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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K/A







(Mark One)


|[X] |  | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
|--- |  | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2002


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 0-26778




APPLIED MICROSYSTEMS CORPORATION

(Exact name of registrant as specified in its charter)




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|                                    |  |                                                   
|----------------------------------- |  | --------------------------------------------------
|Washington
(State of incorporation) |  | 91-1074996
(I.R.S. Employer Identification Number)

16770 NE 79th Street, #103, Redmond, Washington 98052
(425) 883-1606

(Address, including zip code, of registrants principal executive offices and telephone number, including area code)




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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  [  ]


Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes    No   
[X]

Indicate the number of shares outstanding of each of the registrants
classes of common stock, as of the latest practicable date.

Common stock: 7,597,303 shares outstanding as of April 15, 2003.

The aggregate market value of the common stock held by non-affiliates of
the registrant, based on the closing price on April 15, 2003, as reported on
the OTC Bulletin Board, was $506,904.1 The aggregate market value of the
common stock held by non-affiliates of the registrant, based on the closing
price on June 28, 2002, as reported on the Nasdaq National Market, was
$2,694,645.

1Excludes shares held of record on that date by directors, executive
officers and greater than 10% shareholders of the registrant. Exclusion of such
shares should not be construed to indicate that any such person directly or
indirectly possesses the power to direct or cause the direction of the
management of the policies of the registrant.



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TABLE OF CONTENTS



|                                                                                  |                                                                         |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------- | ----------------------------------------------------------------------- |  |  |  |  |  |  | 
|EXPLANATORY NOTE                                                                 
|PART III                                                                         
|                                                                                  | Item 10. Directors and Executive Officers of the Registrant.           
|                                                                                  | Item 11. Executive Compensation.                                       
|SUMMARY COMPENSATION TABLE                                                       
|OPTION GRANTS IN LAST FISCAL YEAR                                                
|AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
|                                                                                  | Item 12. Security Ownership of Certain Beneficial Owners and Management
|                                                                                  | Item 13.Certain Relationships and Related Transactions.                
|SIGNATURES                                                                       



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EXPLANATORY NOTE

This amendment to the registrants annual report on Form 10-K for the
fiscal year ended December 31, 2002 is being filed in order to submit the
information required to be included in Part III thereof within the period
required by General Instruction G(3) to Form 10-K.
     .

As used in this amendment to annual report on Form 10-K/A, unless the
context otherwise requires, the terms we, us, the Company, and Applied
refer to Applied Microsystems Corporation, a Washington corporation, and its
subsidiaries.

Part III of the registrants annual report on Form 10-K is hereby amended
by deleting the text thereof in its entirety and substituting the following:




PART III




Item 10.  Directors and Executive Officers of the Registrant.

The following table sets forth, for our current directors, information
with respect to their ages and background.

|                     |  |                                                 |  |     |    |       |  |          |      | 
|-------------------- |  | ----------------------------------------------- |  | --- | -- | ----- |  | -------- | ---- | 
|                     |  |                                                 |  |     |    |       |  | Director
|Name                 |  | Position With Applied Microsystems              |  | Age |    | Since
|                     |  |                                                 |  |     |    |      
|Charles H. House     |  | Director                                        |  |     | 62 |       |  |          | 1998 | 
|Elwood D. Howse, Jr. |  | Director                                        |  |     | 63 |       |  |          | 1992 | 
|Stephen J. Verleye   |  | Director, President and
Chief Executive Officer |  |     | 47 |       |  |          | 1999 | 

Charles H. Househas served as a director of Applied since July 1998 and
was appointed Chairman in January 2001. Mr. House presently serves as Director
of Societal Impact of Technology at Intel Corporation. Mr. House previously
served as Executive Vice President of Communications Research at Dialogic
Corp., which was acquired by Intel Corporation in 1999, and was initially
appointed to a similar position by Dialogic in November 1997. In December
1995, Mr. House first joined Dialogic as President of its wholly owned
subsidiary, Spectron MicroSystems. From December 1993 to 1995, Mr. House
served as Senior Vice President and General Manager of the VISTA Division of
Veritas Software. Mr. House has also held various senior management positions
at other high-technology companies, including Senior Vice President of Product
Development and Management of Informix Software, and founder and General
Manager of Hewlett-Packards Logic Systems division. He also served as
Hewlett-Packards corporate Engineering Director and General Manager of its
Software Engineering Systems division. Mr. House is also a director of several
private companies.

