<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 DECEMBER 30, 2000
[ ] 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, Pennsylvania            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 February 7, 2001, there were 42,151,051 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 DECEMBER 30, 2000

                                      INDEX

<TABLE>
<CAPTION>

PART I.    FINANCIAL INFORMATION                                                            PAGE NO.
--------------------------------                                                            --------
<S>        <C>                                                                               <C>
Item 1.    Financial Statements

           Balance Sheets - December 30, 2000 (Unaudited) and April 1, 2000                   3

           Statements of Operations -- Three Month Periods and Nine Month                     4
           Periods Ended December 30, 2000 and January 1, 2000
           (Unaudited)

           Statements of Cash Flows -- Nine Month Periods Ended December 30,
           2000 and January 1, 2000 (Unaudited)                                               5

           Notes to Financial Statements                                                      6 - 7

Item 2.    Management's Discussion and Analysis of Operations                                 7 - 13



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

Item 4.    Submission of Matters to a Vote of Security Holders                                14

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

</TABLE>








                                       2





<PAGE>

Item 1.    Financial Statements

                             AM COMMUNICATIONS, INC.
                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                         December 30,          April 1,
                                                                             2000                2000
                                                                        --------------      --------------
                                                                          (Unaudited)
<S>                                                                     <C>                <C>
ASSETS
Current Assets:
   Cash                                                                 $       14,000      $       79,000
   Accounts Receivable, Net of Reserves of $199,000 at
      December 30, 2000 and April 1, 2000                                    2,620,000           2,439,000
   Due from Affiliates                                                         159,000              52,000
   Inventory                                                                 2,341,000           1,694,000
   Prepaid Expenses and Other                                                  153,000              79,000
                                                                        --------------      --------------
      Total Current Assets                                                   5,287,000           4,343,000

   Equipment and Fixtures, Net                                                 227,000             216,000
   Other Assets                                                                  9,000              16,000
                                                                        --------------      --------------
   Total Assets                                                         $    5,523,000      $    4,575,000
                                                                        ==============      ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Current Portion of Capital Lease Obligations                         $        2,000      $        2,000
   Current Portion of Notes Payable                                             53,000              30,000
   Bank Line of Credit                                                       1,000,000             750,000
   Accounts Payable                                                          1,716,000           1,650,000
   Deferred Revenue                                                            102,000             126,000
   Accrued Expenses                                                            925,000           1,149,000
                                                                        --------------      --------------
      Total Current Liabilities                                              3,798,000           3,707,000
                                                                        --------------      --------------
Capital Lease Obligations - Long Term                                            2,000               3,000
Notes Payable - Long Term                                                       67,000              90,000
Senior Convertible Redeemable Preferred Stock,
   $100 Par Value, Authorized 1,000,000 Shares; Issued
   and Outstanding 19,825 Shares at December 30, 2000 and
   25,825 at April 1, 2000                                                   1,983,000           2,583,000
                                                                        --------------      --------------
Commitments and Contingencies
Stockholders' Equity:
Common Stock, $.10 Par Value, Authorized 100,000,000
   Shares at December 30, 2000 and April 1, 2000; Issued
   and Outstanding 35,288,717 Shares at December 30, 2000
   and 33,335,090 at April 1, 2000                                           3,530,000           3,333,000
Capital in Excess of Par                                                    33,872,000          33,288,000
Accumulated Deficit                                                        (37,729,000)        (38,429,000)
                                                                        --------------      --------------
   Stockholders' Equity (Deficit)                                             (327,000)         (1,808,000)
                                                                        --------------      --------------
Total Liabilities and Stockholders' Equity                              $    5,523,000      $    4,575,000
                                                                        ===============     ==============

</TABLE>
                See Notes to Financial Statements

                                       3
<PAGE>



                             AM COMMUNICATIONS, INC.
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     Three Months Ended                    Nine Months Ended
                                                -----------------------------       ------------------------------
                                                 December 30,    January 1,         December 30,        January 1,
                                                     2000           2000                 2000              2000
                                                ------------    -------------       ------------     -------------
<S>                                              <C>             <C>                <C>              <C>
Revenues                                         $3,574,000      $  2,669,000       $11,195,000      $   6,838,000

