<PAGE>


                      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 DECEMBER 30, 1995 
[ ] 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)

1900 AM Drive, Quakertown, Pennsylvania                           18951-9004
----------------------------------------                          ----------
(Address of principal executive offices)                          (Zip Code)

                                (215) 536-1354
                          ---------------------------
                          (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 February 10, 1996, there were 30,487,962  shares of the Registrant's Common 
Stock, par value $.10 per share, outstanding.


<PAGE>

                            AM COMMUNICATIONS, INC.
                                  FORM 10-QSB
                    FOR THE QUARTER ENDED DECEMBER 30, 1995

                                     INDEX
<TABLE>
<CAPTION>

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

Item 1.    Financial Statements

           Balance Sheets -- December 30 (Unaudited) and April 1, 1995                3

           Statements of Operations -- Three Month Period and Nine Month              4
           Period Ended December 30, 1995 and December 31, 1994,
           (Unaudited)

           Statements of Cash Flows -- Nine Months Ended December 30, 1995
           and December 31, 1994 (Unaudited)                                          5

           Notes to Financial Statements                                           6, 7

Item 2.    Management's Discussion and Analysis of Operation                     8 - 10



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

Item 4.    Submission of Matters to a Vote of Security Holders                       11

Item 6.    Exhibits and Reports on Form 8-K                                          11

</TABLE>

<PAGE>

Item 1.    Financial Statements
                                            AM COMMUNICATIONS, INC.
                                                BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                          December 30,         April 1,
                                                                              1995               1995
                                                                           -----------         -------- 
ASSETS                                                                     (Unaudited)
<S>                                                                     <C>                 <C>
Current Assets:
   Cash                                                                 $      245,000      $      454,000
   Accounts Receivable                                                       1,354,000             811,000
   Inventory                                                                 2,343,000           1,360,000
   Prepaid Expenses and Other                                                   54,000              42,000
   Deferred Tax Asset                                                          229,000             229,000
                                                                        --------------      --------------
      Total Current Assets                                                   4,225,000           2,896,000

Equipment and Fixtures, Net                                                    521,000             194,000
Deferred Software Development Costs, Net of
   Accumulated Amortization of $427,000 at
   December 30 and $315,000 at April 1, 1995                                   197,000             308,000
Deferred Tax Asset, Net                                                        707,000             707,000
Other                                                                           76,000              76,000
                                                                        --------------      --------------
Total Assets                                                            $    5,726,000      $    4,181,000
                                                                        --------------      --------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Current Portion of Capital Lease Obligations                         $       32,000      $         ---
   Accounts Payable                                                          1,032,000             600,000
   Advances                                                                     71,000             368,000
   Accrued and Other Expenses                                                  355,000             395,000
                                                                        --------------      --------------
      Total Current Liabilities                                              1,490,000           1,363,000

Capital Lease Obligations - Long Term                                           65,000                ---
                                                                        --------------      --------------
                                                                             1,555,000           1,363,000
                                                                        --------------      --------------
Commitments and Contingencies

Stockholders' Equity:
   Senior Convertible Redeemable Preferred Stock,
   $100 Par Value, Authorized; Issued and
   Outstanding 25,825 Shares at December 30
   and April 1, 1995                                                         2,583,000           2,583,000
Common Stock, $.10 Par Value Authorized
   40,000,000 Shares; Issued and Outstanding
   30,412,961 Shares at December 30 and
   24,564,391 Shares at April 1, 1995                                        3,041,000           2,456,000
Capital in Excess of Par                                                    30,730,000          28,682,000
Accumulated Deficit                                                        (32,183,000)        (30,903,000)
                                                                        ---------------     --------------
   Stockholders' Equity                                                      4,171,000           2,818,000
                                                                        --------------      --------------
Total Liabilities & Stockholders' Equity                                $    5,726,000      $    4,181,000
                                                                        --------------      --------------
</TABLE>

                                       See Notes to Financial Statements
<PAGE>

                                            AM COMMUNICATIONS, INC.
                                             STATEMENTS OPERATIONS
                                                  (Unaudited)
<TABLE>
<CAPTION>


