<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)
0
           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934.

                  For the quarterly period ended June 30, 2003

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934.

                   For the transition period from _____to_____

                         COMMISSION FILE NUMBER 0-21846

                              AETHLON MEDICAL, INC.
                              ---------------------
             (Exact name of registrant as specified in its charter)

                    NEVADA                                13-3632859
            ----------------------                  ----------------------
         State or other jurisdiction of               (I.R.S. Employer
         incorporation or organization)               Identification No.)

         7825 FAY AVENUE, SUITE 200, LA JOLLA, CA               92037
         -----------------------------------------             ---------
         (Address of principal executive offices)              (Zip Code)

                                 (858) 456-5777
                                 ---------------
              (Registrant's telephone number, including area code)

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

The number of shares of common stock of the registrant outstanding as of
August 15, 2003 was 7,774,960.





<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

        CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 2003 (UNAUDITED)

        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE
        THREE MONTHS ENDED JUNE 30, 2003 AND 2002 AND FOR THE PERIOD JANUARY
        31, 1984 (INCEPTION) THROUGH JUNE 30, 2003

        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE
        THREE MONTHS ENDED JUNE 30, 2003 AND 2002 AND FOR THE PERIOD JANUARY
        31, 1984 (INCEPTION) THROUGH JUNE 30, 2003

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

ITEM 3. CONTROLS AND PROCEDURES

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 2. CHANGES IN SECURITIES

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

                                        2





<PAGE>

                                     PART I.
                              FINANCIAL INFORMATION

         All references to "us", "we", "Aethlon", "Aethlon Medical", or "the
Company" refer to Aethlon Medical, Inc., its predecessors and its subsidiaries.

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                     AETHLON MEDICAL, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      CONDENSED CONSOLIDATED BALANCE SHEET

                                                                   June 30,
                                                                     2003
                                                                  (Unaudited)
                                                                 -------------
                                     ASSETS
Current assets
     Cash                                                        $       --
     Prepaid expenses                                                  10,310
                                                                 -------------
                                                                       10,310

Property and equipment, net                                            21,218
Patents and patents pending, net                                      254,858
Employment contract                                                    63,471
Other assets                                                            5,605
                                                                 -------------

                                                                 $    355,462
                                                                 =============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
     Accounts payable and accrued
       liabilities                                               $  1,558,746
     Due to related parties                                         1,475,505
     Notes payable                                                    392,500
     Convertible notes payable                                        660,000
                                                                 -------------
                                                                    4,086,751

Commitments and Contingencies

Stockholders' Deficit
     Common stock,par value $0.001 per
         share; 25,000,000 shares authorized;
         7,344,960 shares issued
         and outstanding                                                7,345
     Additional paid-in capital                                    12,306,073
     Deficit accumulated during
         development stage                                        (16,044,707)
                                                                 -------------

                                                                   (3,731,289)
                                                                 -------------

                                                                 $    355,462
                                                                 =============

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

                                        3





<PAGE>
<TABLE>

                               AETHLON MEDICAL, INC. AND SUBSIDIARIES
                                    (A Development Stage Company)
                           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                          For the Three Months Ended June 30, 2003 and 2002
                and For the Period January 31, 1984 (Inception) Through June 30, 2003

<CAPTION>
                                                                              JANUARY 31,
                                                                                1984
                                                                              (INCEPTION)
                                                                                THROUGH
                                          JUNE 30,           JUNE 30,           JUNE 30,
                                            2003               2002               2003
                                         (unaudited)        (unaudited)        (unaudited)
                                        -------------      -------------      -------------
<S>                                     <C>                <C>                <C>
REVENUES
  Grant income                          $         --       $         --       $  1,424,012
  Subcontract income                              --                 --             73,746
  Sale of research and development                --                 --             35,810
                                        -------------      -------------      -------------
                                                  --                 --          1,533,568

