<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarter ended March 31, 2004                 Commission File No. 0-19944


                                  M~WAVE, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



<TABLE>
<S>                                                          <C>
                     DELAWARE                                    36-3809819
--------------------------------------------------             --------------
         (State or other jurisdiction of                      (I.R.S.  Employer
          Incorporation or organization)                     identification No.)

  475 Industrial Drive, West Chicago, Illinois                     60185
--------------------------------------------------             --------------
    (Address of principal executive offices)                     (Zip Code)

Registrant's telephone number including area code:             (630) 562-5550
                                                               --------------
</TABLE>

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 and 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

<TABLE>
<S>                                                                <C>   <C>
                                                                   Yes   No
Indicate by check mark whether the Registrant is an
accelerated filer(as defined by rule 12b-6 of the Act)                    X
</TABLE>

The registrant has 4,444,219 shares of common stock outstanding at May 14, 2004.


                                       1
<PAGE>
                                  M-WAVE, INC.

                                    CONTENTS

<TABLE>
<S>                                                                           <C>
PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements:

           Condensed Balance Sheets as of March 31, 2004 and December
           31, 2003 (unaudited)                                               Page 3

           Condensed Statements of Operations for the Three Months Ended
           March 31, 2004 and 2003 (unaudited)                                Page 4

           Condensed Statements of Cash Flows for the Three Months Ended
           March 31, 2004 and 2003 (unaudited)                                Page 5

           Notes to Condensed Financial Statements (unaudited)                Page 6-10

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                          Page 11

Item 4.    Controls and Procedures                                            Page 17

PART II. OTHER INFORMATION

Item 1.    Legal Proceedings                                                  Page 18

Item 6.    Exhibits and Reports on Form 8-K                                   Page 19

           Signatures                                                         Page 20
</TABLE>


                                       2
<PAGE>
                         PART I - FINANCIAL INFORMATION
                          ITEM 1: FINANCIAL STATEMENTS

                                  M~WAVE, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                December 31        March 31
                                                                   2003              2004
                                                                -----------       -----------
<S>                                                             <C>               <C>
ASSETS
CURRENT ASSETS:
  Cash ......................................................   $   249,343       $   845,737
  Accounts receivable, net ..................................     2,051,027         2,304,434
  Inventories, net ..........................................       587,179           802,997
  Refundable income taxes ...................................       685,418           685,418
  Prepaid expenses and other assets .........................        21,499            43,674
                                                                -----------       -----------

    Total current assets ....................................     3,594,466         4,682,260
PROPERTY, PLANT AND EQUIPMENT:
  Land, buildings and improvements ..........................     2,177,356           177,238
  Machinery and equipment ...................................     1,928,600           379,900
                                                                -----------       -----------
    Total property, plant and equipment .....................     4,105,956           577,138
  Less accumulated depreciation .............................        85,715             9,000
                                                                -----------       -----------
    Property, plant and equipment - net .....................     4,020,241           548,138
Land, building and improvements held for sale and idle ......       568,583           568,583
Investment in AM-Wave, LLC ..................................             0           641,200
                                                                -----------       -----------
TOTAL .......................................................   $ 8,183,290       $ 6,440,181
                                                                ===========       ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable ..........................................   $ 4,364,888       $ 3,571,523
  Accrued expenses ..........................................       739,282           537,825
  Note payable, bank ........................................             0         1,491,581
  Current portion of long-term debt .........................     2,457,073                 0
                                                                -----------       -----------
   Total current liabilities ................................     7,561,243         5,600,929


STOCKHOLDERS' EQUITY:
  Preferred stock, $.01 par value; authorized, 1,000,000
    shares; no shares issued and outstanding ................             0                 0
  Common stock, $.005 par value; authorized 10,000,000
    shares; issued 2003: 6,179,112 shares, 2004: 6,180,037
    shares; outstanding 2003: 4,443,294 shares, 2004:
    4,444,219 shares ........................................        30,895            30,900
  Additional paid-in capital ................................     8,439,072         8,521,847
  Accumulated deficit .......................................    (5,562,750)       (5,428,325)
  Treasury stock, at cost 1,735,815 shares ..................    (2,285,170)       (2,285,170)
                                                                -----------       -----------
    Total stockholders' equity ..............................       622,047           839,252
                                                                -----------       -----------
TOTAL .......................................................   $ 8,383,290       $ 6,440,181
                                                                ===========       ===========
</TABLE>

                 See notes to consolidated financial statements.


