<PAGE>



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   Form 10-QSB


[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 2001

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________TO_______________

Commission File Number:  0-9856
                         ------

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


         Delaware                                        23-1922958
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

100 Commerce Boulevard, Quakertown, PA                   18951-2237
----------------------------------------                 ----------
(Address of principal executive offices)                 (Zip Code)

                                 (215) 538-8700
                                 --------------
                           (Issuer's Telephone Number)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 ____

On November 9, 2001 there were 52,429,016 shares of the Registrant's Common
Stock, par value $.10 per share, outstanding.

Transitional Small Business Disclosure Format (check one):  Yes____   No __X__


<PAGE>


                             AM COMMUNICATIONS, INC.
                                   FORM 10-QSB
                    FOR THE QUARTER ENDED SEPTEMBER 29, 2001

                                      INDEX

<TABLE>
<CAPTION>
<S>           <C>                                                                           <C>
PART I.       FINANCIAL INFORMATION                                                         PAGE NO.
-----------------------------------                                                         --------

Item 1.       Consolidated Financial Statements

              Consolidated Balance Sheets - September 29 (Unaudited) and
              March 31, 2001                                                                     3

              Consolidated Statements of Operations - Quarter and Six Months
              Ended September 29, 2001 and September 30, 2000 (Unaudited)                        4

              Consolidated Statements of Cash Flows -- Six Months Ended
              September 29, 2001 and September 30, 2000 (Unaudited)                              5

              Notes to Consolidated Financial Statements                                       6 - 8

Item 2.       Management's Discussion and Analysis of Operations                               8 - 14



PART II.      OTHER INFORMATION
-------------------------------

Item 6.       Exhibits and Reports on Form 8-K                                                14 - 17


</TABLE>



                                       2


<PAGE>


Item 1.  Financial Statements
------------------------------

                             AM COMMUNICATIONS, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                      September 29,         March 31,
                                                                           2001                2001
                                                                     ---------------      -------------
                                                                       (Unaudited)
<S>                                                                    <C>                  <C>
ASSETS
Current Assets:
   Cash                                                               $    130,000         $  350,000
   Accounts Receivable, Net of Reserves of $209,000
      at September 29 and March 31, 2001                                 3,144,000          2,654,000
   Due from Affiliate                                                       26,000             53,000
   Inventory                                                             2,442,000          2,935,000
   Prepaid Expenses and Other                                              187,000            101,000
                                                                      ------------        -----------
      Total Current Assets                                               5,929,000          6,093,000

   Equipment and Fixtures, Net                                             229,000            267,000
   Other Assets                                                            179,000             13,000
                                                                      ------------        -----------
   Total Assets                                                       $  6,337,000        $ 6,373,000
                                                                      ============        ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Current Portion of Capital Lease Obligations                       $      2,000        $     2,000
   Current Portion of Notes Payable                                         30,000             30,000
   Bank Line of Credit                                                   1,250,000          1,250,000
   Accounts Payable                                                      1,611,000          1,731,000
   Deferred Revenue                                                         74,000            135,000
   Accrued Expenses                                                      1,003,000          1,044,000
                                                                      ------------        -----------
      Total Current Liabilities                                          3,970,000          4,192,000
                                                                      ------------        -----------

Capital Lease Obligations - Long Term                                          ---              1,000
Notes Payable - Long Term                                                   45,000             60,000
Senior Convertible Redeemable Preferred Stock,
   $100 Par Value, Authorized 1,000,000 Shares;
   Issued and Outstanding 19,825 Shares at
   September 29 and March 31, 2001                                       1,983,000          1,983,000
                                                                      ------------        -----------

Commitments and Contingencies
Stockholders' Equity:
Common Stock, $.10 Par Value, Authorized 100,000,000
   Shares at September 29 and March 31, 2001; Issued
   and Outstanding 43,427,350 Shares at September 29
   and 43,152,051 Shares at March 31, 2001                               4,343,000          4,315,000
Capital in Excess of Par                                                33,100,000         33,087,000
Accumulated Deficit                                                    (37,104,000)       (37,265,000)
                                                                      ------------        -----------
   Stockholders' Equity                                                    339,000            137,000
                                                                      ------------        -----------
Total Liabilities and Stockholders' Equity                            $  6,337,000        $ 6,373,000
                                                                      ============        ===========
</TABLE>


              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements.



                                       3

<PAGE>


                             AM COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                    Quarter Months Ended                    Six Months Ended
                                               September 29,     September 30,      September 29,     September 30,
                                                   2001              2000               2001               2000
                                               -------------     -------------      -------------     -------------
<S>                                          <C>                 <C>               <C>                <C>
Revenues                                       $  4,075,000       $ 3,887,000        $ 8,101,000       $  7,621,000

Cost and Expenses:
   Cost of Sales                                  2,011,000         1,942,000          3,906,000          3,757,000
   Selling, General and Administrative            1,136,000           698,000          2,035,000          1,524,000
   Research and Development                       1,000,000           863,000          1,917,000          1,727,000
                                               ------------       -----------        -----------       ------------

Operating Income (Loss)                             (72,000)          384,000            243,000            613,000
Other Income (Expense)                              (36,000)          (34,000)           (73,000)           (63,000)
                                               ------------       -----------        -----------       ------------