EXPENSES
  Personnel                                  102,654            133,442          5,255,678
  Professional fees                           55,232            110,347          3,482,071
  Impairment                                      --                 --          1,231,531
  Other expenses                              78,805             73,735          3,322,970
                                        -------------      -------------      -------------
                                             236,691            317,524         13,292,250

OPERATING LOSS                              (236,691)          (317,524)       (11,758,682)

OTHER EXPENSE (INCOME)
  Interest and other debt expenses           181,501             83,259          4,165,833
  Interest income                                 --                 --            (17,415)
  Other                                           --             (1,616)           137,607
                                        -------------      -------------      -------------
                                             181,501             81,643          4,286,025
                                        -------------      -------------      -------------

         NET LOSS                       ($   418,192)      ($   399,167)       (16,044,707)
                                        =============      =============      =============

BASIC AND DILUTED LOSS PER
                  COMMON SHARE          ($      0.06)      ($      0.08)
                                        =============      =============

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING                  7,316,279          5,234,072
                                        =============      =============

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

</TABLE>

                                                      4





<PAGE>
<TABLE>

                                         AETHLON MEDICAL, INC. AND SUBSIDIARIES
                                              (A Development Stage Company)
                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              For the Three Months Ended June 30, 2003 and 2002 and For the
                                Period January 31, 1984 (Inception) Through June 30, 2003

<CAPTION>
                                                                                                        January 31,
                                                                                                           1984
                                                                                                        (Inception)
                                                                                                          Through
                                                                     June 30,          June 30,           June 30,
                                                                      2003               2002               2003
                                                                   (unaudited)        (unaudited)        (unaudited)
                                                                  -------------      -------------      -------------
<S>                                                               <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                          $   (418,192)      $   (399,167)      $(16,044,707)
Adjustments to reconcile net loss to net cash
   used in operating activities:
     Depreciation and amortization                                      39,387             40,879            822,302
     Gain on sale of property and equipment                                 --                 --            (13,065)
     Fair market value of warrants issued in connection with
         accounts payable and debt                                          --            (24,714)         2,715,736
     Fair market value of common stock, warrants and
         options issued for services                                     2,500             40,385          2,132,934
     Beneficial conversion feature of convertible
         notes payable                                                 150,000             80,000            635,000
     Impairment of patents and patents pending                              --                 --            334,304
     Impairment of goodwill                                                 --                 --            897,227
     Deferred compensation forgiven                                         --                 --            217,223
     Changes in operating assets and liabilities:
         Accounts receivable                                                --                 --                 --
         Prepaid expenses                                                   --              5,863            151,227
         Other assets                                                       --                 --             (5,605)
         Accounts payable and accrued liabilities                       12,128             78,362          1,646,401
         Due to related parties                                         60,506             99,218          1,475,505
                                                                  -------------      -------------      -------------
Net cash used in operating activities                                 (153,671)           (79,174)        (5,035,518)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment                                     (2,661)                --           (212,045)

Acquisition of patents and patents pending                                  --            (10,986)          (352,833)
Proceeds from sale of property and equipment                                --                 --             17,065
Cash of acquired company                                                    --                 --             10,728
                                                                  -------------      -------------      -------------

Net cash used in investing activities                                   (2,661)           (10,986)          (537,085)

                                           (continued)

                                                5

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

</TABLE>





<PAGE>
<TABLE>

                     AETHLON MEDICAL, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Three Months Ended June 30, 2003 and 2002 and
       For the Period January 31, 1984 (Inception) Through June 30, 2003

<CAPTION>

                                                                                             January 31,
                                                                                               1984
                                                                                             (Inception)
                                                                                               Through
                                                           June 30,          June 30,          June 30,
                                                             2003              2002              2003
                                                         (unaudited)       (unaudited)       (unaudited)
                                                         ------------      ------------      ------------
<S>                                                      <C>               <C>               <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable                  $        --       $   105,000       $ 1,480,000
Principal payments of notes payable                         (160,000)          (25,000)         (170,000)
Proceeds from issuance of convertible notes payable          150,000                --           948,000
Net proceeds from issuance of common stock                   160,000                --         3,314,603
                                                         ------------      ------------      ------------