                                       3
<PAGE>
                                  M~WAVE, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 Three months ended March 31,
                                                                -----------------------------
                                                                   2003              2004
                                                                -----------       -----------
<S>                                                             <C>               <C>
NET SALES ...................................................   $ 3,205,045       $ 3,916,078
COST OF GOODS SOLD ..........................................     4,932,871         2,963,577
                                                                -----------       -----------
  Gross (loss) profit .......................................    (1,727,826)          952,501

OPERATING EXPENSES:
  General and administrative ................................       577,147           469,412
  Selling and marketing .....................................       366,949           279,101
  Impairment loss recognized on land and building ...........     3,577,735                 0
  Impairment loss recognized on investment in AM-Wave, LLC ..             0           136,000
  Stock compensation ........................................             0            82,040
                                                                -----------       -----------
    Total operating expenses ................................     4,521,831           966,553
                                                                -----------       -----------

  Operating (loss) ..........................................    (6,249,657)          (14,052)

OTHER INCOME (EXPENSE):
  Interest income ...........................................        40,647            31,052
  Interest expense ..........................................       (50,124)                0
  Trade debt forgiveness ....................................             0           117,425
                                                                -----------       -----------
    Total other income (expense), net .......................        (9,477)          148,477
                                                                -----------       -----------

(LOSS) INCOME BEFORE INCOME TAXES ...........................    (6,259,134)          134,425

  Income tax (benefit) expense ..............................      (888,333)                0
                                                                -----------       -----------

NET (LOSS) INCOME ...........................................   $(5,370,801)      $   134,425
                                                                ===========       ===========

Weighted average shares outstanding .........................     4,443,294         4,443,497
                                                                ===========       ===========

BASIC (LOSS) INCOME PER SHARE ...............................   $     (1.21)      $      0.03
                                                                ===========       ===========

Diluted weighted average shares outstanding .................     4,443,294         4,575,133
                                                                ===========       ===========

DILUTED (LOSS) INCOME  PER SHARE ............................   $     (1.21)      $      0.03
                                                                ===========       ===========
</TABLE>


                                       4
<PAGE>
                                  M~WAVE, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                  Three months ended March 31,
                                                                  -----------------------------
                                                                     2003              2004
                                                                  -----------       -----------
<S>                                                               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss) income ............................................  $(5,370,801)      $   134,425
    Adjustments to reconcile net (loss) income to net cash flows
    provided by (used in)operating activities:
    Depreciation and amortization ..............................      294,600             9,000
    Trade debt forgiveness .....................................            0           117,425
    Impairment loss recognized on land and building ............    3,577,735                 0
    Impairment loss recognized on investment in AM-Wave, LLC ...            0           136,000
    Stock compensation recognized on options and warrants ......            0            82,040
    Changes in assets and liabilities:
    Accounts receivable ........................................      120,525          (253,407)
    Inventories ................................................       23,456          (215,818)
    Prepaid expenses and other assets ..........................      (20,548)          (22,175)
    Accounts payable ...........................................    1,043,897          (910,790)
    Accrued expenses ...........................................     (112,159)         (201,457)
    Income taxes ...............................................    2,699,767                 0
                                                                  -----------       -----------
  Net cash flows provided by (used in) operating activities ....    2,256,472        (1,124,757)
                                                                  -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property, plant and equipment ..................      (52,561)          (28,500)
    Proceeds from sale of land, building and equipment,
      net of disposal costs ....................................            0         2,714,403
    Restricted cash ............................................     (327,344)                0
                                                                  -----------       -----------
Net cash flows (used in) provided by investing activities ......     (379,905)        2,685,903
                                                                  -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from exercise of stock options ......................            0               740
  Net borrowings on note payable, bank .........................            0         1,491,581
  Repayment of long-term debt ..................................      (19,228        (2,457,073)
                                                                  -----------       -----------
Net cash flows (used in) financing activities ..................      (19,228)         (964,752)
                                                                  -----------       -----------

NET INCREASE IN CASH ...........................................    1,857,339           596,394

CASH:
  Beginning of period ..........................................    1,514,509           249,343
                                                                  -----------       -----------
  End of period ................................................  $ 3,371,848       $   845,737
                                                                  ===========       ===========

SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES:

Contribution of equipment for investment in AM-Wave, LLC .......  $         0       $   777,200
Stock options issued in connection with consulting agreement ...            0            53,195
Stock warrants issued in connection with SOA agreement .........            0            28,845
</TABLE>


                                       5
<PAGE>
                                  M~WAVE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles in the United States
of America 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 generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments necessary for a fair
presentation, consisting only of normal recurring adjustments, have been
included.

Operating results for the three months ended March 31, 2004 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2004. For further information, refer to the financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
December 31, 2003.