                                           Three Months Ended            Nine Months Ended
                                      December 30,    December 31,   December 30,    December 31,
                                          1995            1994          1995             1994
                                      ------------    ------------   ------------    ------------
<S>                                   <C>             <C>            <C>             <C>
Revenues:
Product Sales                         $  2,042,000    $  1,469,000   $  5,352,000    $  3,427,000

Cost and Expenses:
Cost of Sales                            1,783,000         610,000      3,598,000       1,473,000
Selling, General and Administration        486,000         337,000      1,417,000         845,000
Research and Development                   530,000         266,000      1,645,000         566,000
                                      ------------    ------------   ------------    ------------

Operating (Loss) Income                   (757,000)        256,000     (1,308,000)        543,000
Other (Income) Expense                      (4,000)          2,000        (28,000)         (1,000)
                                      ------------    ------------   ------------    ------------

Income (Loss) Before Income Taxes         (753,000)        254,000     (1,280,000)        544,000
Income Tax Provision                       221,000          30,000             --          65,000
                                      ------------    ------------   ------------    ------------

Net Income (Loss)                     $   (974,000)   $    224,000   $ (1,280,000)   $    479,000
                                      ============    ============   ============    ============

Earnings Per Weighted Average
Common & Common Equivalent Share      $      (0.03)   $       0.01   $      (0.04)   $       0.02
                                      ============    ============   ============    ============

Weighted Average Common & Common
Equivalent Shares Outstanding Used
in Computing Earnings Per Share         33,290,000      32,699,000     32,774,000      32,699,000
                                      ============    ============   ============    ============


</TABLE>



                                       See Notes to Financial Statements
<PAGE>

                            AM COMMUNICATIONS, INC.
                           STATEMENTS OF CASH FLOWS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                           Nine Months Ended
                                                      --------------------------
                                                       December 30  December 31,
                                                           1995         1994
                                                      ------------  ------------
<S>                                                   <C>             <C>
Cash Flows from Operating Activities:
   Net Income (Loss)                                  $(1,280,000)   $   479,000
   Adjustments to Reconcile Net Income (Loss) to
   Net Cash Used in Operating Activities:
     Depreciation and Amortization                        250,000        146,000
     Changes in Assets and Liabilities Which
     Provided (Used) Cash:
       Accounts Receivable                               (543,000)       218,000
       Inventory                                         (983,000)      (645,000)
       Prepaid Insurance and Other                        (12,000)        (3,000)
       Accounts Payable                                   432,000        225,000
       Advances                                          (297,000)        17,000
       Accrued and Other Expenses                         (40,000)        10,000
                                                      -----------    -----------
Net Cash Provided By (Used In) Operating
Activities                                             (2,473,000)       447,000

Cash Flows From Investing Activities:
   Purchase of Equipment and Intangible Assets           (466,000)       (58,000)
   Deferred Software Development Costs                       --         (155,000)
                                                      -----------    -----------
Net Cash Provided by (Used In) Investing Activities      (466,000)      (213,000)

Cash Flows from Financing Activities:
   Proceeds from Issuance of Short Term Debt                 --          200,000
   Repayments of Short Term Debt                             --         (100,000)
   Exercise of Warrants and Stock Options               2,633,000           --
   Capital Lease Obligations                              103,000           --
   Payments Under Capital Lease Obligations                (6,000)          --
                                                      -----------    -----------
Net Cash Provided By (Used In) Financing Activities     2,730,000        100,000

Net Increase (Decrease) In Cash                          (209,000)       334,000
Cash:
   Beginning                                              454,000        190,000
                                                      -----------    -----------

   Ending                                             $   245,000    $   524,000
                                                      ===========    ===========
</TABLE>


                       See Notes to Financial Statements



<PAGE>


                            AM COMMUNICATIONS, INC.
                   NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                  As of December 30, 1995 and for the 39 Week
             Periods Ended December 30, 1995 and December 31, 1994