Income (Loss) Before Income Taxes                  (108,000)          350,000            170,000            550,000

Income Tax Provision                                    ---               ---              9,000                ---
                                               ------------       -----------        -----------       ------------

Net Income (Loss)                              $   (108,000)      $   350,000        $   161,000       $    550,000
                                               ============       ===========        ===========       ============

Basic Net Income (Loss) Per Share              $        Nil       $      0.01        $       Nil       $       0.02
                                               ============       ===========        ===========       ============

Diluted Net Income (Loss) Per Share            $        Nil       $      0.01        $       Nil       $       0.01
                                               ============       ===========        ===========       ============

Shares Used in Computation of Basic
   Net Income (Loss) Per Share                   43,427,000        33,429,000         43,396,000         33,406,000
                                               ============       ===========        ===========       ============

Shares Used in Computation of Diluted
   Net Income (Loss) Per Share                   43,427,000        53,622,000         50,770,000         53,855,000
                                               ============       ===========        ===========       ============

</TABLE>



              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements.


                                       4
<PAGE>


                             AM COMMUNICATIONS, INC.
                      STATEMENTS OF CONSOLIDATED CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                              Six Months Ended
                                                                    --------------------------------------
                                                                       September 29,       September 30,
                                                                           2001                2000
                                                                    ------------------  ------------------
<S>                                                                  <C>                   <C>
Cash Flows from Operating Activities:
   Net Income                                                        $     161,000        $   550,000
   Adjustments to Reconcile Net Income to
   Net Cash Provided By (Used in) Operating Activities:
     Depreciation and Amortization                                          77,000             93,000
     Changes in Assets and Liabilities Which
     Provided (Used) Cash:
       Accounts Receivable                                                (490,000)          (251,000)
       Due from Affiliate                                                   27,000           (113,000)
       Inventory                                                           493,000            232,000
       Prepaid Expenses and Other                                         (253,000)           (39,000)
       Accounts Payable                                                   (120,000)          (426,000)
       Deferred Revenue                                                    (61,000)           (34,000)
       Accrued and Other Expenses                                          (41,000)           (36,000)
                                                                     -------------        -----------
Net Cash Used In Operating Activities                                     (207,000)           (24,000)
                                                                     -------------        -----------

Cash Flows From Investing Activities:
   Purchase of Equipment and Intangible Assets                             (38,000)           (58,000)
                                                                     -------------        -----------
Net Cash Used In Investing Activities                                      (38,000)           (58,000)
                                                                     -------------        -----------

Cash Flows from Financing Activities:
   Exercise of Stock Options                                                41,000             24,000
   Payments on Note Payable                                                (15,000)               ---
   Payments Under Capital Lease Obligations                                 (1,000)            (1,000)
                                                                     -------------        -----------
Net Cash Provided By Financing Activities                                   25,000             23,000
                                                                     -------------        -----------

Net Increase (Decrease) In Cash                                           (220,000)           (59,000)
Cash:
   Beginning                                                               350,000             79,000
                                                                     -------------        -----------
   Ending                                                            $     130,000        $    20,000
                                                                     =============        ===========

Interest Paid                                                        $      77,000        $    34,000
                                                                     =============        ===========
Income Taxes Paid                                                    $         ---        $       ---
                                                                     =============        ===========

</TABLE>

              The Accompanying Notes are an Integral Part of these
                       Consolidated Financial Statements.


                                       5
<PAGE>



                             AM COMMUNICATIONS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
          As of September 29, 2001 and for the Six Month Periods Ended
                    September 29, 2001 and September 30, 2000


1.   The accompanying interim consolidated financial statements should be read
     in conjunction with the annual consolidated financial statements and notes
     thereto included in AM Communications, Inc.'s Annual Report for the year
     ended March 31, 2001. The results of operations for the three and six month
     periods ended September 29, 2001, are not necessarily indicative of the
     operating results for the full year. Certain information and footnote
     disclosures normally included in financial statements prepared in
     accordance with generally accepted accounting principles have been
     condensed or omitted. The Consolidated Balance Sheet as of September 29,
     2001 and the related Consolidated Statements of Operations and Consolidated
     Statements of Cash Flows for the quarters and six months ended September
     29, 2001 and September 30, 2000 are unaudited, but in the opinion of
     management include all normal and recurring adjustments necessary for a
     fair statement of the results for such interim periods.

2.   Revenue Recognition

     AM Communications, Inc. (the "Company") derives its revenues principally
     from sales of its products to the cable TV industry. The Company's software
     revenue is recognized in accordance with American Institute of Certified
     Public Accountants Statement of Position (SOP) 97-2. As is customary in the
     industry, the Company's sales are made pursuant to individual purchase
     orders and are recognized upon the shipment of the product. Each component
     of the Company's products is sold separately and the cost of each component
     is listed separately in the purchase documentation. Revenue from custom
     development efforts is recognized as contractual milestones are achieved.

     AM Broadband Services, Inc., derives its revenues from sales of
     outside-plant services to CATV operators. Revenue is recognized as
     contracted tasks are completed and billed.

