacturer, and marketer of amplifiers and related products that address the defense microwave
and wireless communications markets.

The
accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States. However, certain information and
footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted or condensed pursuant to the
rules and regulations of the Securities and Exchange Commission ("SEC"). In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation
have been included. The results of operations and cash flows for the three-month and nine-month periods presented are not necessarily indicative of the results of operations for a full
year. These financial statements should be read in conjunction with the Company's March 31, 2002 audited financial statements and notes thereto included in the Company's Annual Report on
Form 10-KSB.

Going Concern Issues

In connection with the audit for the year ended March 31, 2002, we received a report from our independent certified public accountants that includes an
explanatory paragraph describing uncertainty in our ability to continue as a going concern. Our financial statements included herein contemplate our ability to continue and as such do not include any
adjustments that might result from this uncertainty.
These financial statements should be read in conjunction with the Company's March 31, 2002 audited financial statements and notes thereto included in the Company's Annual Report on
Form 10-KSB.

2.    Earnings Per Share

Basic earnings per share is computed by dividing net income or loss by the weighted average number of shares outstanding for the year. "Diluted" earnings per
share is computed by dividing net income or loss by the total of the weighted average number of shares outstanding plus, if applicable, the dilutive effect of outstanding stock options (applying the
treasury stock method).

3.    Inventories

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

December 31, 2002

March 31, 2002(Unaudited)

(Audited)Raw materials

$
752,000

$
896,000Work-in-process


100,000


104,000Finished goods


112,000


102,000$
964,000

$
1,102,000


4.    Line of Credit

In December 2002, we renewed our $1,000,000 line of credit with Silicon Valley Bank. This revolving line of credit bears interest at the bank's reference
rate (prime rate) plus 1.00 percent (5.25%

6

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at December 31, 2002). This line of credit is secured by substantially all of the Company's assets and expires on December 15, 2003. As of December 31, 2002, there was $412,000
in outstanding borrowings under the line of credit. Borrowings under the line of credit are subject to a borrowing base of accounts receivable, and there are no financial covenants.

5.    Capital Leases

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

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

6.    Recently Issued Accounting Pronouncements

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This statement addresses financial
accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." This statement requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred. Under EITF Issue 94-3, a liability for an exit cost, as defined, was recognized at the date of an entity's commitment to an
exit plan. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002 with earlier application encouraged. The Company does not
expect adoption of SFAS No. 146 to have a material impact, if any, on its financial position or results of operations.

In
October 2002, the FASB issued SFAS No. 147, "Acquisition of Certain Financial Institutions." SFAS No. 147 annuls the requirement in SFAS No. 72 and
Interpretation 9 thereto, to recognize and amortize any excess of the fair value of liabilities assumed over the fair value of tangible and identifiable intangible assets acquired as an unidentifiable
intangible asset. This statement requires that those transactions be accounted for in accordance with SFAS No. 141. In addition, this statement amends SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," to include certain financial institution-related intangibles. This statement is not applicable to the Company.

In
December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based CompensationTransition and Disclosure," an amendment of SFAS No. 123. SFAS
No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123 to require more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. This statement
is effective for financial statements for fiscal years ending after December 15, 2002. SFAS No. 148 will not have any impact on the Company's financial statements as management does not
have any intention to change to the fair value method.

7

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

This
filing contains forward-looking statements which involve risks and uncertainties. The Company's actual future results may differ materially from the results discussed in the forward-looking
statements. When used in this report, the words "expects" "anticipates" and "estimates" and similar expressions are intended to identify forward-looking statements. Factors that could cause actual
results to differ materially from those expressed in any forward-looking statement made by the Company include, but are not limited to:



Please
read the factors set forth in "Additional Factors That May Affect Future Results" and other risks detailed in the Company's Securities and Exchange Commission filings. AML
Communications, Inc. undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date this report is filed with
the Securities and Exchange Commission or to reflect the occurrence of unanticipated events.