Net cash provided by financing activities                    150,000            80,000         5,572,603
                                                         ------------      ------------      ------------

NET (DECREASE) INCREASE IN CASH                               (6,332)          (10,160)               --
CASH - beginning of period                                     6,332            10,667                --
                                                         ------------      ------------      ------------

CASH - end of period                                     $        --       $       507       $        --
                                                         ============      ============      ============

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

                                                6
</TABLE>





<PAGE>

                     AETHLON MEDICAL, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

NOTE 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

Aethlon Medical, Inc. (the "Company") is a development stage therapeutic device
company focused on expanding the applications of its Hemopurifier (TM) platform
technology, which is designed to rapidly reduce the presence of infectious
viruses and toxic viral proteins from human blood. In this regard, Aethlon
Medical's core focus is the development of therapeutic devices that treat
HIV/AIDS, Hepatitis-C, and other infectious diseases. In pre-clinical testing,
the Company's lead product, AEMD-45 removed 55% of HIV from human blood in three
hours and in excess of 85% in twelve hours. This same treatment cartridge was
able to remove 90% of toxic proteins that deplete immune cells in one hour. In
January of 2003, the Company completed early stage blood studies of its
HCV-Hemopurifier, which documented a consistent ability to remove 58 percent of
the Hepatitis-C virus from infected blood in two hours. The Company is in the
development stage on the Hemopurifier and significant research and testing are
still needed to reach commercial viability. Any resulting medical device or
process will require approval by the U.S. Food and Drug Administration ("FDA"),
and the Company has not yet begun efforts to obtain FDA approval on its current
lead product candidate, which may take several years. Since many of the
Company's patents were issued in the 1980's, they are scheduled to expire in the
near future. Thus, such patents may expire before FDA approval, if any, is
obtained.

The Company is classified as a development stage enterprise under accounting
principles generally accepted in the United States ("GAAP"), and has not
generated revenues from its principal operations.

The Company's common stock is quoted on the Over-the-Counter Bulletin Board of
the National Association of Securities Dealers under the symbol "AEMD".

The accompanying unaudited condensed consolidated financial statements of
Aethlon Medical, Inc. (the "Company") have been prepared in accordance with GAAP
for interim financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by GAAP for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three-month
period ended June 30, 2003 are not necessarily indicative of the results that
may be expected for the year ending March 31, 2004. For further information,
refer to the Company's Annual Report on Form 10-KSB for the year ended March 31,
2003, which includes audited financial statements and footnotes as of and for
the years ended March 31, 2003 and 2002.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant accounting policies of the Company presented below is
designed to assist the reader in understanding the Company's consolidated
financial statements. Such financial statements and related notes are the
representations of Company management, who is responsible for their integrity
and objectivity. These accounting policies conform to GAAP in all material
respects, and have been consistently applied in preparing the accompanying
condensed consolidated financial statements.

PRINCIPLES OF CONSOLIDATION
---------------------------

The accompanying condensed consolidated financial statements include the
accounts of Aethlon Medical, Inc. and its legal wholly-owned subsidiaries
Aethlon, Inc., Hemex, Inc. and Cell Activation, Inc. ("Cell") (collectively
hereinafter referred to as the "Company"). All significant intercompany balances
and transactions have been eliminated in consolidation.

                                       7


<PAGE>

                     AETHLON MEDICAL, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

STOCK BASED COMPENSATION
------------------------

At June 30, 2003, the Company has two stock-based employee compensation plans.
The Company accounts for those plans under the recognition and measurement
principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB 25"), and related Interpretations.

No stock-based employee compensation cost is reflected in net loss, as all
options granted under those plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. The following table
illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," as
amended to stock-based employee compensation.