2. BUSINESS

During the fiscal year ended December 31, 2003, and continuing through the
quarter ended March 31, 2004 we effectuated a material restructuring of our
business in the printed circuit board industry to cease domestic manufacturing
activities, which had become unprofitable, and to provide supply chain
management services to our customers. In this regard, we restructured our
balance sheet to liquidate non-essential manufacturing assets and eliminate
related long term debt and reduce unsecured vendor obligations. In this
connection with this restructuring, the Company entered into a strategic
operating alliance (SOA), described below, with American Standard Circuits, Inc.
(ASC) to outsource fulfillment of our domestic manufacturing needs. The
following relates our prior business activities and our new business model.

The Company

M~Wave, Inc. ("M~Wave" or the "Company") is a value-added service provider of
high performance printed circuit boards used in a variety of digital and high
frequency communications applications for a variety of telecommunications and
industrial electronics applications. M~Wave satisfies its customers requirements
for telecommunications commercial and industrial electronics applications by
directly booking of orders, supervision and inspection of the outsourced
manufacture of such boards through its global base of production partners
located


                                       6
<PAGE>
in the China and Southeast Asia, and, domestically, through our Strategic
Operating Alliance (SOA) partner, American Standard Circuits, Inc. (ASC)
[WWW.ASC-I.COM], located in Franklin Park and West Chicago, Illinois, where
M-Wave maintains its offices.

This business model is referred to as Virtual Manufacturing. Through Virtual
Manufacturing we contractually supply many of the printed circuit board needs of
our customers, creating a "pipeline" between those customers and production that
covers early prototypes and pilot production, directly into mass production,
offering one seamless process. The Company delivers products when the customer
needs them through consignment inventory control, demand-pull, just-in-time,
inplant storehouses and other supply-chain programs.

The Company began Virtual Manufacturing during 2000 by developing subcontracting
relationships with global manufacturers predominately Asian, from its base in
Singapore. The SOA extends this approach to our domestic manufacturing
requirements.

Our manufacturing partners maintain most certifications for quality,
environmental and safety, including ISO, QS, UL, CE and others. Both the Company
and its manufacturing partners have a reputation for timely delivery of products
that are competitively priced, from plants operating at high levels for worker
and environmental safety both within and outside the U.S.

The Company markets its products through regional sales managers supported by
independent sales organizations. The Company's base of approximately 100
customers represents a sophisticated group of purchasers.

SIGNIFICANT EVENTS DURING Q1 2004

February 2004 The SOA with ASC was completed on February 3, 2004; the West
Chicago facility was sold to an ASC affiliate and the equipment at that location
was sold to a limited liability company controlled by ASC in which Company is
the minority member. Additional elements of SOA transaction are:

---ASC provides the domestic manufacturing required by the Company's customers
and is paid for finished product as a supplier to the Company. The Company
maintains the sales, support, manufacturing oversight, and logistics for its
customers. The term of the SOA agreement is two years.

---The Company issued 5-year warrants to Gordhan Patel, owner of ASC, for the
purchase of 500,000 shares of the Company's common stock at $1.35 per share,
which vest ratably over the two-year SOA agreement period or in full upon an


                                       7
<PAGE>
earlier sale of the Company. The warrants are valued at $346,141 and will be
recorded ratably as an increase to additional paid-in capital and recognized as
stock compensation expense over the vesting period. Additionally, the Company
was granted by ASC the right to receive 8% of the gain over book value arising
from a sale of ASC, occurring on or after the first anniversary of the SOA
agreement.

---The Company sold its West Chicago plant to an affiliate of ASC for a cash
price of approximately $2,000,000. ASC has leased the manufacturing portion of
that plant from the new owner to enable it to manufacture as required under the
SOA.

---The Company leased a portion of the West Chicago facility to maintain its
offices from which it operates its domestic and international VM, supply chain
management, and consulting businesses in close proximity to the domestic
manufacturing being performed for its customers by ASC.

---The Company sold the major portion of its manufacturing equipment at the West
Chicago facility to a newly formed limited liability company, AM-Wave, LLC
("LLC"), for total consideration of $1,577,200. The Company received cash of
$800,000 and a 20% preferred and secured ownership interest in the LLC. ASC is
the other member of the LLC and has leased the use of the equipment from it. The
Company's preferred interest enables it to receive all cash proceeds up to
$777,200 in any liquidation less M~Wave's portion of the LLC's depreciation on
the equipment before ASC receives any distribution. Distributions thereafter are
made 80% to ASC and 20% to the Company. Management believes the effect of this
preference item will prevent the Company from fully realizing the initial
investment in the LLC, and has accordingly recognized an impairment loss of
$136,000 in the first quarter of 2004 to reduce the carrying value of the
investment in the LLC to its net realizable value. M-Wave undertook no financial
liabilities with respect to this LLC that are material to its business or
financial condition. M~Wave is accounting for this investment in the LLC under
the equity method of accounting.

---The Company used a portion of the funds generated from the sale of its assets
to retire its debt of approximately $2,422,000 with Bank One, NA. Bank One N.A.
also released all liens on the collateral securing the note.