1. The accompanying interim financial statements should be read in conjunction
with the annual financial statements and notes thereto included in AM
Communications, Inc.'s Annual Report. The Balance Sheet as of December 30,
1995 and the related Statements of Operations and Statements of Cash Flows for
the quarters and nine months ended December 30, 1995 and December 31, 1994 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.
<TABLE>
<CAPTION>
                                                           December 30,            April 1,
                                                               1995                 1995
                                                          -------------         -------------
                                                           (Unaudited)
<S>                                                       <C>                   <C> 
2.   Inventory Comprises:

       Raw Material                                       $   2,319,000         $   1,572,000
       Work in Process                                        1,121,000               610,000
       Finished Goods                                           194,000               169,000
                                                          -------------         -------------
         Sub-total                                            3,634,000             2,351,000
       Less Reserves                                         (1,291,000)             (991,000)
                                                          -------------         -------------
         Net Inventory                                    $   2,343,000         $   1,360,000
                                                          -------------         -------------

3.   Accrued Expenses Comprise:

       Accrued Compensation                               $     133,000         $     192,000
       Commissions                                                --                    3,000
       Accrued Professional Fees                                 35,000                31,000
       Warranty Reserve                                          25,000                20,000
       Other                                                    162,000               149,000
                                                          -------------         -------------
                                                          $     355,000         $     395,000
                                                          =============         =============
</TABLE>

<PAGE>

4.   Income Taxes:

     Effective April 4, 1993, the Company adopted the Statement of Financial 
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes".

     The provision for taxes on income consisted of:

                                               Nine Months Ended
                                           December 30, December 31,
                                               1995        1994
                                            ---------    ---------

            Current Income Taxes            $    --      $  65,000
            Deferred Income Taxes            (520,000)     163,000
            Change in Valuation Allowance     520,000     (163,000)
                                            ---------    ---------
            Net                             $    --      $  65,000
                                            =========    =========

     A reconciliation between the provision 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:
                                                        Nine Months Ended
                                                    December 30, December 31,
                                                        1995         1994
                                                     ---------    ---------

   Federal Income Tax Provision at Statutory Rate    $(435,000)   $ 163,000
   State Income Taxes                                  (85,000)      65,000
   Utilization of Net Operating Loss Carryforwards        --       (163,000)
   Change in Valuation Allowance                       520,000         --
                                                     ---------    ---------
   Provision for Income Taxes                        $    --      $  65,000
                                                     =========    =========
     The components of the net deferred tax asset were as follows:

                                              December 30,      April 1,
                                                  1995            1995
                                              -----------    -----------
      Deferred Tax Items:
           Inventory                          $   538,000    $   416,000
           Accrued Vacation                        27,000         27,000
           Net Operating Loss Carryforwards     5,986,000      5,588,000
           Tax Credit Carryforwards               521,000        521,000
           Valuation Allowance                 (6,136,000)    (5,616,000)
                                              -----------    -----------
      Net Deferred Tax Asset                  $   936,000    $   936,000
                                              ===========    ===========

     During fiscal 1995, the Company recorded a deferred tax asset in
accordance with FAS No. 109 to recognize a portion of the future income tax
benefits available.

     The Company has total net operating loss carryforwards available to
offset future taxable income of $25.6 million expiring at various times from
1999 through 2008. Due to certain statutory limitations under Internal Revenue
Code Section 382, only $17.9 million of such carryforwards are available at
December 30, 1995. The remaining carryforwards of $7.7 million will become
available ratably over the carryforward period.
<PAGE>

Item 2.     Management's Discussion and Analysis of Operation

Results of Operations

     Revenues increased 39% to $2,042,000 in the third quarter of fiscal 1996
from $1,469,000 in the third quarter of fiscal 1995. For the first nine months
of fiscal 1996 revenues increased 56% to $5,352,000 from $3,427,000 for the
same period in fiscal 1995. These increases resulted primarily from shipments
to AT&T, a major OEM customer, which comprised 75% of revenues for the third
quarter and 54% for the nine months ended December 30, 1995, respectively.