<TABLE>
<CAPTION>
                                                           September 29,          March 31,
                                                               2001                 2001
                                                          ---------------       -------------
                                                            (Unaudited)           (Audited)
<S>                                                         <C>                   <C>
3.   Inventory Comprises:
       Raw Material                                       $   2,351,000         $   3,355,000
       Work in Process                                          982,000               684,000
       Finished Goods                                           574,000               361,000
                                                          -------------         -------------
                                                              3,907,000             4,400,000
       Inventory Reserves                                    (1,465,000)           (1,465,000)
                                                          -------------         -------------
       Net Inventory                                      $   2,442,000         $   2,935,000
                                                          =============         =============
4.   Accrued Expenses Comprise:
       Accrued Compensation                               $     169,000         $     282,000
       Accrued Commissions                                      104,000                33,000
       Accrued Contracted Services                              213,000               227,000
       Accrued Interest                                          16,000                20,000
       Accrued Rent                                              36,000                89,000
       Accrued Real Estate Taxes                                 62,000                45,000
       Warranty Reserve                                         226,000               226,000
       Accrued Professional Fees                                 14,000                40,000
       Accrued Trade Show Costs                                  53,000                   ---
       Accrued Income Taxes                                      22,000                12,000
       Other                                                     88,000                70,000
                                                          -------------         -------------
                                                          $   1,003,000         $   1,044,000
                                                          =============         =============
</TABLE>
                                       6
<PAGE>

5.   Income Taxes:

     The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109.

     The provision for taxes on income consisted of:

<TABLE>
<CAPTION>

                                                                           Six Months Ended
                                                                   ------------------------------
                                                                    September 29,    September 30,
                                                                        2001             2000
                                                                   --------------    ------------
<S>                                                                  <C>               <C>
     Current Income Taxes                                           $   9,000         $       ---
     Deferred Income Taxes                                             62,000             216,000
     Change in Valuation Allowance                                    (62,000)           (216,000)
                                                                    ---------         -----------
     Net                                                            $   9,000         $       ---
                                                                    =========         ===========
</TABLE>


     A reconciliation between the provision (benefit) for income taxes, computed
by applying the statutory federal income tax rate of 34% to income before income
taxes and the actual provision for income taxes follows:

<TABLE>
<CAPTION>

                                                                           Six Months Ended
                                                                   ------------------------------
                                                                    September 29,    September 30,
                                                                        2001             2000
                                                                   --------------    ------------
<S>                                                                  <C>               <C>
     Federal Income Tax Provision at
        Statutory Rate                                              $   58,000         $   187,000
     State Income Taxes, Net of Federal Benefit                         11,000              37,000
     Research and Development Credits                                  (10,000)            (10,000)
     Permanent Differences                                               3,000               2,000
     Change in Valuation Allowance                                     (62,000)           (216,000)
     Other                                                               9,000                 ---
                                                                    ----------         -----------
     Income Tax Provision                                           $    9,000         $       ---
                                                                    ==========         ===========
</TABLE>


     The components of the net deferred tax asset as of September 29 and March
31 were as follows:

<TABLE>
<CAPTION>
                                                                    September 29,         March 31,
                                                                        2001                2001
                                                                   --------------        -----------
<S>                                                                 <C>                    <C>
     Deferred Tax Items:
       Inventory                                                    $    595,000        $    595,000
       Accrued Expenses and Reserves                                     252,000             324,000
       Net Operating Loss Carryforwards                                7,975,000           7,975,000
       Tax Credit Carryforwards                                          753,000             743,000
       Valuation Allowance                                            (9,575,000)         (9,637,000)
                                                                    ------------        ------------
       Net Deferred Tax Assets                                      $        ---        $        ---
                                                                    ============        ============
</TABLE>

       The Company has total net operating loss carryforwards available to
offset future taxable income of approximately $22 million expiring at various
times from 2002 to 2016. Due to certain statutory limitations under the Internal
Revenue Code, a portion of such carryforwards may not be available or may expire
before being utilized.


                                       7
<PAGE>


6.   Net Income (Loss) Per Share

       The following is a reconciliation of the numerator and denominators of
the basic and diluted EPS computations:

<TABLE>
<CAPTION>
                                                  Quarter Ended                    Six Months Ended
                                        September 29,     September 30,    September 29,      September 30,
                                            2001              2000             2001               2000
                                       --------------     -------------    -------------      -------------
<S>                                      <C>                <C>              <C>                 <C>
Net Income (Loss)                       $  (108,000)      $   350,000      $   161,000         $   550,000
Basic Weighted Shares
  Outstanding                            43,427,000        33,429,000       43,396,000          33,406,000
Convertible Preferred Stock,
  Warrants and Dilutive Options                 ---        20,193,000        7,374,000          20,449,000
                                        -----------       -----------      -----------         -----------
Diluted Shares                           43,427,000        53,622,000       50,770,000          53,855,000
Net Income (Loss) Per Common
  Share
   Basic                                        NIL              0.01              NIL                0.02
   Diluted                                      NIL              0.01              NIL                0.01

</TABLE>

     For the quarter ended September 29, 2001, convertible preferred stock,
warrants, and options to purchase common stock were not included in the
computation of diluted EPS because they would be anti-dulutive and increase the
net loss per share.