Elwood D. Howse, Jr.has served as a director of Applied since February
1992, and served as Chairman from April 2000 to January 2001. Mr. Howse has
served as President of Cable & Howse Ventures, a Northwest venture capital
management firm, since 1981, and as General Partner of the CH Partners venture
funds. Mr. Howse is also a director of OrthoLogic Corporation, ImageX, Inc.,
and BSQUARE Corporation, as well as several private companies.

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Stephen J. Verleyejoined Applied in April 1999 as its President and Chief
Executive Officer, and also joined the Companys Board of Directors at that
time. In late January 2003, Mr. Verleye terminated his paid employment with
Applied under the terms of his employment agreement (see Employment Contracts
and Change-In-Control Agreements). Mr. Verleye continues to serve in the
capacity of President and Chief Executive Officer on an unpaid basis, and
remains on the Board of Directors. Beginning in 1993, Mr. Verleye served in
various management capacities at RadiSys Corporation, a designer and
manufacturer of embedded computing systems. At RadiSys, Mr. Verleye first
served as its Vice President of Marketing, and subsequently as Vice President
of Business Development. In May 1996 he was appointed Vice President and
General Manager, Commercial Equipment Division, and in October 1998 he was
appointed joint responsibility of the merged Automation Equipment Division.
Prior to joining RadiSys, Mr. Verleye held various marketing management roles
at Sequent Computer Systems, Inc., as well as various sales and marketing roles
at Intel Corporation.

Our executive officers are generally elected annually at the meeting of
our Board of Directors held in conjunction with the annual meeting of
shareholders. The following are our current executive officers and their ages
as of March 31, 2003:

|                   |  |     |    |         |  |                                                                            |  |  |      | 
|------------------ |  | --- | -- | ------- |  | -------------------------------------------------------------------------- |  |  | ---- | 
|Name               |  | Age |    | Officer |  | Position Since                                                            
|                   |  |     |    |         |  |                                                                           
|Stephen J. Verleye |  |     | 47 |         |  | President and Chief Executive Officer(1)                                   |  |  | 1999 | 
|Robert C. Bateman  |  |     | 40 |         |  | Vice President,
Chief Financial Officer,Corporate Secretary, and Treasurer |  |  | 1999 | 

|    |                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In late January 2003, Mr. Verleye terminated his paid employment with Applied under
the terms of his employment agreement. Mr. Verleye continues to serve in the
capacity of President and Chief Executive Officer of Applied on an unpaid basis, and
remains a member of Applieds Board of Directors.

The following are former executive officers whose employment with the
Company was terminated in January 2003 as we reduced our operating expenses,
and their ages as of January 31, 2003:

|                  |  |     |    |         |  |                                                  |  |  |      | 
|----------------- |  | --- | -- | ------- |  | ------------------------------------------------ |  |  | ---- | 
|Name              |  | Age |    | Officer |  | Position Since                                  
|                  |  |     |    |         |  |                                                 
|Mark C. Budzinski |  |     | 42 |         |  | Vice President of Business Development and Sales |  |  | 1999 | 
|Alex A. Doumani   |  |     | 42 |         |  | Vice President of Engineering                    |  |  | 2001 | 

The following sets forth the business experience, principal occupations
and employment of each of our current and the above-listed former executive
officers who do not sit on the board (see above for such information with
respect to Mr. Verleye):

Robert C. Batemanjoined Applied in October 1999 as Vice President, Chief
Financial Officer, Corporate Secretary, and Treasurer. From March 1996 to
September 1999, Mr. Bateman held various management positions at NeoPath, Inc.,
a medical device company, including Corporate Controller, Corporate Secretary,
Treasurer, Vice President, and Chief Financial Officer. Prior to joining
NeoPath, Mr. Bateman held various positions at Ernst & Young LLP.

Mark C. Budzinskijoined Applied in September 1999 as Vice President of
Marketing, and most recently served as Vice President of Business Development
and Sales. From May 1996 to August 1999, Mr. Budzinski was Director of
Marketing at RadiSys Corporation. Prior to joining RadiSys, Mr. Budzinski held
various marketing positions at Sequent Computer Systems, Inc. and Intel
Corporation.