     Backlog at February 10, 1996 totaled $4.9 million compared to $2.6
million at February 11, 1995.

Cost of Sales
     Cost of sales represented 87.3% of revenues for the third quarter of
fiscal 1996 compared to 41.5% in the comparable prior year quarter. Cost of
sales represented 67.2% of revenues for the first nine months of fiscal 1996
compared to 43% in the same period in fiscal 1995. Cost of sales is dependent
on product mix and customer mix, with sales to OEM customers generally having
a lower profit margin.

     The increases in cost of sales as a percentage of revenues is due to the
increase in new OEM business which has a lower profit margin, higher
manufacturing costs associated in transitioning new products to volume
production, and a $300,000 addition to the inventory reserve during the third
quarter of fiscal 1996. As product demand has expanded, the Company has
experienced manufacturing delays due to technical and manufacturing process
issues in transitioning new products from engineering to volume manufacturing.
As a result, manufacturing costs have increased due to excessive yield losses,
product rework, capacity limitations, and expediting costs. The Company has
responded to this by redesign of certain products to reduce costs and improve
yields, evaluation and qualification of new contract assemblers and
restructuring of the management of the manufacturing function.

     Development costs charged to cost of sales were $11,000 and $20,000 for
the third quarter of fiscal 1996 and 1995, respectively, and $61,000 and
$203,000 for the first nine month periods in fiscal 1996 and 1995,
respectively. Development funds paid by customers and included in revenues
totaled $253,000 and $34,000 for the third quarter periods, and $418,000 and
$209,000 for the first nine month periods in fiscal 1996 and 1995,
respectively.

Selling, General and Administrative
     Selling, general and administrative (S,G&A) expenses were $486,000 for
the third quarter of fiscal 1996, up 44% from the $337,000 in the comparable
prior year period. S,G&A expenses increased 68% in the comparable nine month
periods. Expenses increased due to increased marketing and sales efforts
including hiring of direct sales managers, expanded promotional efforts and
expansion of sales activities into the Far East and other international
markets. Administrative costs increased in response to increased business
levels, including staff additions and the establishment of a quality
department.
<PAGE>

Research and Development
     Research and development expenses primarily consist of salaries for
research and development personnel and associated personnel benefits, tooling
and supplies for research and development activities. Research and development
expenses increased $264,000 or 100% in the quarter ended December 30, 1995
compared to the third quarter of fiscal 1995. For the nine months ended
December 30, 1995, research and development expenses increased $1,079,000, or
191% over the comparable period in fiscal 1995. These increases are due to
expansion of the development staff including additional hardware and software
engineers. The Company has expanded its development efforts in response to
customer and OEM interest in status monitoring products and to support the
development of the OmniVU monitoring software, which is currently in Beta
testing. The Company evaluates its software development efforts and determines
if capitalization of such development costs are required under FAS No. 2.
During the three months and nine months ended December 31, 1994, the Company
capitalized $53,000 and $158,000 of development costs, respectively. The
Company's development efforts during fiscal 1996 were expensed. The Company
expects that research and development expense will continue to increase but at
a substantially slower rate than during the past several quarters.

Operating Loss
       The Company incurred pre-tax operating losses of $757,000 and
$1,308,000 for the three months and nine months ended December 30, 1995. This
was due primarily to significantly higher levels of investment in research and
development and selling activities and lower gross profit margins due to the
increase in OEM level business and manufacturing inefficiencies. During fiscal
1996, the Company has made a strategic decision to aggressively respond to new
customer driven activities as market interest for the Company's products has
expanded. The Company's actions in addressing the manufacturing issues are
focused at improving operating results and achieving profitability. The
Company will be reviewing alternative actions to improve operating results
should the manufacturing actions not be sufficient.