Cost and Expenses:
   Cost of Sales                                  1,725,000         1,610,000         5,482,000          3,642,000
   Selling, General and Administrative              774,000           675,000         2,298,000          1,946,000
   Research and Development                         891,000           763,000         2,618,000          2,441,000
                                                 ----------      ------------       -----------      -------------
Operating Income (Loss)                             184,000          (379,000)          797,000         (1,191,000)
Other Expense                                       (34,000)          (22,000)          (97,000)           (57,000)
                                                 ----------      ------------       -----------      -------------
Income (Loss) Before Income Taxes                   150,000          (401,000)          700,000         (1,248,000)
                                                 ----------      ------------       -----------      -------------
Net Income (Loss)                                $  150,000      $   (401,000)      $   700,000      $  (1,248,000)
                                                 ==========      ============       ===========      =============
Basic Net Income (Loss) Per Share                $      NIL      $      (0.01)      $      0.02      $       (0.04)
                                                 ==========      ============       ===========      =============
Diluted Net Income (Loss) Per Share              $      NIL      $      (0.01)      $      0.01      $       (0.04)
                                                 ==========      ============       ===========      =============
Shares Used in Computation of Basic
 Net Income (Loss) Per Share                     34,021,000        32,367,000        33,611,000         31,948,000
                                                 ==========      ============       ===========      =============
Shares Used in Computation of
 Diluted Net Income (Loss) Per Share             53,619,000        32,367,000        52,962,000         31,948,000
                                                 ==========      ============       ===========      =============

</TABLE>

                        See Notes to Financial Statements

                                       4


<PAGE>


                             AM COMMUNICATIONS, INC.
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                             Nine Months Ended
                                                                    -------------------------------------
                                                                       December 30,         January 1,
                                                                            2000              2000
                                                                    ----------------    -----------------
<S>                                                                    <C>                <C>
Cash Flows from Operating Activities:
   Net Income (Loss)                                                   $ 700,000          $ (1,248,000)
   Adjustments to Reconcile Net Income (Loss) to
   Net Cash Provided by (Used in) Operating Activities:
     Warrants Issued to NeST for Services                                    ---             1,157,000
     Depreciation and Amortization                                       130,000               228,000
     Changes in Assets and Liabilities Which
     Provided (Used) Cash:
       Accounts Receivable                                              (181,000)             (780,000)
       Due from Affiliates                                              (107,000)             (184,000)
       Inventory                                                        (647,000)              (16,000)
       Prepaid Expenses and Other                                        (73,000)              (67,000)
       Accounts Payable                                                   66,000               307,000
       Deferred Revenue                                                  (24,000)              151,000
       Accrued and Other Expenses                                       (224,000)              161,000
                                                                       ---------          ------------
Net Cash Used In Operating Activities                                   (360,000)             (291,000)

Cash Flows Used In Investing Activities:
   Purchase of Equipment and Intangible Assets                          (135,000)              (49,000)
                                                                       ---------          ------------
Net Cash Used In Investing Activities                                   (135,000)              (49,000)

Cash Flows From (Used In) Financing Activities:
   Proceeds from Borrowings Under Bank Line of Credit                    250,000               125,000
   Exercise of Stock Options                                             181,000               197,000
   Issuance of Warrants                                                      ---                36,000
   Payments Under Capital Lease Obligations                               (1,000)              (36,000)
                                                                       ---------          ------------
Net Cash Provided By Financing Activities                                430,000               322,000

Net Decrease In Cash                                                     (65,000)              (18,000)
Cash:
   Beginning                                                              79,000                24,000
                                                                       ---------          ------------
   Ending                                                              $  14,000          $      6,000
                                                                       =========          ============
Interest Paid                                                          $  92,000          $     59,000
                                                                       =========          ============
Income Taxes Paid                                                      $     ---          $      2,000
                                                                       =========          ============
Non-Cash Financing Activities:
   Equipment Purchased Under Capital Lease                             $     ---          $      6,000
                                                                       =========          ============

</TABLE>

                        See Notes to Financial Statements

                                       5

<PAGE>



                             AM COMMUNICATIONS, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
            As of December 30, 2000 and for the 39 Week Periods Ended
                      December 30, 2000 and January 1, 2000


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 for the fiscal year ended April 1,
     2000. The Balance Sheet as of December 30, 2000 and the related Statements
     of Operations and Statements of Cash Flows for the quarters and nine months
     ended December 30, 2000 and January 1, 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.