<TABLE>
<CAPTION>
                                                            2003            2002
                                                         ----------      ----------
Net loss:
<S>                                                      <C>             <C>
    As reported                                          $(418,192)      $(399,167)
    Deduct: Total stock-based employee compensation
          expense determined under fair value based
          method for all awards                            (13,000)        (60,000)
                                                         ----------      ----------
    Pro forma                                            $(431,192)      $(459,167)
                                                         ==========      ==========

Basic and diluted net loss per share:
    As reported                                          $   (0.06)      $   (0.08)
                                                         ==========      ==========
    Pro forma                                            $   (0.06)      $   (0.09)
                                                         ==========      ==========
</TABLE>

LOSS PER COMMON SHARE
---------------------

Loss per common share is based on the weighted average number of shares of
common stock and common stock equivalents outstanding during the year in
accordance with Statement of Financial Accounting Standards No. 128, "Earnings
per Share."

Securities that could potentially dilute basic loss per share (prior to their
conversion, exercise or redemption) were not included in the
diluted-loss-per-share computation because their effect is anti-dilutive. The
total potential common shares that have not been included in such computation
are approximately 4,140,000 at June 30, 2003.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------

In July 2001, the FASB issued Statements No. 141, " Business Combinations "
("SFAS 141") and No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142").
SFAS 141 is effective for fiscal years beginning after June 30, 2001 and
requires that all business combinations be accounted for by the purchase method.
SFAS 142 provides that all existing and newly acquired goodwill and certain
intangible assets will no longer be amortized but will be tested for impairment
at least annually and written down only when impaired. Additionally, the FASB
has recently issued Statements No. 143, " Accounting for Asset Retirement
Obligations " ("SFAS 143") and No. 144, " Accounting for the Impairment or
Disposal of Long-Lived Assets " ("SFAS 144"). SFAS 143 addresses financial

                                       8

<PAGE>

                     AETHLON MEDICAL, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

accounting and reporting for obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs, and is
effective for financial statements issued for fiscal years beginning after June
15, 2002. For the three-month period ended June 30, 2002, the Company adopted
SFAS 141, 142 and 144. There was no significant effect on the Company's June 30,
2002 financial statements. Management does not expect that the requirements of
SFAS 143 will have a significant impact on the Company's future financial
statements.

In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure an amendment of FASB Statement No. 123,
"which is effective for fiscal years beginning after December 15, 2002. SFAS 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, this Statement amends the disclosure requirements of Statement 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. Management has not determined the
effect, if any, of SFAS 148 on the Company's future financial statements.

RECLASSIFICATIONS
-----------------

Certain reclassifications have been made to the June 30, 2002 financial
statement presentation to correspond to the June 30, 2003 format.

NOTE 3. CONVERTIBLE PROMISSORY NOTES

CONVERTIBLE PROMISSORY NOTES
-----------------------------

In April 2003, the Company issued a convertible note in the amount of $150,000,
bearing interest at 9% per annum, with principal and interest due in June 2003,
which is in default. The convertible note requires no payment of principal or
interest during the term and may be converted to common stock of the Company at
the conversion price of $0.25 per share at any time at the option of the
noteholder. The Company has recorded a beneficial conversion feature ("BCF") of
$150,000 in connection with the issuance of the note and amortized such amount
to interest expense during the three month period ended June 30, 2003.

The Company is currently in default on approximately $ 1,052,500 of amounts owed
under various notes payable and accrued liabilities and is currently seeking
other financing arrangements to retire all past due notes.

NOTE 4. GOING CONCERN AND LIQUIDITY CONSIDERATIONS

The accompanying condensed consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the ordinary course of business. The Company has
experienced a loss of approximately $15.9 million for the period from January
31, 1984 (Inception) through June 30, 2003. The Company has not generated
significant revenue or any profit from operations since inception. A substantial
amount of additional capital will be necessary to advance the development of the
Company's products to the point at which they may become commercially viable.
Such factors indicate that the Company may be unable to continue as a going
concern for a reasonable period of time. Management is in discussions with
potential investors to pursue additional capital infusions into the Company,
which management believes are necessary at least until such time that the
Company generates sufficient revenues and achieves profitability and positive
cash flow.