Item 2.    Management's Discussion and Analysis of Operations

     The following discussion contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements represent the Company's present expectations or beliefs concerning
future events. The Company cautions that such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or anticipated results. Potential risks and
uncertainties include, without limitation, the impact of economic conditions
generally; the competitive nature of the CATV (Cable TV) network monitoring
market; the Company's ability to enhance its existing products and develop and
introduce new products which keep pace with technological developments in the
marketplace; and market demand.

     The following discussion should be read in conjunction with the Company's
Form 10-KSB for its 2001 fiscal year ended March 31, 2001.


Overview

     The Company is a provider of high technology system level products for the
broadband communications industry, primarily for CATV monitoring and control
systems. During fiscal 1999 and fiscal 2000, the Company experienced a
significant restructuring of its business, primarily due to the cessation of
programs involving two major customers, which contributed approximately 50% of
revenues in fiscal 1998. As part of the restructuring, the Company undertook
several major organizational changes including the election of Mr. Javad Hassan
as Chairman and the execution of a strategic development and manufacturing
relationship with NeST associated companies, under which NeST provides a
substantial portion of the Company's engineering and manufacturing requirements.
Mr. Hassan is also the Chairman and primary shareholder of NeST Technologies and
NeSTronix which are U.S. based technology service providers that provide
engineering development services and turn-key manufacturing services primarily
through the use of technology resources of staff and electronic manufacturing
operations located in India and controlled by Mr. Hassan's brother, N. Jehangir.
Collectively these operations are referred to as NeST.


                                       8
<PAGE>

     As a result of the restructuring actions taken and other contractual
agreements between the Company and NeST, Mr. Hassan and the NeST related
companies control the voting of 14,391,837 shares of the Company's Common Stock
presently owned by the Company's majority shareholder, hold 1,000,000 shares
obtained through the exercise of stock options, hold 7,862,334 shares obtained
through the exercise of warrants, and hold a stock option to purchase 4,000,000
shares of common stock at $.15 per share. The warrants were issued by the
Company as payment for $1,827,197 of engineering development services performed
by NeST during fiscal 1999 and fiscal 2000.

     Using the NeST resources, the Company undertook a substantial development
program to upgrade its software and certain hardware products, which were
introduced during fiscal 2000. These products include complete new system
platforms for the Company's Omni2000 software, Scanning Ingress Monitoring
Systems, and QuickSTAT.

     During fiscal 2000, the Company experienced significant improvements in its
operations as revenue levels increased due to the improved product set and
expanded marketing activities. Operating costs decreased due to improved gross
profit margins as a result of the transition to the NeST based manufacturing
strategy and development spending declined due to the transition to more cost
effective India based development resources. While the Company experienced an
operating loss for the fiscal year 2000, it did achieve profitability in its
fourth quarter of fiscal 2000 and has remained profitable through the first
quarter of fiscal 2002 ended June 30, 2001.

     During the third quarter of fiscal 2001, the Company announced the
formation of a new strategic business unit named AM Broadband Services, Inc., a
wholly-owned subsidiary of the Company. The mission of the broadband services
unit will be to provide a range of outside-plant services to CATV operators that
will include design, installation, certification and maintenance with a focus on
quality and reliability. The Company believes that quality and reliability will
be critical metrics as CATV operators battle competitive access providers in the
new unregulated communications environment. AM Broadband Services, Inc. began
operations on January 5, 2001. The Company did experience an operating loss of
$108,000 for the second quarter of fiscal 2002 ended September 29, 2001 which
was primarily the result of an increase in general and administrative costs
incurred in connection with the Company's new broadband services unit, as well
as approximately $175,000 in start-up costs incurred in connection with the
Company's entrance into the subscriber fulfillment service business.

    During the second quarter of fiscal 2002, AM Broadband Services, Inc., a
wholly-owned subsidiary of the Company, announced that it was entering the
subscriber fulfillment services business through the acquisition of SRS
Communications Corporation and EDJ Communications, Inc. The acquisition closed
on October 1, 2001.

    The Company and NeST Technologies, Inc. previously announced the formation
of a joint venture which was to be known as "AM Broadband Systems." During the
second quarter of fiscal 2002, management of the Company and NeST Technologies,
Inc. reached a decision to abandon this joint venture concept. This decision was
made prior to a joint venture agreement actually being executed by the parties
or any work being performed by the joint venture. The AM Broadband Systems
products and services originally planned to be provided by this separate joint
venture will now be provided by the Company's broadband products unit, under the
direction of Group Vice President, Joseph D. Rocci, or by the Company's
broadband services unit, under the direction of Group Vice President, Maqbool A.
Qurashi.