                                            December 30,            April 1,
                                                2000                  2000
                                           --------------        --------------
                                             (Unaudited)
2.   Inventory Comprises:
       Raw Material                        $    2,727,000        $    1,805,000
       Work in Process                            912,000             1,167,000
       Finished Goods                             190,000               110,000
                                           --------------        --------------
                                                3,829,000             3,082,000
       Inventory Reserves                      (1,488,000)           (1,388,000)
                                           --------------        --------------
       Net Inventory                       $    2,341,000        $    1,694,000
                                           ==============        ==============

3.   Accrued Expenses Comprise:
       Accrued Compensation                $      363,000        $      302,000
       Accrued Contracted R&D                      27,000               196,000
       Accrued Trade Show Costs                    10,000                44,000
       Accrued Rent                               116,000               160,000
       Accrued Real Estate Taxes                   32,000                93,000
       Warranty Reserve                           203,000               203,000
       Accrued Income Taxes                           ---                   ---
       Accrued Professional Fees                   34,000                71,000
       Other                                      140,000                80,000
                                           --------------        --------------
                                           $      925,000        $    1,149,000
                                           ==============        ==============

4.   Income Taxes:

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


                                       6
<PAGE>


5.   Equity Transactions:
     On October 30, 2000, the Company's majority shareholder exercised the
right to convert 6,000 shares of senior convertible preferred stock into
800,000 shares of the Company's common stock.

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>
                                               Three Months Ended                   Nine Months Ended
                                        December 30,          January 1,     December 30,         January 1,
                                            2000                 2000            2000                2000
                                        ------------       --------------  ----------------    ---------------
<S>                                     <C>                <C>               <C>               <C>
Net Income (Loss)                       $    150,000       $    (401,000)    $     700,000     $   (1,248,000)
Basic Weighted Shares
  Outstanding                             34,021,000          32,367,000        33,611,000         31,948,000
Convertible Preferred Stock,
  Warrants and Dilutive Options           19,598,000                 ---        19,351,000                ---
                                        ------------       -------------     ---------------   --------------
Diluted Shares                            53,619,000          32,367,000        52,962,000         31,948,000
Net Income (Loss) Per Common
  Share
   Basic                                         Nil               (0.01)             0.02              (0.04)
   Diluted                                       Nil               (0.01)             0.01              (0.04)
</TABLE>

     In fiscal 2000, convertible preferred stock, warrants, and options to
purchase common stock were not included in the computation of diluted EPS
because they would be anti-dilutive 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 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. Those factors which specifically relate to the Company's business
include: a history of operating losses including a significant reduction in
revenue in fiscal 1999, rapid technological change along with the need to
continually develop new products and gain customer acceptance, dependence on a
relatively small total available market size, competition, dependence on key
employees, dependence on a small number of large customers, whose demand for
Company products are subject to substantial changes from year to year, and
dependence on certain suppliers and reliance on NeST related operations for
engineering and manufacturing services.

     The following discussion should be read in conjunction with the Company's
Form 10-KSB for its 2000 fiscal year ended April 1, 2000.

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

                                       7

<PAGE>

as Chairman and the execution of a strategic development and manufacturing
relationship with NeST (as defined below). Pursuant to this relationship, 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, Inc. and NeSTronix, Inc. which are U.S. based technology service
providers that provide engineering development services and turn-key
manufacturing services, primarily through the use of technology staff resources
and electronic manufacturing operations located in India and controlled by Mr.
Hassan's brother, N. Jehangir. Collectively, these operations are referred to as
"NeST" resources.

     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 of
common stock, hold a stock option to purchase 4,000,000 shares of common stock
at $.15 per share, and hold warrants to purchase 7,862,334 shares of common
stock at $.01 per share. Subsequent to December 30, 2000, the NeST related
companies exercised the warrants to purchase 7,862,334 shares of common stock.