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Alex A. Doumanijoined Applied in June 2001 as Vice President of
Engineering. Before joining Applied, Mr. Doumani spent more than a decade with
RadiSys Corporation, most recently as that companys Vice President of Central
Engineering. He also held responsibility for RadiSys merger and acquisition
activities; served as the general manager of the embedded system software
operation; and established the companys European offices. Prior to RadiSys,
he worked at Tektronix, Inc. in a variety of software engineering management
positions.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers, directors and persons who beneficially own more than 10% of
our common stock to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission. Such persons are
required by SEC regulations to furnish us with copies of all Section 16(a)
forms they file.

Based solely on our review of the copies of such reports furnished to us
and written representations by certain reporting persons regarding their
compliance with the applicable reporting requirements under Section 16(a) of
the Exchange Act, we believe that, with respect to our fiscal year ended
December 31, 2002, all filing requirements applicable to our executive
officers, directors and greater-than-10% shareholders were complied with.

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Item 11.  Executive Compensation.

The following table sets forth information concerning the compensation of
our chief executive officer and our three other most highly compensated
executive officers during the fiscal years ended December 31, 2000, 2001 and
2002.




SUMMARY COMPENSATION TABLE

|                     |                         |        |      |        |  |          |                     |            |            |                 |        |        |  |  |              |        |  |   |        |        | 
|-------------------- | ----------------------- | ------ | ---- | ------ |  | -------- | ------------------- | ---------- | ---------- | --------------- | ------ | ------ |  |  | ------------ | ------ |  | - | ------ | ------ | 
|                     |                         |        |      |        |  |          |                     |            |            |                 |        |        |  |  | Long-Term    |        |  |   |       
|                     |                         |        |      |        |  |          |                     |            |            |                 |        |        |  |  | Compensation |        |  |   |       
|                     |                         |        |      |        |  |          |                     |            |            |                 |        |        |  |  |              |        |  |   |       
|                     |                         |        |      |        |  |          |                     |            |            |                 |        |        |  |  | Securities   |        |  |   |       
|                     |                         |        |      |        |  |          | Annual Compensation |            | Underlying |                 |        |        | 
|Name and             |                         | Fiscal |      |        |  | Stock    |                     | All Other 
|Principal Position   |                         | Year   |      | Salary |  | Bonus(1) |                     | Options(#) |            | Compensation(2)
|                     |                         |        |      |        |  |          |                     |            |            |                
|Stephen J. Verleye   |                         |        | 2002 |        |  | $        | 216,346             |            |            | $               | 10,000 |        |  |  |             |        |  | $ | 1,329  |       
|                     | President and CEO       |        |      | 2001   |  |          |                     | 217,054    |            |                 |        | 19,688 |  |  |              | 45,000 |  |   |        | 5,617  | 
|                     |                         |        | 2000 |        |  |          | 224,617             |            |            |                 | 3,656  |        |  |  |             |        |  |   | 5,362  |       
|Robert C. Bateman    |                         |        | 2002 |        |  | $        | 164,423             |            |            | $               | 10,000 |        |  |  |             |        |  | $ | 403    |       
|                     | VP, CFO, Corporate      |        |      | 2001   |  |          |                     | 164,307    |            |                 |        | 14,963 |  |  |              | 30,000 |  |   |        | 3,415  | 
|                     | Secretary and Treasurer |        |      | 2000   |  |          |                     | 153,462    |            |                 |        | 2,503  |  |  |              | 20,000 |  |   |        | 3,370  | 
|Mark C. Budzinski(3) |                         |        | 2002 |        |  | $        | 163,545             |            |            | $               |       |        |  |  |             |        |  | $ | 22,561 |       
|                     | VP of Worldwide Sales   |        |      | 2001   |  |          |                     | 161,759    |            |                 |        | 7,350  |  |  |              | 30,000 |  |   |        | 62,768 | 
|                     |                         |        |      | 2000   |  |          |                     | 160,000    |            |                 |        | 32,600 |  |  |              | 20,000 |  |   |        | 12,758 | 
|Alex A. Doumani (4)  |                         |        | 2002 |        |  | $        | 163,462             |            |            | $               |       |        |  |  |             |        |  | $ | 565    |       
|                     | VP of Engineering       |        |      | 2001   |  |          |                     | 86,843     |            |                 |        | 30,000 |  |  |              | 90,000 |  |   |        | 1,418  | 