Results of Operations

Three Months Ended December 31, 2002 Compared to Three Months Ended December 31, 2001

Net sales.Net sales for the three months ended December 31, 2002 were $1.3 compared to net sales of $972,000 in the
three months ended December 31, 2001, an increase of 30.2%. The increase in net sales is attributable to an increase in sales of our MIC amplifier products (defense microwave) which increased
to $1.1 million, or 83.0% of net sales for the three months ended December 31, 2002, compared to $576,000, or 59.3% of net sales for the three months ended December 31, 2001. The
increase in sales of our MIC products is the result of our continued penetration of the MIC market, an increase in demand for our defense related MIC products, and the continued acquisition of new MIC
customers. As a result of the U.S. government's announced plans to increase defense spending, we anticipate that MIC sales will continue to be a significant portion of our revenue. The increase in MIC
sales were partially offset by decreased sales of our PCS, two-way messaging, and cellular products. Sales of our PCS and two-way messaging products in the three months ended
December 31, 2002 were $145,000, or 11.4% of net sales, compared to $237,000, or 24.4% of net sales, for the three months ended December 31, 2001. Sales of our cellular products
contributed $71,000, or 5.6% of net sales, for the three months ended December 31, 2002, compared to $159,000, or 16.3% of net sales for the three months ended December 31, 2001. Sales
of our PCS, two-way messaging, and cellular products decreased due the decrease in demand for these products in light of the continued economic slow down in the wireless, PCS and
two-way messaging markets.

Gross profit(loss).Gross profit for the three months ended December 31, 2002 was $409,000 or 32.3% of net sales,
compared to a gross profit of $329,000, or 33.8% of net sales, for the three months ended December 31, 2001. Gross profit decreased as a percent of net sales as a result of increased

8

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labor and benefit costs and due to unfavorable inventory cost variations. We expect pressure on selling prices in all markets to continue in fiscal 2003.

Selling, general and administrative costs.Selling, general and administrative costs for the three months ended
December 31, 2002, were $287,000, or 22.7% of net sales, compared to $256,000, or 26.4% of net sales, for the three months ended December 31, 2001. The dollar increase is attributable to
increased sales labor and benefit related costs, increased advertising costs, higher commission expense due to our increased utilization of third-party sales representatives and increased directors
and officers insurance premiums.

Research and development costs.Research and development costs for the three months ended December 31, 2002 were
$313,000, or 24.8% of net sales, compared to $311,000, or 32.0% of net sales, for the three months ended December 31, 2001. The percentage decrease is primarily due to lower material costs for
research and development projects as material related to our current MIC research and development is less capital intensive. During the quarter ended December 31, 2002 we continued to invest in
the development of new, catalog products, including the completion of the development of our ultra broadband amplifier product line.

Other income(expense), net.Other expense for the three months ended December 31, 2002 was $9,000, compared to other
expense of $11,000 for the three months ended December 31, 2001. The decrease in other expense is due mainly to a decrease in interest expense related to our outstanding capital leases as we
approach the end of a number of leases.

Provision for income taxes.For both the three months ended December 31, 2002 and December 31, 2001, we
recorded no provision for or benefit from income taxes. Although we recorded a net loss for the three months ended December 31, 2002 and December 31, 2001, we recorded no benefit from
income taxes since we have utilized all net operating loss carry-back benefits.

Net loss.For the reasons set forth above, we generated a net loss for the three months ended December 31, 2002 of
$200,000, compared to a net loss of $249,000 for the three months ended December 31, 2001.

Nine Months Ended December 31, 2002 Compared to Nine Months Ended December 31, 2001

Net sales.Net sales for the nine months ended December 31, 2002 were $3.6 million, compared to net sales of
$4.2 million in the nine months ended December 31, 2001, a decrease of 13.7%. The decrease in net sales is largely attributable to reduced sales of our PCS and two-way
messaging products which
accounted for $211,000, or 5.8% of net sales for the nine months ended December 31, 2002 compared to $1.3 million or, or 31.0% of net sales for the nine months ended December 31,
2001. Sales of PCS and two-way messaging products decreased due to the decreased demand for these products from the continued contraction in the wireless, PCS and two-way
messaging markets and due to the fulfillment of a large order for our PCS amplifiers during the nine months ended December 31, 2001. The decrease is also attributable to lower sales of our
cellular products which contributed $248,000, or 6.8% of net sales for the nine months ended December 31, 2002, compared to $590,000, or 14.0% of net sales for the nine months ended
December 31, 2001. Sales of our cellular products decreased due to the weakness in the global wireless communications market, the maturity of our product within its life cycle and our emphasis
on our defense related MIC product lines over the past 18 months. These decreases were partially offset by increases in sales of our defense related MIC amplifier products which contributed
$3.2 million, or 87.4% of net sales for the nine months ended December 31, 2002, compared to $2.3 million, or 55.0% of net sales for the nine months ended December 31,
2001. The increase in sales of MIC products is the result of our continued penetration of the MIC market, an increase in demand for our defense related MIC products, and the continued acquisition of
new MIC customers. As a result of the U.S. government's announced plans to increase