The condensed consolidated financial statements do not include any adjustments
relating to the recoverability of assets that might be necessary should the
Company be unable to continue as a going concern. The Company's continuation as
a going concern is dependent upon its ability to obtain additional financing as
may be required, and generate sufficient revenue and operating cash flow to meet
its obligations on a timely basis.

                                       9

<PAGE>

                     AETHLON MEDICAL, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2003

NOTE 5. COMMITMENTS AND CONTINGENCIES

REGISTRATION RIGHTS AGREEMENTS
------------------------------

The Company is obligated under various agreements to register its common stock,
including the common stock underlying certain warrants and options. The Company
is subject to penalties for failure to register such securities, the amount of
which could be material to the Company's financial position, results of
operations and cash flows. The Company filed a registration statement on Form
SB-2 with the Securities and Exchange Commission in December 2000 to register
the necessary securities. However, such registration statement was never
declared effective. Management is currently unaware of any potential claims
related to the lack of registration and plans to file a revised registration
statement as funds to cover registration expenses become available. The Company
may incur additional charges in exchange for further waivers through the date of
an effective registration statement.

DELINQUENT SEC FILING
---------------------

The Company's March 31, 2002 Form 10-KSB did not contain certain disclosure
items in its Executive Compensation, Security Ownership of Certain Beneficial
Owners and Management and Certain Relationships and Related Transactions. Such
sections were intended to be incorporated by reference in the Company's proxy
statement, which was not filed. The failure to file the proxy statement with the
disclosures required in Form 10-KSB constitutes non-compliance with the periodic
reporting requirements of the Securities and Exchange Act of 1934 (the "Exchange
Act") and, among other things, could result in de-listing of the Company's
common stock from the Over-the-Counter Bulletin Board ("OTCBB").

In addition, any owners of the Company's restricted securities who are otherwise
eligible to sell such securities under Rule 144 may be temporarily unable to do
so until such filing delinquency is cured. The Company intends to file an
amendment to its Annual Report on Form 10-KSB for the year ended March 31, 2002
to cure such delinquency.

NOTE 6. STOCK TRANSACTIONS

In April 2003, the Company issued 600,000 shares of restricted common stock at
$0.25 per share for cash totaling $150,000. In connection with the issuance of
such shares, the Company granted the stockholder 600,000 warrants to purchase
common stock of the Company at $0.25 per share. The warrants vest immediately
and expire through April 2005. As the warrants were issued in connection with
equity financing, no related expense was recorded in the condensed consolidated
financial statements.

During April 2003, 10,000 shares were issued for services rendered, which were
valued at $2,500 (based on the fair market value on the date of grant).

In May 2003, the Company issued 40,000 shares of restricted common stock at
$0.25 per share for cash totaling $10,000. In connection with the issuance of
such shares, the Company granted the stockholders 40,000 warrants to purchase
common stock of the Company at $0.25 per share. The warrants vest immediately
and expire through May 2004. As the warrants were issued in connection with
equity financing, no related expense was recorded in the condensed consolidated
financial statements.

NOTE 7. SUBSEQUENT EVENTS

In July and August 2003, the Company issued 380,000 shares of restricted common
stock at $0.25 per share for cash totaling $100,000. In connection with the
issuance of such shares, the Company granted the stockholders 380,000 warrants
to purchase common stock of the Company at $0.25 per share. The warrants vest
immediately and expire through August 2004. As the warrants were issued in
connection with equity financing, no related expense will be recorded in the
condensed consolidated financial statements. The Company issued 50,000 shares of
restricted common stock in conjunction with equity fund-raising activities.

                                       10

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion of Aethlon Medical's financial condition and results of
operations should be read in conjunction with, and is qualified in its entirety
by the condensed consolidated financial statements and notes thereto, included
in Item 1 in this Quarterly Report on Form 10-QSB. This item contains
forward-looking statements that involve risks and uncertainties. Actual results
may differ materially from those indicated in such forward-looking statements.