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|(1) |  | Bonus amounts are reflected in the year they were earned, without
regard to when the amounts were received.                  
|--- |  | -----------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Represents employer 401(k) matching contributions and term life
insurance premiums, except as otherwise noted.               
|   
|(3) |  | Mr. Budzinskis other compensation includes sales commissions of
$21,958 in 2002, $58,022 in 2001 and $8,005 in 2000.        
|   
|(4) |  | Mr. Doumani joined the Company in June 2001. Mr. Doumanis bonus
compensation consists of a signing bonus of $30,000 in 2001.

Stock Options Granted in Fiscal 2002

The following table provides the specified information concerning grants
of options to purchase our common stock made during the fiscal year ended
December 31, 2002, to the persons named in the Summary Compensation Table:

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OPTION GRANTS IN LAST FISCAL YEAR

|                   |  |     |                   |         |                      |        |          |      |            |    |   |     |             |  |                        |  |  |  |   |  |  |  |   |  | 
|------------------ |  | --- | ----------------- | ------- | -------------------- | ------ | -------- | ---- | ---------- | -- | - | --- | ----------- |  | ---------------------- |  |  |  | - |  |  |  | - |  | 
|                   |  |     | Individual Grants |         |                      |        |          |      |            |    |  
|                   |  |     |                   |         | Potential Realizable
|                   |  |     | Number of         |         | Percent of           |        |          |      |            |    |   |     |             |  | Value at Assumed      
|                   |  |     | Securities        |         | Total                |        |          |      |            |    |   |     |             |  | Annual Rates of Stock 
|                   |  |     | Underlying        |         | Options              |        |          |      |            |    |   |     |             |  | Price Appreciation for
|                   |  |     | Options           |         | Granted to           |        | Exercise |      |            |    |   |     | Option Term
|                   |  |     | Granted           |         | Employees            |        | Price    |      | Expiration |    |  
|Name               |  | (#) |                   | in 2002 |                      | ($/Sh) |          | Date |            | 5% |   | 10%
|                   |  |     |                   |         |                      |        |          |      |            |    |   |    
|Stephen J. Verleye |  |     |                  |         |                      |        |         |      |            |    |  |     |             |  |                       |  |  |  |  |  |  |  |  | 
|Robert C. Bateman  |  |     |                  |         |                      |        |         |      |            |    |  |     |             |  |                       |  |  |  |  |  |  |  |  | 
|Mark C. Budzinski  |  |     |                  |         |                      |        |         |      |            |    |  |     |             |  |                       |  |  |  |  |  |  |  |  | 
|Alex A. Doumani    |  |     |                  |         |                      |        |         |      |            |    |  |     |             |  |                       |  |  |  |  |  |  |  |  | 



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Option Exercises and Fiscal 2002 Year-End Values

The following table provides the specified information concerning
exercises of options to purchase our common stock in the fiscal year ended
December 31, 2002, and unexercised options held as of December 31, 2002, by the
persons named in the Summary Compensation Table above.




AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR

AND FISCAL YEAR-END OPTION VALUES


|                   |  |             |   |          |  |             |   |                       |  |                      |   |                      |  |  |   |  |  |  |   |  |  |  |   | 
|------------------ |  | ----------- | - | -------- |  | ----------- | - | --------------------- |  | -------------------- | - | -------------------- |  |  | - |  |  |  | - |  |  |  | - | 
|                   |  |             |   |          |  |             |   |                       |  | Number of Securities |   | Value of Unexercised
|                   |  |             |   |          |  |             |   |                       |  | Underlying           |   | In-the-Money        
|                   |  |             |   |          |  |             |   |                       |  | Unexercised          |   | Options at          
|                   |  | Shares      |   |          |  |             |   | Options at            |  | Fiscal Year-        
|                   |  | Acquired    |   |          |  |             |   | Fiscal Year-End(#)(1) |  | End                 
|                   |  | on          |   | Value    |  |            
|Name               |  | Exercise(#) |   | Realized |  | Exercisable |   | Unexercisable         |  | Exercisable          |   | Unexercisable       
|                   |  |             |   |          |  |             |   |                       |  |                      |   |                     
|Stephen J. Verleye |  |             |  |          |  |             |  |                       |  |                      |  |                      |  |  |  |  |  |  |  |  |  |  |  | 
|Robert C. Bateman  |  |             |  |          |  |             |  |                       |  |                      |  |                      |  |  |  |  |  |  |  |  |  |  |  | 
|Mark C. Budzinski  |  |             |  |          |  |             |  |                       |  |                      |  |                      |  |  |  |  |  |  |  |  |  |  |  | 
|Alex A. Doumani    |  |             |  |          |  |             |  |                       |  |                      |  |                      |  |  |  |  |  |  |  |  |  |  |  | 