9

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defense spending, we anticipate that MIC sales will continue to be a significant portion of our revenue. Net sales from other products were zero and $242,000 for the nine-month periods
ending December 31, 2002 and December 31, 2001, respectively.

Gross profit.Gross profit for the nine months ended December 31, 2002 was $1.4 million, or 38.1% of net sales,
compared to $1.6 million, or 37.2% of net sales, for the nine months ended December 31, 2001. Gross profit as a percent of sales increased as a result of increased margins due to lower
material costs for our MIC product lines and the effects of management's cost cutting policies. We expect pressure on selling prices in all markets to continue into fiscal 2004.

Selling, general and administrative costs.Selling, general and administrative costs for the nine months ended
December 31, 2002, were $928,000, or 25.6% of net sales, compared to $917,000, or 21.7% of net sales, for the nine months ended December 31, 2001. The increase can be attributed to
increases in commissions paid to our third-party representatives, increased advertising costs, and increased labor and benefit related costs. These increases were offset by decreases related to
reductions in investor relations and professional fees.

Research and development costs.Research and development costs for the nine months ended December 31, 2002, were
$949,000, or 26.1% of net sales, compared to $1.0 million, or 24.8% of net sales, for the nine months ended December 31, 2001. The dollar decrease is primarily due to lower depreciation
costs as an effect of the sale of underutilized or excess fixed assets over the past 12 months, lower material costs for research and development projects as material related to our current MIC
research and development is less capital intensive and lower costs from the decreased use of outside engineering consultants during the current fiscal year. We believe investment in the further
development of defense related MIC product lines will increase research and development costs in future quarters.

Other income, net.Other expense for the nine months ended December 31, 2002 was $203,000, compared to other income of
$23,000 for the nine months ended December 31, 2001. The increase in expense is due mainly to the effects from the recognition of a $170,000 loss on the sale of a certain fixed asset during the
nine months ended December 31, 2002, including a write down of related inventory. The other income for the nine months ended December 31, 2001 was related to a State of California
Franchise Tax Board tax audit and a California State Board of Equalization sales tax audit resulting in a net refund of approximately $60,000.

Provision for income taxes.For both the nine months ended December 31, 2002 and December 31, 2001, although
the Company incurred losses, we recorded no benefit from income taxes since the Company has utilized all net operating loss carry-back benefits.

Net loss.For the reasons set forth above, we generated a net loss in the nine months ended December 31, 2002 of
$694,000, compared to a net loss of $368,000 for the nine months ended December 31, 2001.

Liquidity and Capital Resources

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

10

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January 2002, we raised approximately $1.0 million in additional funds from the completion of four (4) equity private placements. The net proceeds of the initial public offering
and the equity private placements have also been used to maintain inventory and working capital balances.

On
August 10, 1998, we announced that our board of directors had authorized a stock buyback program of up to 400,000 shares of the Company's outstanding common stock. Shares
repurchased pursuant to the buyback will be purchased from time to time in the open market or in negotiated transactions and will be held for issuance in connection with the future exercise of
employee stock options. We repurchased 114,500 shares at an aggregate cost of $224,000 during fiscal 1999. We have not repurchased any additional shares subsequent to fiscal 1999 nor do we anticipate
any share repurchases during fiscal 2003.

In
December 2002, we renewed our $1,000,000 line of credit with Silicon Valley Bank. This revolving line of credit bears interest at the bank's reference rate (prime rate) plus
1.00 percent (5.25% at December 31, 2002). This line of credit is secured by substantially all of the Company's assets and expires on December 15, 2003. As of December 31,
2002, there was $412,000 in outstanding borrowings under the line of credit. Borrowings under the line of credit are subject to a borrowing base of accounts receivable, and there are no financial
covenants.