FORWARD LOOKING STATEMENTS
--------------------------

All statements, other than statements of historical fact, included in this Form
10-QSB are, or may be deemed to be, "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended ("the
Securities Act"), and Section 21E of the Exchange Act. Such forward-looking
statements involve assumptions, known and unknown risks, uncertainties and other
factors which may cause the actual results, performance, or achievements of
Aethlon Medical, Inc. ("the Company") to be materially different from any future
results, performance, or achievements expressed or implied by such forward
looking statements contained in this Form 10-QSB. Such potential risks and
uncertainties include, without limitation, completion of the Company's
capital-raising activities, FDA approval of the Company's products, other
regulations, patent protection of the Company's proprietary technology, product
liability exposure, uncertainty of market acceptance, competition, technological
change, and other risk factors detailed herein and in other of the Company's
filings with the Securities and Exchange Commission. The forward-looking
statements are made as of the date of this Form 10-QSB, and the Company assumes
no obligation to update the forward-looking statements, or to update the reasons
actual results could differ from those projected in such forward-looking
statements.

THE COMPANY
-----------

Aethlon Medical is a development stage therapeutic device company that has not
yet engaged in significant commercial activities. The primary focus of our
resources is the advancement of our proprietary Hemopurifier(TM) platform
treatment technology, which is designed to remove viruses and toxic viral
proteins from human blood. Our main focus during fiscal 2003 was to prepare our
HIV-Hemopurifier to treat HIV/AIDS for human clinical trials, and to initiate
the pre-clinical human blood studies of our HCV-Hemopurifier for treating
Hepatitis-C. See Item 1, "NATURE OF BUSINESS".

Our principal executive office is located at 7825 Fay Avenue, Suite 200, La
Jolla, California 92037. Our telephone number is 858/456-5777, and our website
is www.aethlonmedical.com.

We file annual, quarterly, special reports, proxy statements and other
information with the Securities Exchange Commission (SEC). Reports, proxy
statements and other information filed with the SEC can be inspected and copied
at the public reference facilities of the SEC at 450 Fifth Street NW,
Washington, DC 20549. Such material may also be accessed electronically by means
of the SEC's website at www.sec.gov.

Our common stock, par value $0.001 per share, is traded on the OTCBB under the
symbol "AEMD".

CRITICAL ACCOUNTING POLICIES
----------------------------

The preparation of condensed consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America
requires us to make a number of estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements. Such estimates and
assumptions affect the reported amounts of expenses during the reporting period.
On an ongoing basis, we evaluate estimates and assumptions based upon historical
experience and various other factors and circumstances. We believe our estimates
and assumptions are reasonable in the circumstances; however, actual results may
differ from these estimates under different future conditions.

We believe that the estimates and assumptions that are most important to the
portrayal of our financial condition and results of operations, in that they
require our most difficult, subjective or complex judgments, form the basis for
the accounting policies deemed to be most critical to us. These critical
accounting policies relate to stock purchase warrants issued with notes payable,
beneficial conversion feature of convertible notes payable, impairment of
intangible assets and long lived assets, contingencies and litigation. We
believe estimates and assumptions related to these critical accounting policies
are appropriate under the circumstances; however, should future events or
occurrences result in unanticipated consequences, there could be a material
impact on our future financial conditions or results of operations.

                                       11





<PAGE>

RESULTS OF OPERATIONS
---------------------

THE THREE MONTHS ENDED JUNE 30, 2003 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2002.

OPERATING EXPENSES
------------------

Consolidated operating expenses were $236,691 for the three months ended June
30, 2003, versus $317,524 for the comparable period ended June 30, 2002. This
decrease of 25.5% in operating expenses is principally attributable to decreased
professional fees and personnel expenses due to reduced professionals associated
with strategic and financial planning activities and reduced staff.