March 2004 The Company reaffirmed its intention to sell its unused land and
building located in Bensenville, Illinois as soon as practicable. As discussed
in prior filings, land and building at the Company's Bensenville facility were
abandoned when the Company moved to its West Chicago facility in 2002. These
assets have been classified as held for sale and idle in the accompanying
consolidated balance sheets and have been recorded at approximately $539,000
which represents management's estimate of the potential selling price based on


                                       8
<PAGE>
listed market price and broker information, less costs to sell. All losses were
recorded when the impairment was recognized in 2002.

4. INVENTORIES

Inventory is carried at the lower of cost (first-in, first-out) or market.
Substantially all the Company's inventories are in finished goods held for sales
to customers supported by annual forecasts, firm purchase orders or contracts.

5. DEBT

On March 31, 2004 Silicon Valley Bank, N.A. (Bank) and the Company entered into
the first of a two-step financing agreement known as "Mini ABL" that will
commence with an accounts receivable, contract financing facility. Under the
facility, the Company can pledge to the Bank, subject to Bank approval, up to
85% of the face value of its approved invoices to a maximum of $3.125 million at
the prime rate plus 2.5% (prime rate was 4.0% at March 31, 2004). The cost of
the facility also includes a 1/2% one-time discount on the initial borrowings, a
facility fee of $25,000 half of which was paid immediately, and half is due at
the end of six months, with other transaction fees relating to cash management
and online services that are considered by management to be minor. Borrowings
outstanding under the facility were $1,491,581 at March 31, 2004 and were
recorded in accordance with Statement of Financial Accounting Standard (SFAS)
No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, as a note payable, Bank, in the accompanying
consolidated balance sheet. Borrowings are collateralized by substantially all
assets of the Company and are subject to certain non-financial and financial
covenants which require, amongst other provisions, the Company to maintain
minimum tangible net worth. The facility can be terminated by the Bank upon
certain default events as defined in the agreement.

In connection with the financing, the Company issued 7-year warrants to the Bank
for the purchase of 85,000 shares of the Company's common stock at $4.80 per
share, which vest ratably over six months. The warrants are valued at $264,672
and will be recorded ratably as an increase to additional paid-in capital and
recognized as stock compensation expense over the vesting period, which will
commence in April 2004.

6. LITIGATION

The Company is not a party to any litigation whose outcome will have a material
adverse effect on the financial position or results of operations of the
Company.


                                       9
<PAGE>
7. STOCK-BASED COMPENSATION

Stock-based employee compensation, including stock options, for the three months
ended March 31, 2004 and 2003 was accounted for under the intrinsic value-based
method as prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees." Therefore, no compensation expense was recognized for those stock
options that had no intrinsic value on the date of grant.

If the Company were to recognize compensation expense over the relevant service
period under the fair-value method of SFAS No. 123 net (loss) income would have
increased or decreased, resulting in pro forma net (loss) income and EPS as
presented below:

<TABLE>
<CAPTION>
                                                     THREE MONTHS
                                                 ENDED MARCH 31, 2004
                                                 --------------------
                                                2003               2004
                                            -------------       -----------
<S>                                         <C>                 <C>
Net (loss) income, as reported ..........   $  (5,370,801)      $   134,425
Deduct: Stock-based employee compensation
  expense, net of related tax effects,
  determined under fair-value method
  for all awards ........................         (74,653)          (90,994)
                                            -------------       -----------
Pro forma net (loss) income .............   $  (5,445,454)      $    43,431
                                            =============       ===========
EPS, as reported
  Basic .................................   $       (1.21)      $      0.03
  Diluted ...............................           (1.21)             0.03
Pro forma EPS
  Basic .................................   $       (1.23)      $      0.01
  Diluted ...............................           (1.23)             0.01
</TABLE>


                                       10
<PAGE>
ITEM 2:

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2004
COMPARED TO THE THREE ENDED MARCH 31, 2003

NET SALES

Net sales were approximately $3,916,000 for the quarter ended March 31, 2004, an
increase of approximately $711,000 or 22% above the first quarter of 2003. The
increase in sales is directly related to "RF" microwave sales that increased
approximately $1.2 million in the first quarter of 2004 while the Company's
digital business decreased approximately $800,000 in the first quarter of 2004.
Other product line sales increased approximately $311,000 in the first quarter
of 2004.

Net sales to Celestica, a major customer of the Company, were approximately
$697,000 in the first quarter of 2004 compared to about $105,000 in the first
quarter of 2003. Net sales to RF Power, a significant customer of the Company,
were approximately $354,000 in the first quarter of 2004 compared to about
$99,000 in the first quarter of 2003. Net sales to Remec, another significant
customer of the Company, were approximately $349,000 in the first quarter of
2004 compared to approximately $5,000 in the first quarter of 2003. The above
increases reflect increased sales in the "RF" microwave business of the Company.