     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 the second half of fiscal 2000 and continuing into fiscal 2001, the
Company experienced significant improvements in its operations as revenue levels
increased due to the improved product set and expanded marketing activities.
Gross profit margins also improved due to the transition to the NeST-based
manufacturing strategy and operating costs decreased due to more efficient
development spending through the use of India-based NeST 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.

     On October 25, 2000, 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 this 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.

     On October 31, 2000, the Company announced a new strategic business unit,
which will be a joint venture with NeST Technologies, Inc., to provide
integration of the "back office" software systems used by broadband network
service providers. This unit's products and services will be marketed as "AM
Broadband Systems". The new business unit will develop a "toolkit" of
intelligence-based software products that can be used to provide rapid and
efficient systems integration that is customized for each provider's
requirements. Under the terms of the relationship, all revenue and expenses will
be reported on the Company's books with NeST providing engineering manpower from
its pool of over 400 software developers and the Company providing sales and
marketing services. No revenues were earned or expenses incurred for the quarter
ending December 30, 2000.

Results of Operations
Quarter 3 Fiscal 2001 vs. 2000
                                               Quarter 3            Quarter 3
                                                 2001                  2000
                                               ---------            ---------
Revenues                                         100.0%               100.0%

Cost of Sales                                     48.3                 60.3
Selling, General and Administrative               21.7                 25.3
Research and Development                          24.9                 28.6
                                                 -----                -----
Operating Income (Loss)                            5.1                (14.2)
Other Income (Expense)                             (.9)                 (.8)
                                                 -----                -----
Income (Loss) Before Income Taxes                  4.2                (15.0)
Income Tax Provision                                --                   --
                                                 -----                -----
Net Income (Loss)                                  4.2%               (15.0)%
                                                 =====                =====

Revenues
     Revenues were $3.6 million and $11.2 million for the third quarter and
first nine months of fiscal 2001 ended December 30, 2000, representing increases
of 34% and 64%, respectively, compared to the prior year periods. The increase
in revenues is due to expanding revenues from sales of the Company's products to
both existing and new customers. During the second half of fiscal 2000 and
continuing into fiscal 2001, the Company's revenues showed growth due to market
acceptance of the Company's new products and increased marketing and selling
activities by the Company. The Company is experiencing the benefit of its new
Omni2000 software platform introduced during fiscal 2000 and continued strong
sales to its OEM and MSO channels.

                                       8
<PAGE>

     OEM revenues were 69% and 72% of total revenues in the third quarter and
first nine months of fiscal 2001, respectively compared to 70% and 30% in the
comparable periods in fiscal 2000. The Company maintains key strategic OEM
relationships with General Instrument, 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. Two OEMs
contributed 53% and 54% of total revenues for the third quarter and first nine
months of fiscal 2001, respectively, compared to 65% and 60% in the comparable
periods in fiscal 2000. As the purchase of the Company's products generally is
associated with a customer's capital upgrade or expansion program, contribution
levels of individual customers can be subject to wide fluctuations.

     Backlog was $4.1 million at December 30, 2000 compared to $3.9 million a
year ago, but has declined to $ 3.7 million as of February 2, 2001. The drop in
backlog since December 30, 2000 is due to a slowdown in OEM bookings during the
first several weeks of January 2001, which is considered to be a seasonally slow
period. While the Company has identified several new customers and revenue
segments, revenue growth could be tempered due to general economic conditions
and other factors which could limit customers' rollout of new services and
purchase of AM products.

     Development and software revenues totaled $511,000 and $1.5 million in the
third quarter and first nine months of fiscal 2001, respectively, compared to
$339,000 and $960,000 in the third quarter and first nine months of fiscal 2000,
respectively. Development revenues primarily relate to OEM development efforts
which 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. All
software development costs are charged to research and development when
incurred. The increase in these revenues is primarily due to the introduction of
the Company's new Omni2000 software platform.

Cost of Sales
     Cost of sales includes all manufacturing costs of the Company's hardware
products. Cost of sales represented 48.3% of revenues in the third quarter of
fiscal 2001 compared to 60.3% in the third quarter of fiscal 2000 and 49.0% and
53.2% in the first nine months of fiscal 2001 and 2000, respectively. The
decrease in the cost of sales percentage for the third quarter of fiscal 2001
and first nine months of fiscal 2001 is primarily due to the Company's strategy
of outsourcing manufacturing to NeSTronix, Inc., which commenced on January 2,
2000. Additionally, the Company's margins are generally dependent on product mix
and customer mix, with sales to OEM customers generally having a lower profit
margin.