                                       9
<PAGE>

Results of Operations
Quarter 2 Fiscal 2002 vs. 2001
------------------------------

<TABLE>
<CAPTION>

                                                                  Quarter 2            Quarter 2
                                                                    2002                  2001
                                                                 -----------          -----------
<S>                                                                 <C>                  <C>
Revenues                                                           100.0%                 100.0%

Cost of Sales                                                       49.3                   50.0
Selling, General and Administrative                                 27.9                   17.9
Research and Development                                            24.6                   22.2
                                                                   -----                  -----

Operating Income (Loss)                                             (1.8)                   9.9
Other Income (Expense)                                              (0.9)                  (0.9)
                                                                   -----                  -----

Income (Loss) Before Income Taxes                                   (2.7)                   9.0
Income Tax Provision                                                  --                     --
                                                                   -----                  -----

Net Income (Loss)                                                   (2.7)%                  9.0%
                                                                   =====                  =====

</TABLE>

Revenues
     Revenues were $4.1 million and $8.1 million for the second quarter and
first six months of fiscal 2002 ended September 29, 2001 compared to $ 3.9
million and $ 7.6 million, respectively, for the comparable periods in fiscal
2001. The increase in revenues from the comparable periods a year ago is due to
the Company's expanded direct global sales and marketing efforts. Additionally,
the Company's new broadband services unit, AM Broadband Services, Inc., which
began operations on January 1, 2001, contributed revenues of $37,000 and
$268,000 for the second quarter and first six months of fiscal 2002,
respectively.

     Revenues from OEMs (original equipment manufacturers) and foreign
distributors were 26% and 43% of total revenues in the second quarter and first
six months of fiscal 2002, respectively, compared to 70% and 73% in the
comparable periods in fiscal 2001. A greater portion of the Company's revenues
are coming from MSOs (multiple system operators) and other direct end-user
customers as a result of the Company's expanded direct global sales and
marketing efforts. The Company's multi-year agreement with Charter
Communications is also contributing to a greater portion of revenues coming from
MSOs and other direct end-user customers. The Company maintains key strategic
OEM relationships with Motorola, Philips and Scientific-Atlanta and others,
which purchase the Company's products under private label relationships and
re-sell them primarily to their international customers.

     One MSO customer contributed 64% and 38% of total revenues and one OEM
customer contributed 14% and 16% of total revenues for the second quarter and
first six months of fiscal 2002, respectively. In fiscal 2001, two OEM customers
contributed 27% and 19% of total revenues for the second quarter and 31% and 23%
of total revenues for the first six months. As the purchase of the Company's
products is generally associated with a customer's capital upgrade or expansion
program, contribution levels of individual customers can be subject to wide
fluctuations.

     Software revenues totaled $367,000 and $688,000 in the second quarter and
first six months of fiscal 2002, respectively, compared to $547,000 and $956,000
in the second quarter and first six months of fiscal 2001, respectively.
Software revenues were higher in the comparable periods a year ago as many of
the Company's existing customers upgraded to the Company's newly released
Omni2000 software at that time. All software development costs are charged to
research and development when incurred.

                                       10

<PAGE>

     Development revenues totaled $15,000 and $83,000 in the second quarter and
first six months of fiscal 2002, respectively, compared to $52,000 and $52,000
in the second quarter and first six months of fiscal 2001, respectively.
Development revenues primarily relate to OEM development efforts that are
recognized when defined milestones are reached, the timing of which may be
different from when the related development expenses were incurred. The related
development costs are reported as research and development expense.

     Backlog for the Company's broadband hardware and software products was $4.0
million at September 29, 2001 down from $4.4 million a year ago, but has
subsequently increased to $5.7 million as of November 9, 2001. In addition, with
the completion of the acquisition of SRS Communications Corporation and EDJ
Communications, Inc., the Company's performance of broadband services currently
generates approximately $400,000 a week in revenue. One customer accounts for
84% of the Company's broadband products backlog as of November 9, 2001. While
the Company has identified several new customers and revenue segments, revenue
growth could be tempered due to general economic conditions and other factors
that could limit customers' rollout of new services and purchases of AM
products.

Cost of Sales
     Cost of sales includes all manufacturing costs of the Company's hardware
products and job costs of the Company's new broadband services unit. Cost of
sales represented 49% and 48% of revenues in the second quarter and first six
months of fiscal 2002, respectively, compared to 50% and 49% in the comparable
periods of fiscal 2001. The Company's margins are generally dependent on product
mix and customer mix. Sales to MSO and other direct end-user customers generally
have a higher profit margin.

Selling, General and Administrative
     Selling, general and administrative (S,G & A) expenses were $1.1 million
and $2.0 million in the second quarter and first six months of fiscal 2002,
respectively, compared to $698,000 and $1.5 million in the comparable periods of
fiscal 2001. Selling expenses increased as the Company has expanded its global
direct sales and marketing efforts. Additionally, selling expenses increased due
to higher sales commission costs associated with a greater percentage of the
Company's total revenues coming from sales to MSO(s) and other direct end-user
customers. General and administrative costs increased to support the Company's
new broadband services unit.

Research and Development
     Research and development expense were $1.0 million and $1.9 million in the
second quarter and first six months of fiscal 2002, respectively, compared to
$863,000 and $1.7 million in the comparable periods of fiscal 2001. The increase
was due to the need to support increased customer demand for more advanced
systems and software. The Company continues to spend a significant amount on
research and development related to its major development efforts to upgrade and
expand its software and hardware products. NeST development expenses incurred
during the second quarter and first six months of fiscal 2002 were $647,000 and
$1.2 million, respectively, compared to $520,000 and $1.0 million in the
comparable periods of fiscal 2001.