GROSS PROFIT (LOSS) AND COST OF GOODS SOLD

The Company's gross profit for the first quarter of 2004 was approximately
$953,000 compared to a gross loss of approximately $1,728,000 for the first
quarter of 2003. In September 2003, the Company began to phase out its
manufacturing operations in preparation for the strategic operating alliance
agreement with ASC which it consummated in February 2004. The Company presently
purchases all of its printed circuit boards as finished products and distributes
the finished products to its customers.

OPERATING EXPENSES

General and administrative expenses were approximately $469,000 or 12.0% of net
sales in the first quarter of 2004 compared to approximately $577,000 or 18.0%
of net sales in the first quarter of 2003, a decrease of approximately


                                       11
<PAGE>
$108,000. General and administrative expenses consist primarily of salaries and
benefits, professional services, depreciation of office, equipment and computer
systems and occupancy expenses. In comparison to the first quarter of 2003,
payroll related expenses decreased $162,000, professional services, which
include legal, auditing, and consulting fees increased $103,000, and
depreciation expense decreased $30,000 in the first quarter of 2004.

Selling and marketing expenses were approximately $279,000 or 7.1% of net sales
in the first quarter of 2004 compared to approximately $367,000 or 11.4% of net
sales in the first quarter of 2003. Selling and marketing expenses include the
cost of salaries, advertising and promotion of the Company's products, and
commissions paid to independent sales organizations. In comparison to the 1st
quarter of 2003, commissions paid to independent sales organizations decreased
$19,000, payroll-related expenses decreased $57,000 with the reduction of
regional sales managers in the third quarter of 2003, and travel expenses
decreased $11,000 in the first quarter of 2004.

The Company recorded an impairment loss of $136,000 in the first quarter of
2004. The charge was recorded to adjust the carrying value of the investment in
AM-Wave, LLC to its net realizable value.

The Company recorded an impairment loss of $3,578,000 on the land and building
at the Company's West Chicago location in the first quarter of 2003 when
management determined it intended to sell the property in connection with its
execution of the Company's restructuring plan to provide added cash flow for the
Company. When the impairment loss was recognized, the carrying value of the
property was adjusted to approximately $2,000,000 which represented the
contemplated offer from an affiliate of ASC less costs to sell in accordance
with SFAS No. 144.

The Company recorded stock compensation expense in the first quarter of 2004 of
approximately $53,000 relating to options issued in connection with the
consulting agreement between the Company and Credit Support International.

The Company also recorded stock compensation expense in the first quarter of
2004 of approximately $29,000 relating to warrants issued to Gordhan Patel,
owner of ASC, upon execution of the SOA.

OPERATING LOSS

Operating loss was approximately $14,000 in the first quarter of 2004 compared
to an operating loss of approximately $6,250,000 in the first quarter of 2003.
The changes in operating income reflect primarily the changes in gross profit,


                                       12
<PAGE>
impairment losses, stock compensation, and other operating expenses as discussed
above, which can be summarized as follows:

<TABLE>
<S>                                        <C>
Increase in gross margin                    2,680,000
Decrease in impairment losses               3,442,000
Increase in stock compensation               (82,000)
Decrease in other operating expenses          196,000
                                           ----------
Decrease in operating loss                 $6,236,000
</TABLE>

INTEREST INCOME

Interest income from short-term investments was approximately $31,000 in the
first quarter of 2004 compared to approximately $41,000 in the first quarter of
2003.

INTEREST EXPENSE

Interest expense, primarily related to the Industrial Revenue Bond was
approximately $50,000 in the first quarter of 2003. The Company recorded no
interest expense in the first quarter of 2004 upon retirement of the long-term
debt.

OTHER INCOME

Other income of approximately $117,000, primarily relates to forgiveness of debt
as the Company entered into settlement agreements with certain vendors. Under
terms of the vendor settlement agreements, the Company will pay, immediately
following the signing of each agreement, 50% of the vendor balances that are
under $10,000. It will pay trade balances in excess of $10,000 to vendors at 60%
of the principal balance, payable in two payments staggered 60 days apart. The
vendors will then forgive one-half of the balance of such trade debt upon
receipt of each partial payment. As of April 30, 2004, the Company has entered
into vendor settlement agreements with vendors holding approximately $3.1
million of trade debt. As of April 30, 2004, the Company has recognized a gain
on the forgiveness of trade debt relating to settlements with vendors of
approximately $984,000.