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|(1) |  | In connection with the November 2002 sale of our embedded systems
development tools business and assets to Metrowerks Corporation, a
wholly-owned subsidiary of Motorola, Inc., all outstanding employee
options to purchase our common stock were terminated.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Compensation of Directors

During 2002, directors who are not employees of the Company received
$1,000 for each Board meeting attended and $500 for each telephonic Board
meeting. Our non-employee directors during 2002 included Mr. Evans, Mr. House,
and Mr. Howse. Mr. House also received $10,200 in consulting fees from us
during 2002.

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In December 2002, our Board of Directors formed a special committee
consisting of Mr. House and Mr. Howse to oversee, review and make
recommendations to the Board of Directors concerning certain transactions
relating to the liquidation of the Company, including overseeing the process of
attempting to sell our Libra Networks assets. Beginning January 1, 2003, each
member of this committee receives $6,000 per quarter as compensation for his
services as a member of the committee.

We also have a Director Stock Option Plan, under which a grant of a
nonqualified option to purchase 5,000 shares of our common stock is
automatically made to each non-employee director on the date of each annual

meeting of shareholders. During 2002, options to purchase 15,000 shares of our
common stock were granted under the plan. Each of these options has an
exercise price of $0.95, a ten-year term, and will vest on the date of the 2003
annual meeting of shareholders. In February 2003, the Board of Directors
approved the cancellation of all options granted under the plan, with such
option cancellations to be effective on the date that shareholders approve a
plan to dissolve and liquidate the Company.

Employment Contracts and Termination of Employment and Change-in-Control Agreements

In April 1999, we entered into an employment agreement with Stephen J.
Verleye, our President and Chief Executive Officer. Under the agreement, Mr.
Verleye is entitled to receive monthly severance payments equal to his salary
and benefits for a period of six months following termination of his employment
in certain circumstances. Mr. Verleye will no longer be entitled to receive
these severance payments at such time as he obtains other full-time employment
or if he competes with us. In December 2002, the Board of Directors approved
certain modifications to Mr. Verleyes employment agreement which include: Mr.
Verleye may elect to receive, in lieu of the severance payments described
above, a severance payment equal to one-half times his full annual base salary,
payable in a lump sum within thirty days following termination of his
employment due to disability or without cause, without regard to whether Mr.
Verleye has other full-time employment immediately following such termination
of employment or whether he competes with us; and until the earlier of twelve
months following termination of Mr. Verleyes employment, or the date Mr.
Verleye becomes employed on a full-time basis by another employer, we will
maintain in full force and effect for the continued benefit of Mr. Verleye or
his designee all life, medical and disability insurance he was entitled to
receive immediately prior to the date of his termination of employment. Mr.
Verleye was removed from our ongoing payroll records effective late January
2003, and we subsequently paid Mr. Verleye the lump sum severance payment
described above. Mr. Verleye continues to retain the title and perform the
functions of President and Chief Executive Officer with no compensation, and
remains a member of our Board of Directors.

In April 2001, our Board of Directors approved a plan for certain of our
executive officers, including Robert C. Bateman, Mark C. Budzinski and Alex A.
Doumani, that provides for severance payments equal to one-half of their annual
salary following termination of employment after a change in control. In
addition, for a period of twelve months following such termination of
employment, we will maintain medical benefits each executive officer was
entitled to receive immediately prior to the date of his termination of
employment. After the termination of Mr. Budzinskis and Mr. Doumanis
employment in January 2003, we paid each former executive the severance
payments described above and continue to reimburse these former executives for
medical benefits in accordance with the plan. We intend to provide similar
payments to Mr. Bateman following termination of his employment.