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

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

At
December 31, 2002, we had $319,000 in cash and cash equivalents. Our operating activities provided cash of approximately $190,000 in the nine months ended December 31,
2002, primarily as a result of the reduction of accounts receivable and inventory balances. Our capital expenditures of $100,000 for the nine months ended December 31, 2002 were primarily for
manufacturing test equipment.

Our
auditors have included an explanatory paragraph relating to our ability to continue as a going concern as of our fiscal year ended March 31, 2002 in their Report of Certified
Public Accountants included in our audited financial statements contained in our Form 10-KSB. For the year ended March 31, 2002, we incurred a net loss of $713,000 and
negative cash flows from operations of approximately $1.1 million primarily as a result of the reduction of accounts payable balances. The auditors considered that these factors raise
substantial doubt about our ability to continue as a going concern.

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

We
believe that funds provided from the private placements and the borrowing capacity from our line of credit may not be sufficient to finance us for the next 12 months. We are
attempting to procure additional sources of financing in the event that the capital available as of December 31, 2002 is insufficient for our operating needs. These sources may include, but are
not limited to, an equity investment in the Company by a third party. There are, however, no assurances that we will be able

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successfully obtain additional financing at terms acceptable to us. Failure to obtain such financing could have a material adverse effect on our ability to operate as a going concern.

Critical Accounting Policies

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

Revenue recognition.We are required to make judgments based on historical experience and future expectations, as to the
realizability of shipments made to our customers. These judgments are required to assess the propriety of the recognition of revenue based on Staff Accounting Bulletin ("SAB") No. 101, "Revenue
Recognition," and related guidance. We make these assessments based on the following factors: i) customer-specific information, ii) return policies, and iii) historical experience
for issues not yet identified.

Inventory valuation.We are required to make judgments based on historical experience and future expectations as to the
realizability of inventory. We make these assessments based on the following factors: i) existing orders, ii) age of the inventory, and iii) historical experience.

Additional Factors That May Affect Future Results

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



On
July 17, 2001, we received notification of a Nasdaq Staff Determination indicating that we had failed to comply with the minimum market value of public float requirement for
continued listing as required by Marketplace Rule 4450(a)(2), and that our securities were therefore subject to delisting from The Nasdaq National Market. At that time, the Nasdaq Listing
Qualifications Staff also requested

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that we address two other Nasdaq Marketplace Rules that we were not in compliance with, specifically, the minimum net tangible assets and minimum bid price of $1.00 requirements of Nasdaq Marketplace
Rules 4450(a)(3) and 4450 (a)(5), respectively. As permitted by Nasdaq rules, we requested a hearing before the Nasdaq Listings Qualifications Panel to review the Staff's determination and a
date for the hearing was set for Friday, August 31, 2001. At the hearing, we requested that our common stock be transferred to the NASDAQ SmallCap Market. On October 4, 2001, the Nasdaq
Listing Qualifications Panel granted our request for transfer to the NASDAQ SmallCap Market, conditioned upon the filing of our Form 10-Q for the period ended September 30,
2001 evidencing either net tangible assets of $2 million or shareholders equity of $2.5 million, which we complied with on November 8, 2001. As calculated in the financial
statements of our Form 10-QSB for the period ended September 30, 2001, our net tangible assets were $2,270,000. Our common stock began trading on the Nasdaq SmallCap Market
effective October 8, 2001.

On
November 27, 2001, the Nasdaq Listing Qualifications Panel further conditioned the continued listing of our common stock on the Nasdaq SmallCap Market upon the filing of our
Form 10-Q for the period ended December 31, 2001 evidencing either net tangible assets of $2 million or shareholders equity of $2.5 million and upon our
compliance with all the requirements for continued listing on the Nasdaq SmallCap Market, including maintaining a minimum bid price of $1.00. As calculated from the financial statements in our
10-QSB filed for the period ended December 31, 2001, our net tangible assets as of December 31, 2001 were $2,181,000. On January 2, 2002, The Nasdaq Stock Market
reinstated the requirements for the minimum bid price of $1.00 and modified the rules for the grace period afforded members of the SmallCap Market from 90 days to 180 days. The
reinstated and revised Nasdaq Marketplace Rules essentially allows us 30 consecutive trading days from January 2, 2002 with which to comply to the minimum $1.00 bid price. If we were unable to
attain and maintain the minimum $1.00 bid price, we would then be afforded a 180 calendar day grace period in which to regain compliance.