INCOME TAXES

In the first quarter of 2003, the Company had an effective tax credit of 14.2%.
The Company's income tax provision for the three months ended March 31, 2004 has
been reduced by the utilization of net operating loss carry-forwards. Management
believes that the Company has adequate net operating loss carryforwards


                                       13
<PAGE>
available that, if utilized, will offset any taxable income generated by the
Company throughout 2004. The Company's tax credit for 2004 is limited to
expected tax refunds of approximately $685,000 in 2004.


                                       14
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

Net cash used by operations was approximately $1,125,000 for the first three
months of 2004. Net cash provided by operations was approximately $1,929,000 for
the first three months of 2003.

Accounts receivable increased approximately $78,000. On March 31, 2004 Silicon
Valley Bank, N.A. (Bank) and the Company entered into the first of a two-step
financing agreement known as "Mini ABL" that will commence with an accounts
receivable contract financing facility. Under the facility, the Company can
pledge to the Bank, subject to Bank approval, up to 85% of the face value of its
approved invoices to a maximum of $3.125 million at the prime rate plus 2.5%.
The cost of the facility also includes a 1/2% one-time discount on the initial
borrowings, a facility fee of $25,000, and other transaction fees. Borrowings
outstanding under the facility were $1,491,581 at March 31, 2004.

Based upon the current level of operations and anticipated growth, management
believes that future cash flow from operations, receipt of tax refunds, proceeds
from the sale of certain fixed assets, vendor payable reductions and funds
obtained from a bridge receivables purchasing facility through Silicon Valley
Bank on March 31, 2004 will be adequate to meet its anticipated liquidity
requirements for this fiscal year, including the remaining payments due to its
vendors under settlement arrangements for the payment of its delinquent third
party vendor obligations.

A concurrent, proposed asset based financing facility with Silicon Valley Bank
is currently in underwriting that will replace the Mini ABL. The financing, if
consummated, will provide 85% advances against the face value of eligible
accounts receivable with a $500,000 sub-limit on pre-sold inventory that does
not exceed 33% of the total funding of up to $4 million. This agreement has
tentatively been priced at the Bank's prime rate of interest plus two percent,
and a total one-time fee of 1%. While the Company believes this facility will
consummate, there are no assurances either of approval by either the Bank or the
Company or the final terms at this time.

Proceeds on the facility allowed the Company to acquire additional inventories
of approximately $216,000, retire accounts payable by approximately $675,000,
and reduce amounts owed to ASC to $300,000 per the terms of the SOA agreement.
Accrued expenses also decreased by approximately $376,000. The Company paid out
approximately $48,000 in vacation payments relating to the transfer of personnel
to ASC. Property taxes and Utility Costs accruals decreased approximately
$120,000 with the sale of the West Chicago facility.


                                       15
<PAGE>
Legal expenses decreased approximately $45,000 relating to payments and expected
fees associated with the filing of the 2003 Form 10-K.

Capital expenditures were approximately $29,000 in the first three months of
2004 compared to $52,000 in the first three months of 2003. The Company has
limited plans for capital expenditures in 2004.

The West Chicago facility was sold to an ASC affiliate and the equipment at that
location was sold to a limited liability company controlled by ASC in which
Company is the minority member. The Company does have a preferred and secured
liquidation preference in the assets of that limited liability company. It has
undertaken no financial obligations relevant to its financial condition with
regard to the company.

The Company sold its West Chicago plant to the affiliate of ASC for a cash price
of approximately $2,000,000. ASC has leased the manufacturing portion of that
plant from the new owner to enable it to manufacture as required under the SOA.

The Company leased a portion of the West Chicago facility to maintain its
offices from which it operates its domestic and international Virtual
Manufacturing, supply chain management, and consulting businesses in close
proximity to the domestic manufacturing being performed for its customers by
ASC.

The Company sold and transferred the major portion of its manufacturing
equipment at the West Chicago facility to the newly formed limited liability
company for total consideration of $1,577,200. The Company received cash of
$800,000 and a 20% preferred and secured ownership interest in the LLC. ASC is
the other member of the LLC and has leased the use of the equipment from it.

The Company used a portion of the funds generated from the sale of its assets to
retire its debt of approximately $2,422,000 with Bank One, N. A. The remaining
funds were used to pay expenses associated with the transaction.

The Company also plans to sell its prior plant and improvements located in
Bensenville, Illinois as soon as practicable.

The Company recorded stock option expense in the first quarter of 2004 of
approximately $53,000 relating to options issued in connection with the
consulting agreement between the Company and Credit Support International. The
options have an exercise price of $.67 per share, are valued at $91,192, and
vest ratably over a period of 12 months. The options are recorded ratably as an
increase to additional paid-in capital and recognized as stock compensation
expense over the vesting period. Accordingly, the Company expects to record


                                       16
<PAGE>
approximately $23,000 in the second quarter of 2004 and an additional $15,000 in
the third quarter of 2004 relating to the consulting agreement.