Operating Income (Loss)
     The Company reported an operating loss of $72,000 and operating income of
$243,000 for the second quarter and first six months of fiscal 2002,
respectively, compared to operating income of $384,000 and $613,000 for the
second quarter and first six months of fiscal 2001, respectively. The operating
loss for the second quarter of fiscal 2002 and the lower operating income for
the first six months is primarily due to the increase in general and
administrative costs incurred in connection with the Company's new broadband
services unit. Additionally, the Company's broadband services unit incurred
approximately $175,000 in start-up costs associated with entering the subscriber
fulfillment services business.


                                       11
<PAGE>

Income Taxes
     Due to its significant net operating loss carryforward, the Company is
subject to minimum income taxes which include state income taxes and federal
income taxes based on an "alternative minimum tax" calculation.

Industry Factors
     The cable and broadband communications industry is presently undergoing
significant change as cable television (CATV) operators continue to expand and
consolidate their operations. Operators are also implementing new interactive
services such as video on demand, Internet access and telephony. In addition,
competition for video services has increased with new entrants, including
telephone and satellite providers. This has resulted in existing CATV operators
planning to expand and upgrade their distribution infrastructures and new
providers planning to construct new distribution systems capable of providing a
mix of services. However, there continues to be many unresolved issues and
uncertainties impacting this convergence of CATV and telecommunications
industries, including governmental regulations, competing distribution
technologies, and significant capital costs.

     Demand for CATV monitoring products has increased recently as monitoring of
cable distribution systems has become an important factor in increasing
operating efficiency and reliability. As previously noted, the Company's
operations were adversely impacted in fiscal 1999 and during the first three
quarters of fiscal 2000 by the combined impact of reduced revenues (resulting
from customers electing to cease certain programs) and the need for the Company
to upgrade its software products. The Company's operations and revenues are
driven, in large part by the timing and success of new product introductions and
the scheduling of orders by customers. The Company also continues to identify
product development needs in excess of its available development resources,
which in the past has negatively impacted its competitive position. The Company
believes its strategic relationship with NeST has allowed and will continue to
allow the Company to become more responsive to market requirements.

Liquidity and Capital Resources
     In the first six months of fiscal 2002, the Company consumed net cash of
$220,000, compared to consuming net cash of $59,000 in the first six months of
fiscal 2001.

     While the Company operated at a profit for the first six months of fiscal
2002, the Company consumed greater net cash compared to the prior year primarily
due to an increase in accounts receivable and prepaid expenses and a decrease in
accounts payable. This was partially offset by a reduction in inventory. The
increase in accounts receivable is attributable to the timing of sales during
the second quarter of fiscal 2002. The decrease in inventory is due to the
shipment of products which had been built or were in process in anticipation of
receiving orders under the Company's multi-year agreement with Charter
Communications.

     During fiscal 1999, the Company received a $150,000 technology improvement
fund loan from the Ben Franklin Technology Center of Southeastern Pennsylvania.
The loan was for the initial phase development of the Company's Omni2000
software package. The loan principal is payable in quarterly installments of
$7,500 over five years. Interest is payable quarterly, contingent on the
commercial success of the product, in an amount equal to 3% of the product sales
for the immediately preceding quarter until a cumulative amount equal to 50% of
the loan has been repaid. The outstanding loan balance as of September 29, 2001
was $75,000.

                                       12

<PAGE>

     The Company's line of credit is limited to $1,250,000, which was fully
borrowed and outstanding at September 29, 2001. Borrowings under the line are
based on 80% of the value of qualified accounts receivable. Under the terms of
the agreement, all the Company's assets are pledged and interest is payable at
2% above prime. Subsequent to September 29, 2001, the Company negotiated an
increase in availability under the bank line of credit to $3 million.

     In June 1999, the Company entered into an agreement with its chairman,
Javad K. Hassan, whereby Mr. Hassan agreed to provide a $500,000 line of credit
to the Company, with interest payable at 10%. Payment of all outstanding
borrowings and interest is due by December 31, 2001. No amounts were borrowed
under this line since its inception.

     Under the terms of the NeST development agreement, the Company has the
option to pay for NeST development services either in cash or by the issuance of
warrants to purchase AM Common Stock. The Company elected to issue NeST warrants
to purchase 4,234,018 shares of the Company's Common Stock, at an exercise price
of $.01 per share, in payment of $670,000 of NeST development services for the
period from November 1998 through April 3, 1999. The Company also issued
warrants to purchase 3,628,316 shares of the Company's Common Stock, at an
exercise price of $.01 per share, in payment of $1,157,197 of NeST development
services for the period from April 4, 1999 through January 1, 2000. Since
January 2, 2000, the Company has paid cash for NeST development services. As a
result of improved operations, the Company expects to pay ongoing NeST
development expenses in cash, but continues to have the option to issue warrants
up to a limit of 10 million total shares under the NeST Agreement.