                                       9
<PAGE>

Selling, General and Administrative
     Selling, general and administrative (S,G & A) expenses were $774,000 and
$675,000 in the third quarter of fiscal 2001 and fiscal 2000, respectively, and
$2.3 million and $1.9 million for the first nine months of fiscal 2001 and 2000,
respectively. S,G & A expenses increased as the Company has added to its direct
sales and application engineering staff to support the Company's new product
introductions and expanded selling efforts. The Company expects S,G & A expenses
to continue to increase to support the expanded revenue base.

Research and Development
     Research and development expense totaled approximately $891,000 and $2.6
million in the third quarter and first nine months of fiscal 2001 compared to
$763,000 and $2.4 million reported in the comparable periods a year ago. The
Company was previously limited in its access to development resources and this
negatively impacted its competitive position. As a result of the NeST
partnership announced in November 1998, the Company has significantly increased
the number of engineering staff members working on Company projects and began
releasing new products in the second quarter of fiscal 2000, including its new
Omni2000 software platform, Omni2000 Ingress Management System, a new lower cost
master control unit, and several new transponders. The Company expects research
and development spending to continue to increase during the remainder of fiscal
2001 to support increased customer demand for more advanced systems and
software.

     The Company has the option of paying for development services provided by
NeST in cash or warrants to purchase shares of the Company's stock. NeST
expenses incurred during the third quarter and first nine months of fiscal 2001
were $554,000 and $1.6 million, respectively, and are being paid in cash. NeST
expenses incurred during the third quarter and first nine months of fiscal 2000
were $411,000 and $1.2 million, respectively, and were paid by the issuance of
warrants to purchase 1,139,068 shares and 3,628,316 shares, respectively, of the
Company's Common Stock. The warrants are exercisable at $0.01 per share, subject
to the application of certain anti-dilution provisions set forth in the
warrants, on or before April 3, 2004.

Operating Income (Loss)
     The Company reported operating income of $150,000 and $700,000 for the
third quarter and first nine months of fiscal 2001, respectively, compared to
operating losses of $401,000 and $1,248,000 for the third quarter and first nine
months of fiscal 2000, respectively. The transition by the Company from an
operating loss to operating profit is the result of increasing revenues and a
reduction in operating costs, including product costs and research and
development, as a percentage of revenues. This reduction in operating costs is
primarily attributable to the cost savings achieved from the Company's strategic
relationship with NeST.

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.

                                       10
<PAGE>


     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 will allow the Company to become
more responsive to market requirements.

Liquidity and Capital Resources
     In the first nine months of fiscal 2001, the Company consumed net cash of
$65,000 compared to consuming net cash of $18,000 in the first nine months of
fiscal 2000. The Company financed its operating loss in the first nine months of
fiscal 2000 primarily through a reduction in accounts receivable, an increase in
accrued expenses, borrowings under its line of credit, issuance of warrants to
NeST for development services, and proceeds from the exercise of stock options.

     While the Company operated at a profit for the first nine months of fiscal
2001, the Company consumed greater net cash compared to the prior year primarily
due to the payment of NeST services in cash, which commenced in January 2000.
Prior to this, NeST development services were paid through the issuance of
warrants by the Company. Additionally, the Company also consumed cash in
increasing the inventory level of long lead time components in an effort to
reduce production cycle times.