The Company issued 5-year warrants to Gordhan Patel, owner of ASC, for the
purchase of 500,000 shares of the Company's common stock at $1.35 per share,
which vest ratably over the two-year SOA agreement or upon an earlier sale of
the Company. The warrants are valued at $346,141 and will be recorded ratably as
an increase to additional paid-in capital and recognized as stock compensation
expense over the vesting period. Accordingly, the Company recorded stock
compensation expense in the first quarter of 2004 of approximately $29,000 and
expects to record approximately $43,000 in each of the remaining quarters of
2004.

INFLATION

Management believes inflation has not had a material effect on the Company's
operation or on its financial position. However, expected supplier price
increases may have a material effect on the Company's operations and financial
position in the remainder of 2004.

FOREIGN CURRENCY TRANSACTIONS

All of the Company's foreign transactions are negotiated, invoiced and paid in
United States dollars.

RISK FACTORS AFFECTING BUSINESS AND RESULTS OF OPERATIONS

This report, as well as our other reports filed with the SEC and our press
releases and other communications, contain forward-looking statements made
pursuant to the safe harbor provisions of the Securities Litigation Reform Act
of 1995. Forward-looking statements include all statements regarding our
expected financial position, results of operations, cash flows, dividends,
financing plans, strategy, budgets, capital and other expenditures, competitive
positions, growth opportunities, benefits from new technology, plans and
objectives of management, and markets for stock. These forward-looking
statements are based largely on our expectations and, like any other business,
are subject to a number of risks and uncertainties, many of which are beyond our
control. The risks include those stated in the section entitled "Risk Factors
Affecting Business and Results of Operations" in Item 7 of our Annual Report on
Form 10-K and economic, competitive and other factors affecting our operations,
markets, products and services, expansion strategies and other factors discussed
elsewhere in this report, our Annual Report on Form 10-K and the other documents
we have filed with the Securities and Exchange Commission. In light of these
risks and uncertainties, there can be no assurance that the forward-


                                       17
<PAGE>
looking information contained in this report will in fact prove accurate, and
our actual results may differ materially from the forward-looking statements.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Principal Executive Officer and the
Company's Principal Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures and internal
control over financial reporting (as defined in Rules 13a-15(e) 15d-15(e),
13a-15(f), and 15d-15(f) under the Securities and Exchange Act of 1934, as
amended). Based on this evaluation, the Company's Principal Executive Officer
and Principal Financial Officer concluded that the Company's disclosure controls
and procedures were effective, except as discussed in the next paragraph below,
in timely alerting them to material information relating to the Company required
to be included in the Company's periodic filings with the Securities and
Exchange Commission. It should be noted that in designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. The Company has designed its
disclosure controls and procedures to reach a level of reasonable assurance of
achieving desired control objectives and, based on the evaluation described
above, the Company's Principal Executive Officer and Principal Financial Officer
concluded that the Company's disclosure controls and procedures were effective
at reaching that level of reasonable assurance.

(B) CHANGES IN INTERNAL CONTROLS. There was no change in the Company's internal
control over financial reporting during the quarter ended March 31, 2004 that
has materially affected, or is reasonably likely to materially affect, its
internal control over financial reporting.


                                       18
<PAGE>
      PART II - OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

None


                                       19
<PAGE>
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

      (a) Exhibits

            31.1 Certification of the CEO pursuant to Section 302 of the
            Sarbanes-Oxley Act.

            31.2 Certification of the CFO pursuant to Section 302 of the
            Sarbanes-Oxley Act.

            32.1 Certification pursuant to 18 U.S.C. Section 135O, as adopted
            pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

            32.2 Certification pursuant to 18 U.S.C. Section 135O, as adopted
            pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

      (b) Reports on Form 8-K

            (1) A current report on Form 8-K was filed on January 30, 2004 under
            item 5 relating to Bank One, N. A. extension of loan until February
            10, 2004.

            (2) A current report on Form 8-K was filed on February 11, 2004
            under item 5 relating to Strategic Operating Alliance agreement with
            American Standard Corporation and a major restructuring of its
            Balance Sheet.

            (3) A current report on Form 8-K was filed on April 21, 2004 under
            item 4 relating to changes in Certifying Accountant from Grant
            Thornton, LLP to McGladrey & Pullen, LLP.

            (4) A revised current report on Form 8-K(a) was filed on May 12,
            2004 under item 4 relating to changes in Certifying Accountant from
            Grant Thornton, LLP to McGladrey & Pullen, LLP that expands the
            discussion of certain periods covered under original Report

            (5) A current report on Form 8-K was filed on May 14, 2004 under
            item 5 regarding amendment of the Company's Consulting Agreement
            with Credit Support International, LLC under which Jim Mayer will
            become Chief Financial and Administrative Officer of the Company and
            Paul Schmitt will relinquish his fulltime position as Chief
            Financial Officer and become a Special Consultant to the Company,
            all effective May 1, 2004.