     Pursuant to a Manufacturing Services Agreement between NESTRONIX, Inc. and
the Company, NESTRONIX agreed to manufacture the Company's products on a
turn-key basis commencing on January 2, 2000. The initial term of this
Manufacturing Agreement ends on January 2, 2003 and the Manufacturing Agreement
is automatically renewable for additional 18 month periods unless either party
gives written notice to the contrary to the other party at least 6 months prior
to the end of the then current term. The Manufacturing Agreement is also
terminable by either party upon 60 days prior written notice upon the default of
the other party or the bankruptcy or liquidation of the other party. Nothing in
the Manufacturing Agreement precludes the Company from resuming manufacturing
itself or transferring manufacturing rights to a third party. The Company
retains title to and ownership of all equipment, inventory and intellectual
property rights utilized in connection with the manufacture of its products. The
Company and NESTRONIX jointly agree upon a "bill of materials" price for each
product manufactured pursuant to the Manufacturing Agreement. The Company pays
to NESTRONIX, for each product manufactured pursuant to the Manufacturing
Agreement, an amount equal to the actual cost of all materials utilized to
manufacture the product, plus 0.5 times the agreed upon "bill of materials"
price for the product.

     The Company's restructuring actions taken during fiscal 1999 and 2000
reduced operating cash expenses. The Company expects to continue to utilize the
NeST technology resources in India and NeSTronix for core development and
manufacturing efforts and provide ongoing support services to NeST based
businesses, which is expected to allow the Company to improve its operating cost
structure. The Company began experiencing positive results from this strategy
during fiscal 2000.


                                       13

<PAGE>

     Capital expenditures totaled $38,000 in the first six months of fiscal 2002
and $58,000 in the first six months of fiscal 2001, which included computers,
software, manufacturing assembly and test equipment, and test lab equipment.

     The Company believes that cash from profitable operations, available
lending lines and the ability to pay for NeST development services in cash or
warrants, will provide sufficient liquidity to support its operations through
the next fiscal year. However, should operating losses re-occur which cannot be
supported, the Company would expect to implement further actions to reduce
expenses or raise additional capital to enable continued execution of its
strategy. The Company has also announced its intention to execute certain new
strategic growth initiatives, which could require additional capital to support.
There can be no assurance that such additional capital, if needed, could be
raised under acceptable terms, if at all.


                           PART II. OTHER INFORMATION

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

    (a)(1)  Exhibits
            See end of exhibit list for footnote references indicated by
            asterisks.

               *3-a.  (3.1) Restated Certificate of Incorporation of Registrant.

          ******3-b.  (3.1) Certificate of Amendment to Certificate of
                      Incorporation of Registrant

               *3-c.  (3.2) Amended By-Laws of Registrant.

               *4-a.  (4.1) Specimen of Common Stock Certificate, par value $.10
                      per share.

           *****9-a.  Voting Trust and Share Participation Agreement

             **10-a.  1991 Incentive Stock Option Plan.

            ***10-b.  Joint Development Agreement between AM Communications and
                      Scientific-Atlanta dated May 1996.

            ***10-c.  Distribution Agreement and Manufacturing License dated
                      June 14, 1996.

            ***10-d.  Registration Rights Agreement dated June 17, 1996.

            ***10-e.  Warrant Agreement dated June 17, 1996.

          *****10-f.  1999 Stock Option Plan.

          *****10-g.  Line of Credit Commitment Letter with Progress Bank dated
                      June 29, 1999.

           ****10-h.  Services Agreement between the Company and Jay Hassan.

           ****10-i.  Consulting Services Agreement between the Company and
                      NeST.

          *****10-j.  (10.1) Manufacturing Services Agreement between the
                      Company and NeSTronix.


                                       14
<PAGE>

        *******10-k.  (2) Stock Purchase Agreement between the Company, AM
                      Broadband Services, Inc., SRS Communications Corporation,
                      EDJ Communications, Inc., David P. Sylvestre, Clifford P.
                      Sylvestre, Edward L. Reynolds, Joanne Sylvestre, Donna M.
                      Sylvestre and Elizabeth D. Reynolds, dated as of September
                      7, 2001.

        *******10-l.  (4) Registration Rights Agreement dated as of October 1,
                      2001 between the Company and David P. Sylvestre, Clifford
                      P. Sylvestre, Edward L. Reynolds, Joanne Sylvestre, Donna
                      M. Sylvestre and Elizabeth D. Reynolds.


      *  Incorporated by reference to the Exhibit with the number indicated
         parenthetically in Registrant's Registration Statement on Form S-1,
         File No. 33-10163.

     **  Incorporated by reference to the Exhibit number indicated in
         Registrant's Annual Report on Form 10-K for the fiscal year ended March
         28, 1992.

    ***  Incorporated by reference to the Exhibit number indicated in
         Registrant's Annual Report on Form 10-KSB for the fiscal year ended
         March 30, 1996.

   ****  Incorporated by reference to the Exhibit number indicated in
         Registrant's Report on Form 8-K dated November 9, 1998.

  *****  Incorporated by reference to the Exhibit number indicated in
         Registrant's Annual Report on Form 10-KSB for the fiscal year ended
         April 3, 1999.

 ******  Incorporated by reference to the Exhibit number indicated in
         Registrant's Annual Report on Form 10-KSB for the fiscal year ended
         March 31, 2001.

*******  Incorporated by reference to the Exhibit number indicated in
         Registrant's Report on Form 8-K dated October 15, 2001.