NET LOSS
--------

We recorded a consolidated net loss of $418,192 and $399,167 for the quarters
ended June 30, 2003 and 2002, respectively. The increase in net loss of 4.8% was
primarily attributable to the beneficial conversion feature of warrants
associated with convertible notes issued, partially offset by lower operating
expenses.

Basic and diluted loss per common share were ($0.06) for the three month period
ended June 30,2003 compared to ($0.08) for the same period ended June 30, 2002.
This reduction in loss per share was primarily attributable to the decrease in
net loss, as well as greater number of common shares outstanding during the
three month period ended June 30,2003, as compared to the three month period
ended June 30, 2002.

                                       12

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

To date, we have funded our capital requirements for the current operations from
net funds received from the public and private sale of debt and equity
securities, as well as from the issuance of common stock in exchange for
services. Our cash position at June 30, 2003 was $ -- as compared to $6,332, at
March 31, 2003, representing a decrease of $6,332.

During the three months ended June 30, 2003, operating activities used net cash
of $153,671. We received $160,000 from the sale of common stock. In addition,
during the three months ended June 30, 2003, we received $150,000 from the
issuance of convertible notes payable and repaid notes totaling $160,000.

During the three month period ended June 30, 2003, net cash used in operating
activities primarily consisted of net loss of $418,192. Net loss was offset
principally by depreciation of $39,387 and beneficial conversion feature of
$150,000 plus an increase in accounts payable and amounts due to related parties
of $72,634.

Changes in current assets and current liabilities of ($68,966) resulted in a
negative working capital position of ($4,076,441) at June 30, 2003 as compared
to a negative working capital of ($4,007,475) at March 31, 2003.

Our current deficit in working capital requires us to obtain funds in the
short-term to be able to continue in business, and in the longer term to fund
research and development on products not yet ready for market. We are seeking to
fund these and other operating needs in the next 12 months from funds to be
obtained through a corporate acquisition of or merger with another entity with
greater financial resources, or from the proceeds of additional private
placements or public offerings of debt or equity securities, or both.

Due to the our recurring losses during the development stage, and continued need
for capital, our independent certified public accountants have included an
explanatory paragraph in their audit report in the Company's Form 10-KSB at
March 31, 2003 stating that these factors raise substantial doubt about the
Company's ability to continue as a going concern.

                                       13

<PAGE>

We expect to raise additional capital within the next three months to fund
research and development and other activities. Our operations to date have
consumed substantial capital without generating revenues, and we will continue
to require substantial and increasing capital funds to conduct necessary
research and development and pre-clinical and clinical testing of our
Hemopurifier products, and to market any of those products that receive
regulatory approval. We do not expect to generate revenue from operations for
the foreseeable future, and our ability to meet our cash obligations as they
become due and payable is expected to depend for at least the next several years
on our ability to sell securities, borrow funds or a combination thereof. Our
future capital requirements will depend upon many factors, including progress
with pre-clinical testing and clinical trials, the number and breadth of our
programs, the time and costs involved in preparing, filing, prosecuting,
maintaining and enforcing patent claims and other proprietary rights, the time
and costs involved in obtaining regulatory approvals, competing technological
and market developments, and our ability to establish collaborative
arrangements, effective commercialization, marketing activities and other
arrangements. We expect to continue to incur increasing negative cash flows and
net losses for the foreseeable future.

Management does not believe that inflation has had or is likely to have any
material impact on the Company's limited operations.

At the date of this filing, we do not have plans to purchase significant amounts
of equipment or hire significant numbers of employees prior to successfully
raising additional capital.