     The Company's line of credit is limited to $1,000,000 which was fully
borrowed and outstanding at December 30, 2000. 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 to secure amounts
outstanding under the line of credit and interest is payable at 2% above prime.
As a result of the losses incurred for fiscal 2000, the Company was in technical
default on several financial covenants under the line of credit agreement. In
July 2000, the Company received a waiver of the default from the bank as well as
an extension of the line through July 31, 2001. Subsequent to December 30, 2000,
the Company negotiated an increase in availability under the bank line of credit
to $1.25 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
($.01 exercise price) to purchase 4,234,018 shares of the Company's common stock
in payment of $670,000 of NeST development services for the period from November
1998 through March 1999 and issued warrants to purchase 3,628,316 shares of the
Company's common stock in payment of $1,157,197 of NeST development services for
the period from April 1999 through December 1999. In addition, a total of
$569,083 of NeST development expenses were incurred during fiscal 2000 of which
$299,042 was paid in cash and $270,041 is reflected as a liability on the
Company's balance sheet as of April 1, 2000. As a result of improved operations,
the Company has been paying 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 Development Agreement.

                                       11
<PAGE>


     The Company's restructuring actions taken during fiscal 1999 and 2000
reduced operating cash expenses as a percentage of revenues. The Company expects
to continue to utilize the NeST technology resources in India and NeSTronix for
core development and manufacturing efforts and the finance and administrative
group within the Company will continue to provide ongoing support services to
NeST-based businesses, all of which are expected to continue to allow the
Company to improve its operating cost structure. The Company began experiencing
positive results from this strategy during fiscal 2000.

     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 would require additional capital to support.
There can be no assurance that additional capital could be raised under
acceptable terms, if at all.

      On October 30, 2000, the Company's majority shareholder exercised the
right to convert 6,000 shares of senior convertible preferred stock into 800,000
shares of the Company's common stock.

      Subsequent to December 30, 2000, the NeST related companies exercised
their warrants to purchase 7,862,334 shares of the Company's common stock at an
exercise price of .01 per share.

      Capital expenditures totaled $135,000 in the first nine months of fiscal
2001 and $55,000 in the first nine months of fiscal 2000 which included
computers, manufacturing assembly and test equipment, and facility related
improvements and fixtures.

Impact of the Year 2000 Issue
     The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruption of operations, including among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.

     The Company believes that it has minimal exposure to contingencies related
to the Year 2000 Issue for the products it has sold.

                                       12

<PAGE>

     The Company determined that its internal reporting system would not
properly utilize dates beyond December 31, 1999. A replacement software system
was installed and has been fully operational since July 10, 2000. The cost of
this project was $200,000.

     The Company has undertaken a review of all internal systems and products
and has replaced or modified any non-compliant software and hardware with new
compliant systems. As a result, the Company believes that it has minimal
exposure to contingencies related to the Year 2000 Issue for the products it has
sold and its financial and accounting systems. The Company has expended
approximately $10,000 in external costs to date on such efforts and believes any
additional amounts in the future to be minimal.





                                       13
<PAGE>

                           PART II. OTHER INFORMATION
<TABLE>
<CAPTION>

Item 4.  Submission of Matters to a Vote of Security Holders
<S>          <C>
     (a) Registrant's Annual Meeting of Stockholders was held on November 10, 2000.

     (b) Directors elected at the Annual Meeting:

                                                      Number of Votes
                                            For         Against     Abstain
                 ----------------------------------------------------------
                 R. Barry Borden         22,286,080          0       20,269
                 Jill A. Felix           22,285,980        100       20,269
                 Javad K. Hassan         22,286,080          0       20,269
                 Alvin Hoffman           22,285,980        100       20,269
                 Keith D. Schneck        22,224,015     62,065       20,269
                 Lemuel A. Tarshis       22,286,080          0       20,269

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.  (3.2) Amended By-Laws of Registrant.

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

            ****4-b.  Warrant issued to NeST.

            ****9-a.  Voting Trust and Share Participation Agreement (Exhibit 9.1)

             **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.  Manufacturing Services Agreement between the Company and NeSTronix.

                 27.  Financial Data Schedule

                   *  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 Annual Report on 10-KSB for the fiscal
                      year ended April 3, 1999.

               *****  Incorporated by reference to the Exhibit number indicated
                      in Registrant's Annual Report on 10-KSB for the fiscal
                      year ended April 1, 2000.

     (b) No reports on Form 8-K have been filed for the period covered by this
report.
</TABLE>
                                       14

<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:  February 14, 2000                    By: /s/ H. Charles Wilson, III
       -----------------                        --------------------------
                                            H. Charles Wilson, III
                                            Chief Accounting Officer
                                            and Authorized Signatory






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