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Item 12.  Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of April 15, 2003, certain information
with respect to the beneficial ownership of our common stock by (i) each
shareholder known by us to be the beneficial owner of more than 5% of our
common stock, (ii) each director of Applied, (iii) each executive officer named
in the Summary Compensation Table, and (iv) all of our directors and executive
officers as a group.

|                                                                                            |  |                     |           |                   |  |  |      |  
|------------------------------------------------------------------------------------------- |  | ------------------- | --------- | ----------------- |  |  | ---- | -
|                                                                                            |  | Number of Shares of |           |                   |  | 
|                                                                                            |  | Common Stock        |           |                   |  | 
|                                                                                            |  | Beneficially        |           | Percent of Common
|Name of Beneficial Owner(1)                                                                 |  | Owned (1)           |           | Stock Outstanding
|                                                                                            |  |                     |           |                  
|Orien II, L.P. (2)
c/o Orien Ventures
300 Oswego Point Dr., Suite 200
Lake Oswego, OR 97034 |  |                     | 1,246,257 |                   |  |  | 16.4 | %
|Robert L. Deinhammer (3)
21 Comistas Court
Walnut Creek, CA 94598                           |  |                     | 593,994   |                   |  |  | 7.8  | %
|Dimensional Fund Advisors Inc. (4).
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401    |  |                     | 385,500   |                   |  |  | 5.1  | %
|Charles H. House (5)                                                                        |  |                     | 7,500     |                   |  |  | *    |  
|Stephen J. Verleye                                                                          |  |                     |          |                   |  |  | *    |  
|Robert C. Bateman                                                                           |  |                     | 4,016     |                   |  |  | *    |  
|Mark C. Budzinski                                                                           |  |                     |          |                   |  |  | *    |  
|Alex A. Doumani                                                                             |  |                     |          |                   |  |  | *    |  
|Elwood D. Howse, Jr. (6)                                                                    |  |                     | 40,731    |                   |  |  | *    |  
|All current directors and executive
officers as a group (6 persons) (7)                     |  |                     | 52,247    |                   |  |  | *    |  



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|*   |  | Less than 1%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | Except as otherwise indicated, the persons named in this table have
sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them, subject to community
property law, where applicable, and to the information contained in the
footnotes to this table. The number of shares of common stock shown as
beneficially owned by the persons named in this table includes all
shares of common stock underlying options exercisable within 60 days of
April 15, 2003. The percentage of common stock outstanding is
calculated on the basis of 7,597,303 shares of common stock outstanding
as of April 15, 2003, except that shares of common stock subject to
options currently exercisable, or exercisable within 60 days of April
15, 2003, are deemed outstanding for computing the percentage ownership
of the person holding the options but are not deemed outstanding for
computing the percentage ownership of any other person.
|   
|(2) |  | Anthony Miadich is a former member of our board of directors and is
a Managing General Partner of Orien Venture Partners, the general
partner of Orien II, L.P., and shares voting and investment power over
shares held by Orien II, L.P. with George Kalan, a General Partner of
Orien Venture Partners. The beneficial ownership includes 12,500 shares
issuable to Mr. Miadich upon the exercise of stock options that are
exercisable within 60 days of April 15, 2003. The beneficial ownership
also includes 9,108 shares held in trust attributable to Mr. Kalan and
8,931 shares held in trust attributable to Mr. Miadich.                                                                                                                                                                                                                                                                                                                                                    

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|(3) |  | Based on documents filed by Mr. Deinhammer with the Securities and
Exchange Commission in August 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(4) |  | Dimensional Fund Advisors Inc. (Dimensional), an investment
advisor registered under Section 203 of the Investment Advisors Act of
1940, furnishes investment advice to four investment companies
registered under the Investment Company Act of 1940, and serves as
investment manager to certain other investment vehicles, including
commingled group trusts. (These investment companies and investment
vehicles are the Portfolios). In its role as investment advisor and
investment manager, Dimensional possessed both investment and voting
power over 385,500 shares of our common stock as of December 31, 2002.
The Portfolios own all securities reported in this statement, and
Dimensional disclaims beneficial ownership of such shares.
|   
|(5) |  | Consists of 7,500 shares issuable upon the exercise of stock
options that are exercisable within 60 days of April 15, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(6) |  | Includes 17,500 shares issuable upon the exercise of stock options
that are exercisable within 60 days of April 15, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(7) |  | Includes 25,000 shares issuable upon the exercise of stock options
that are exercisable within 60 days of April 15, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Equity Compensation Plan Information