ITEM 3. CONTROLS AND PROCEDURES

Within 90 days prior to this report, Management carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures, pursuant to Exchange Act Rules 13a-15(c) and 15d-15(c). Based on
the foregoing, the Principal Executive Officer and Principal Financial Officer
concluded that, as of June 30, 2003, the Company's disclosure controls and
procedures are effective to timely alert them to any material information
relating to the Company that must be included in the Company's periodic SEC
filings. In addition, there have been no significant changes in the Company's
internal controls over financial reporting during the quarter ended June 30,
2003 or in other factors that are reasonably likely to significantly affect
these controls. Thus, no corrective actions with regard to significant
deficiencies or material weaknesses were necessary. Based on the most recent
evaluation as of June 30, 2003, the CEO and CFO have concluded that there are no
significant deficiencies in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the
Company's ability to record, process, summarize and report financial information
and such officers have identified no material weaknesses in internal control
over financial reporting.

Disclosure controls and procedures, no matter how well designed and implemented,
can provide only reasonable assurance of achieving an entity's disclosure
objectives. The likelihood of achieving such objectives is affected by
limitations inherent in disclosure controls and procedures. These include the
fact that human judgment in decision-making can be faulty and that breakdowns in
internal control can occur because of human failures such as simple errors or
mistakes or intentional circumvention of the established process.

                                       14

<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES

In April 2003, the Company issued a convertible note in the amount of $150,000,
bearing interest at 9% per annum, with principal and interest due in June 2003.
The convertible note requires no payment of principal or interest during the
term and may be converted to common stock of the Company at the conversion price
of $0.25 per share at any time at the option of the noteholder.

In April 2003, the Company issued 600,000 shares of restricted common stock at
$0.25 per share for cash totaling $150,000. In connection with the issuance of
such shares, the Company granted the stockholder 600,000 warrants to purchase
common stock of the Company at $0.25 per share. The warrants vest immediately
and expire through April 2005.

During April 2003, 10,000 shares were issued for services rendered, valued at
$2,500 (based on the market price on the date of grant).

In May 2003, the Company issued 40,000 shares of restricted common stock at
$0.25 per share for cash totaling $10,000. In connection with the issuance of
such shares, the Company granted the stockholders 40,000 warrants to purchase
common stock of the Company at $0.25 per share. The warrants vest immediately
and expire through May 2004.

In July and August 2003, the Company issued 380,000 shares of restricted common
stock at $0.25 per share for cash totaling $100,000. In connection with the
issuance of such shares, the Company granted the stockholders 380,000 warrants
to purchase common stock of the Company at $0.25 per share. The warrants vest
immediately and expire through August 2004. The Company issued 50,000 shares of
restricted common stock in conjunction with equity fund-raising activities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

As of the date of this report, various promissory and convertible notes payable
in the aggregate principal amount of $1,052,000 have reached maturity and are
past due. The Company is currently seeking other financing arrangements to
retire all past due notes.

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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits. The following documents are filed as part of this report:

31.1 Certification of CEO pursuant to Securities Exchange Act rules 13a-15 and
15d-15(c) as adopted pursuant to section 302 of the Sarbanes-Oxley act of 2002.

31.2 Certification of CFO pursuant to Securities Exchange Act rules 13a-15 and
15d-15(c) as adopted pursuant to section 302 of the Sarbanes-Oxley act of 2002.

32.1 Certification of James A. Joyce, Chief Executive Officer pursuant to 18
U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley
act of 2002.

32.2 Certification of Edward C. Hall, Chief Financial Officer (Principal
Accounting Officer) pursuant to 18 U.S.C. section 1350, as adopted pursuant to
section 906 of the Sarbanes-Oxley act of 2002.

(b) Reports on Form 8-K filed during the quarter ended June 30, 2003.

None

                                       15





<PAGE>

                                   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.

                              AETHLON MEDICAL, INC

Date: August 19, 2003

BY: /S/ JAMES A. JOYCE                  BY: /S/ EDWARD C. HALL
    ---------------------------             ---------------------------
      JAMES A. JOYCE                        EDWARD C. HALL
      CHAIRMAN, PRESIDENT AND               CHIEF FINANCIAL OFFICER
      CHIEF EXECUTIVE OFFICER

                              AETHLON MEDICAL, INC.

                                       16