Income Taxes
     During fiscal 1995, the Company recorded a portion of its future
available income tax benefits as a deferred tax asset. The Company recorded
additional income tax benefits in the second quarter and first six months of
fiscal 1996 based on estimated earnings for the 1996 fiscal year and an
estimated annual 42% effective tax rate. During the third quarter ended
December 30, 1995, the Company estimated its fiscal year operating results and
determined that the interim income tax benefits recorded in the prior two
quarters of fiscal 1996 totaling $221,000 would not be realized during the
remainder of fiscal 1996. Accordingly, the Company reversed $221,000 of tax
benefit in the third quarter ended December 30, 1995.

Industry Factors
     The cable and broadband communications industry is undergoing significant
change as cable television (CATV) operators begin to respond to the
competitive threat of telephone companies (telcos) entering the cable video
services market. This has resulted in CATV operators planning to expand and
upgrade their distribution infrastructures and telcos planning to construct
new distribution systems capable of providing telephone and video services.
There continues to be many unresolved issues and uncertainties impacting this
convergence of CATV and telecommunications industries including governmental
regulations, competing distribution technologies, significant capital costs
and others.
<PAGE>

     Demand for the Company's status monitoring systems has increased as
monitoring of newer advanced distribution systems has become an important
factor in increasing the reliability of the services provided by the service
provider. The Company believes it is positioned favorably to take advantage of
opportunities in the evolving "information superhighway", however, any
increased demand for the Company's products related to this changing
environment is currently unknown.

     In addition, the Company's operations are subject to the timing and
success of new product introductions and the scheduling of orders by
customers. Due to the effects of these factors on future operations, past
performance is a limited indicator in assessing potential future performance
and such factors could impact the trading price of the Company's common stock.

Financial Condition and Liquidity
     Cash used in operating activities totaled $2,473,000 during the first
nine months of fiscal 1996 compared to cash generated from operations of
$447,000 in the comparable prior year period. The primary use of cash was to
fund increases in inventory in response to increased order levels and to
enable the Company to improve manufacturing lead times by purchasing long lead
time items for inventory. The Company expects its inventory position to
decline as manufacturing delays impacting product shipments are resolved.

     During the third quarter ended December 30, 1995, the Company determined
that the inventory supply of certain material components purchased in advance
of orders exceeded future estimates of demand. As a result, the Company
increased its reserves for inventory obsolescence by $300,000 in the third
quarter ended December 30, 1995.

     Accounts receivable has increased to $1,354,000 during the first nine
months of fiscal 1996 in response to increased sales levels.

     During April 1995, warrants to purchase a total of 5,848,470 shares of
common stock were exercised at $.45 per share with cash proceeds totaling
$1,781,009 (of which $351,473 was received in fiscal 1995 and reflected as an
advance pending exercise in April 1995) and an interest bearing $850,803 note
receivable provided by the majority shareholder due, June 30, 1995. The note
receivable was paid on the due date.

     The Company's $500,000 bank line of credit available for working capital
and other cash needs expired on July 31, 1995. The Company is focusing its
efforts on eliminating operating losses and achieving profitability. Recent
and ongoing changes in manufacturing are targeted to improve the Company's
ability to increase shipment levels and improve gross margins such that
breakeven levels and profitability are achieved.

     The Company believes that its existing sources of liquidity, including
available cash and projected future cash flows from operations based on
achieving profitable financial results, the net operating loss tax
carryforward, and improved inventory management will be sufficient to support
its planned operations. Should the Company continue to generate operating
losses, it may have to seek alternative sources of cash.
<PAGE>


                          PART II. OTHER INFORMATION

Item 4.     Submission of Matters to a Vote of Security Holders

    (a)     Registrant's Annual Meeting of Stockholders was held on 
            October 16, 1995.

    (b)     Directors elected at the Annual Meeting:
                Henry I. Boreen
                Keith D. Schneck
                Herman O. Benninghoff
                Alvin Hoffman
                Hal Krisbergh


Item 6.     Exhibits and Reports on Form 8-K

     (b) No reports on Form 8-K have been filed for the period covered by this
report.


                                  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:     February 13, 1996          By: /s/ Keith D. Schneck
       --------------------              -------------------------------------
                                         Keith D. Schneck
                                         President and Chief Financial Officer