We currently maintain three compensation plans that provide for the
issuance of our common stock to officers and other employees, directors, and
consultants. These consist of the 1992 Performance Stock Plan, the 2001 Stock
Option Plan and the Director Stock Option Plan, all of which have been approved
by shareholders. As the result of the Companys sale of its embedded systems
development tools business and assets in November 2002, all outstanding
employee options outstanding under the 1992 Performance Stock Plan and the 2001
Stock Option Plan were terminated. In February 2003, the Board of Directors
approved the cancellation of all options outstanding under the Director Stock
Option Plan, with such option cancellations to occur on the date that
shareholders approve of a plan to dissolve and liquidate the Company. We do
not anticipate issuing any further stock options under any of the Companys
stock option plans.

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The following table sets forth information regarding outstanding options
and shares reserved for future issuance under the foregoing plans as of
December 31, 2002:

|                                                       |       |     |                   |        |                   |     |                          |      |                     |  |                  |           | 
|------------------------------------------------------ | ----- | --- | ----------------- | ------ | ----------------- | --- | ------------------------ | ---- | ------------------- |  | ---------------- | --------- | 
|                                                       |       |     |                   |        |                   |     |                          |      |                     |  | Number of shares
|                                                       |       |     | Number of shares  |        |                   |     |                          |      | remaining available
|                                                       |       |     | to be issued upon |        | Weighted-average  |     | for future issuance     
|                                                       |       |     | exercise of       |        | exercise price of |     | under equity            
|                                                       |       |     | outstanding       |        | outstanding       |     | compensation plans      
|                                                       |       |     | options, warrants |        | options, warrants |     | (excluding shares       
|                                                       |       |     | and rights        |        | and rights        |     | reflected
in column (a))
|Plan Category                                          |       | (a) |                   | (b)    |                   | (c)
|                                                       |       |     |                   |        |                   |    
|Equity compensation
plans approved by
stockholders     |       |     | 55,000            |        |                   | $   | 5.35                     |      |                     |  | 1,627,749(1)     |          
|Equity compensation
plans not approved
by stockholders |       |     |                  |        |                   |     |                         |      |                     |  |                 |          
|                                                       |       |     |                   |        |                   |     |                          |      |                     |  |                  |          
|                                                       | Total |     |                   | 55,000 |                   |     | $                        | 5.35 |                     |  |                  | 1,627,749 | 
|                                                       |       |     |                   |        |                   |     |                          |      |                     |  |                  |          



---

|(1) |  | Includes 40,000 shares that are reserved for issuance under the Director
Stock Option Plan. The Company does not plan to issue any further stock
options under any of its stock option plans.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Item 13.  Certain Relationships and Related Transactions.

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to be
signed on its behalf by the undersigned, thereunto duly authorized.

|                     |                                  |                                                                                                                                          
|-------------------- | -------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------
|Date: April 30, 2003 | APPLIED MICROSYSTEMS CORPORATION
|                     |                                  |                                                                                                                                          
|                     | By /s/ Robert C. Bateman        
|                     |                                  |                                                                                                                                          
|                     |                                  | Robert C. BatemanVice President, Chief Financial Officer,
Corporate Secretary, and Treasurer
(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

|                                             |  |                                                                                                                          |  |      |                | 
|-------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | ---- | -------------- | 
|Signature                                    |  | Title                                                                                                                    |  | Date
|/s/ Stephen J. VerleyeStephen J. Verleye     |  | President, Chief Executive Officer and Director
(Principal Executive Officer)                                            |  |      | April 30, 2003 | 
|                                            
|/s/ Robert C. BatemanRobert C. Bateman       |  | Vice President, Chief Financial
Officer, Corporate Secretary,
and Treasurer (Principal
Financial and Accounting
Officer) |  |      | April 30, 2003 | 
|                                            
|/s/ Charles H. HouseCharles H. House         |  | Chairman of the Board                                                                                                    |  |      | April 30, 2003 | 
|                                            
|/s/ Elwood D. Howse, Jr.Elwood D. Howse, Jr. |  | Director                                                                                                                 |  |      | April 30, 2003 | 

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