     (b) The Company filed a report on Form 8-K on October 15, 2001 regarding
the acquisition of all of the issued and outstanding common stock of SRS
Communications Corporation and EDJ Communications, Inc. by its wholly-owned
subsidiary, AM Broadband Services, Inc. On October 1, 2001, AM Broadband
Services, Inc. acquired from David P. Sylvestre ("David"), Clifford P. Sylvestre
("Clifford"), Edward L. Reynolds ("Edward"), Joanne Sylvestre ("Joanne"), Donna
M. Sylvestre ("Donna") and Elizabeth D. Reynolds ("Elizabeth") (each a "Seller"
and, collectively, the "Sellers") all of the issued and outstanding capital
stock (the "Stock") of SRS Communications Corporation, a Connecticut corporation
("SRS"), and EDJ Communications, Inc., a Connecticut corporation ("EDJ")
collectively, the "Companies"). As a result of the acquisition of the Stock,
AM Broadband Services, Inc. acquired control of all of the Companies' assets,
including their respective inventory, equipment, customer lists, accounts
receivable, cash, and intangible assets.

         Immediately following the completion of the acquisition of the Stock,
AM Broadband Services, Inc. caused EDJ to be merged with and into SRS pursuant
to the applicable provisions of Connecticut law (the "Merger"). Immediately upon
the effectiveness of the Merger, EDJ ceased to exist as a separate legal entity
and SRS, as the surviving corporation, succeeded to all of EDJ's rights and
property, and became subject to all of EDJ's debts and liabilities, by operation
of law. As a result of the Merger, SRS is now the sole subsidiary of AM
Broadband Services, Inc.

                                       15
<PAGE>

         The following consideration was paid by AM Broadband Services, Inc. to
acquire the Stock:

                  (a) $1,150,000.00 in cash, to be paid by AM Broadband
Services, Inc. to the Sellers in weekly installments following the closing of
the Stock acquisition held on October 1, 2001 (the "Closing"), each in an amount
equal to that portion of the Companies' accounts receivable existing as of the
Closing which are actually collected by the Companies during the applicable
week, and continuing until the total of such installments equals $1,150,000.00.

                  (b) $3,000,000.00 in the form of a subordinated promissory
note (the "Note") delivered by AM Broadband Services, Inc. to the Sellers at the
Closing. The Note bears interest at the rate of five percent (5%) per annum. The
outstanding principal balance of the Note, and all interest accrued thereon, is
repayable in twelve (12) equal, consecutive quarterly payments, payable on the
first day of each calendar quarter, commencing on January 1, 2002. Payment of
all amounts outstanding under the Note is guaranteed by the Company.

                  (c) 9,000,000 restricted shares of Common Stock of the
Company, par value $.10 per share, were delivered by AM Broadband Services, Inc.
to the Sellers at the Closing.

         The purchase price payable by AM Broadband Services, Inc. for the
Stock, as evidenced by the Note, will be reduced on a dollar-for-dollar basis if
and to the extent that the aggregate Net Book Value of the Companies (defined as
the book value of the Companies' assets minus the book value of the Companies'
liabilities), as of the Closing, is less than $1,650,000.00. The Aggregate Net
Book Value of the Companies as of the Closing shall be determined by AM
Broadband Services, Inc. within sixty (60) days of the Closing pursuant to the
procedures set forth in the Stock Purchase Agreement entered into between AM
Broadband Services, Inc., the Company, the Companies and the Sellers dated as of
September 7, 2001 (the "Purchase Agreement").

         Simultaneously with the Closing, the Company executed an amendment to
its existing loan documents with Progress Bank (the "Bank"). Pursuant to the
terms of such amendment, the Registrant's existing credit facility was changed
as follows:

         1. AM Broadband Services, Inc. and SRS were added as co-borrowers with
the Company.

         2. The maximum availability to the Company, SRS and AM Broadband
Services, Inc. (collectively, the "Borrowers") under the line of credit facility
extended by the Bank was increased to equal the lesser of (a) $3,000,000.00, and
(b) an amount equal to (i) eighty percent (80%) of the Borrowers' qualified
accounts receivable minus (ii) fifty percent (50%) of the then outstanding
principal amount of the term loan extended by the Bank to the Borrowers at the
Closing.

         3. The maturity date of the line of credit was extended to September
30, 2002.

                                       16

<PAGE>

         4. AM Broadband Services, Inc. pledged all of the outstanding shares of
the capital stock of SRS to the Bank as security for all amounts owed by the
Borrowers to the Bank.

         5. AM Broadband Services, Inc. and SRS granted a security interest to
the Bank in all of their respective assets as security for all amounts owed by
the Borrowers to the Bank, in addition to the security interest already granted
by the Company to the Bank in all of the Company's assets.

         6. The Company pledged all of the outstanding shares of the capital
stock of AM Broadband Services, Inc. to the Bank as security for all amounts
owed by the Borrowers to the Bank.

         7. The Bank extended a term loan to the Borrowers in the principal
amount of $459,336.30 (the "Term Loan"). The proceeds of the Term Loan were
utilized by the Borrowers at the Closing to repay in full all amounts owed by
the Companies on the date of the Closing to the U.S. Small Business
Administration.








                                       17

<PAGE>



                                   SIGNATURES

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

                                          AM COMMUNICATIONS, INC.
                                               (Registrant)


Date:   November 19, 2001                 By:  /s/ H. Charles Wilson, III
       -------------------                     ---------------------------------
                                               H. Charles Wilson, III, Chief
                                               Financial Officer and Authorized
                                               Representative of the Registrant