                                       20
<PAGE>
                                    SIGNATURE

      Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                    M~WAVE,INC.

Date: May 14, 2004                                  /s/ JIM MAYER
                                                    ------------------------
                                                    Jim Mayer
                                                    Chief Financial Officer
<PAGE>
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
  NO.                               DESCRIPTION                                 PAGE
  ---                               -----------                                 ----
<S>            <C>                                                              <C>
 2.1           Exchange Agreement, dated as of January 31, 1992, among
               Poly Circuits, Inc., Joel S. Dryer, Joseph A. Turek and the
               Company                                                                   *

 3.1           Certificate of Incorporation of the Company                               *

 3.2           Bylaws of the Company                                                     *

10.1           Amended and restated M~Wave, Inc. 1992 Stock Option Plan                ***

10.2           Construction Loan Note, dated January 10, 1996, by
               and among the Company, P C Dynamics and American
               National Bank and Trust Company.                                        ***

10.3           Stock Purchase Agreement dated December 18, 1998 by and
               between the Company and First Chicago Equity Corporation.                     *****

10.4           Stock Purchase Agreement dated December 18, 1998 by and
               between the Company and Cross Creek Partners II.                      *****

10.5           Warrant dated December 18, 1998 issued to First Chicago
               Equity                                                                *****

10.6           Warrant dated December 18, 1998 issued to Cross Creek
               Partners II                                                           *****

10.7           Employment Agreement dated January 29, 2001 between the
               Company and Joseph A. Turek                                          ******

10.8           Employment Agreement dated January 29, 2001 between the
               Company and Paul H. Schmitt                                          ******

10.9           Loan Agreement dated July 1, 2001 between the Illinois
               Development Finance Authority and the Company                       *******

10.10          Forbearance Agreement dated November 8, 2002 between
               the Company and Bank One, N.A., formerly known as American
               National Bank & Trust Company of Chicago                           ********
</TABLE>


                                       22
<PAGE>
<TABLE>
<S>            <C>                                                              <C>
10.11          Forbearance Agreement dated March 31, 2003 between the
               Company and Bank One, N.A., formerly known as American
               National Bank & Trust Company of Chicago                          *********

10.12          Employment Agreement dated January 7, 2003 between the
               Company and Robert O'Connell                                      *********

10.13          Employment Agreement dated January 29, 2003 between Company
               and Paul H. Schmitt                                               *********

10.14          Credit Agreement dated October 1, 2003 between Bank One,
               NA, the Company and Poly Circuits, Inc.                          **********

10.15          Consulting Agreement, dated September 1, 2003, between the
               Company and Credit Support International, LLC.                   **********

10.16          Amendment to Consulting Agreement, dated as of May 1, 2004,
               between the Company and Credit Support International. LLC                29

10.17          Letter Agreement with Paul Schmitt dated May 1, 2004                     31

21             Subsidiaries                                                      *********

24.1           Consent of Grant Thornton LLP                                     *********

31.1           Certification of the CEO Pursuant to Section 302 of the
               Sarbanes-Oxley Act.                                                      24

31.2           Certification of the CFO Pursuant to Section 302 of the
               Sarbanes-Oxley Act.                                                      26

32.1           Certification pursuant to 18 U.S.C. Section 135O, as
               adopted pursuant to Section 906 of the Sarbanes-Oxley Act
               of 2002.                                                                 28

32.2           Certification pursuant to 18 U.S.C. Section 135O, as
               adopted pursuant to Section 906 of the Sarbanes-Oxley Act
               of 2002.                                                                 28
</TABLE>


                                       23
<PAGE>
* Incorporated herein by reference to the applicable exhibit to Registrants
Registration Statement on Form S-1 (Registration No. 33-45499)

*** Incorporated herein by reference to the applicable exhibit to the
Registrant's Annual Report on Form 10-K for year ended December 31, 1995.

***** Incorporated herein by reference to the applicable exhibit report on Form
8-K dated December 18, 1998.

****** Incorporated herein by reference to the applicable exhibit report to the
Registrant's quarterly report on form 10-Q for the quarter ended March 31, 2001.

******* Incorporated herein by reference to the applicable exhibit report to the
Registrant's quarterly report on form 10-Q for the quarter ended June 30, 2001

******** Incorporated herein by reference to the applicable exhibit report to
the Registrant's quarterly report on form 10-Q for the quarter ended September
30, 2002

******** Incorporated herein by reference to the applicable exhibit report to
the Registrant's annual report on form 10-K for the year ended December 31, 2002

********** Incorporated herein by reference to the applicable exhibit report to
the Registrant's annual report on form 10-K for the year ended December 31, 2003


                                       24