On
February 14, 2002, the Nasdaq Listing Qualification Panel notified the Company that we had failed to comply with the $1.00 minimum bid price requirement and that, if we could
not show compliance with this requirement by August 13, 2002, our shares would be delisted from the Nasdaq SmallCap Market. Further, the Listing Qualifications Panel notified the Company that
it would not be provided a second oral hearing on the bid issue and that the Company must be compliant on or before August 13, 2002. Consequently, our common stock was delisted from the Nasdaq
SmallCap Market effective with the close of business on August 20, 2002. Our common stock began trading on the over the counter market (commonly known as the bulletin board) effective
August 21, 2002. Delisting from the Nasdaq SmallCap Market had a substantial adverse effect on the liquidity of our common stock, which in turn is likely to have an adverse effect on the
trading price of such stock.

For
the year ended March 31, 2002, we incurred a net loss of $713,000 and negative cash flows from operations of approximately $1.1 million primarily as a result of the
reduction of accounts payable balances. Our auditors considered these factors, combined with the current economic conditions and our then ability to comply with all of the listing requirements to
remain on the Nasdaq Small Cap Market, to raise substantial doubt about our ability to continue as a going concern. Recovery of our assets is dependent upon future events, the outcome of which is
indeterminable. Successful completion of our development program and attaining profitable operations are dependent upon our maintaining a level of sales adequate to support our cost structure. In
addition, realization of a major portion of the assets in the accompanying balance sheet is dependent upon our ability to meet our financing requirements and the success of our plans to sell our
products. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might
be necessary should we be unable to continue in existence.

We
believe that funds provided from the private placements and the borrowing capacity from our line of credit may not be sufficient to finance us for the next 12 months. We are
attempting to procure

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additional sources of financing in the event that the capital available as of December 31, 2002 is insufficient for our operating needs. These sources may include, but are not limited to, an
equity investment in us by a third party. There are, however, no assurances that we will be able to successfully obtain additional financing at terms acceptable to us. Failure to maintain or secure
adequate financing could have a material impact on our liquidity and results from operations.

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

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

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

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

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

The
markets in which our customers and we compete are characterized by rapidly changing technology, evolving industry standards and communications protocols and continuous improvements
in products and services. Our future success depends on our ability to enhance our current products and to develop and introduce in a timely manner new products that keep pace with technological
developments, industry standards and communications protocols, compete effectively on the basis of price, performance and quality, adequately address OEM customer and end-user customer

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requirements and achieve market acceptance. We believe that to remain competitive in the future we will need to continue to develop new products, which will require the investment of significant
financial resources in new product development. In the event our newly developed products are not timely developed or do not gain market acceptance, our business, results of operations and financial
condition could be materially adversely affected.

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

Item 3.    Controls and Procedures

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

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

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PART IIOTHER INFORMATION

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

(a)
Exhibits10.41

Accounts Receivable Purchase Modification Agreement dated December 16, 2002 between Silicon Valley Bank and AML Communications Inc.99.1

Certification by the Chief Executive Officer99.2

Certification by the Director of Finance(b)
Reports on Form 8-K


The
Company filed no current Reports on Form 8-K during the quarter ended December 31, 2002.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|                         |  | AML Communications, Inc.                                                              
|------------------------ |  | --------------------------------------------------------------------------------------
|Date:  February 14, 2003 |  | /s/JACOB INBARJacob Inbar Chairman of the Board, President
and Chief Executive Officer
|Date:  February 14, 2003 |  | /s/DAVID A. SWOISHDavid A. Swoish Director of Finance and
Chief Accounting Officer    

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

I, Jacob Inbar, certify that:

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

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

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

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



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



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

|Date:  February 14, 2003 |  | /s/JACOB INBARJacob Inbar Chairman of the Board and
Chief Executive Officer
|------------------------ |  | ---------------------------------------------------------------------------

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

I, David A. Swoish, certify that:

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

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

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

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



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



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

|Date:  February 14, 2003 |  | /s/DAVID A. SWOISHDavid A. Swoish Director of Finance and
Chief Accounting
|------------------------ |  | --------------------------------------------------------------------------

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