<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 28, 2002

[ ] 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, 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 8, 2002 there were 63,419,016 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 28, 2002

                                      INDEX

<TABLE>
<CAPTION>

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

              Consolidated Balance Sheets - September 28, 2002 (Unaudited)
              and March 30, 2002                                                                 3

              Consolidated Statements of Operations - Quarter and Six Months
              Ended September 28, 2002 and September 29, 2001 (Unaudited)                        4

              Consolidated Statements of Cash Flows -- Quarter and six Months
              Ended September 28, 2002 and September 29, 2001 (Unaudited) 5

              Notes to Consolidated Financial Statements                                         6 - xx

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

Item 3        Controls and Procedures                                                            xx - xx



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

Item 6.       Exhibits and Reports on Form 8-K                                                   xx - xx
</TABLE>

                                       2


<PAGE>

Item. 1 Financial Statements


                    AM Communications, Inc. and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                            September 28,
                                                                                2002              March 30,
                                                                            (Unaudited)             2002
                                                                            ------------         -----------
<S>                                                                         <C>                  <C>
ASSETS

Current assets
  Cash                                                                         $ 194,000         $   192,000
  Accounts receivable, net of reserves of $1,067,000 at
    September 28 and $992,000 at March 30, 2002                               10,125,000           6,288,000
  Due from affiliates                                                            256,000             157,000
  Inventory                                                                    2,392,000           2,826,000
  Prepaid expenses and other                                                     924,000             348,000
                                                                             -----------         -----------
    Total current assets                                                      13,891,000           9,811,000

Property and equipment, net                                                    4,781,000           1,719,000
Notes receivable - officers                                                    1,283,000           1,033,000
Goodwill                                                                       8,002,000           3,735,000
Other intangible assets, net                                                   1,269,000           1,425,000
Other assets                                                                     254,000             144,000
                                                                             -----------         -----------
    Total assets                                                             $29,480,000         $17,867,000
                                                                             ===========         ===========

LIABILITIES AND STOCKHOLDERS EQUITY

Current liabilities
  Current portion of mortgage and notes payable                              $   459,000         $   152,000
  Current portion of subordinated note payable                                 1,353,000             920,000
  Bank line of credit                                                          7,450,000           2,991,000
  Accounts payable                                                             2,954,000           2,381,000
  Accrued expenses                                                             1,798,000           1,812,000
  Deferred revenue                                                                99,000             120,000
  Due to stockholders                                                            295,000                   -
  Due to affiliates                                                            1,394,000             252,000
                                                                             -----------         -----------
    Total current liabilities                                                 15,802,000           8,628,000
                                                                             -----------         -----------

Mortgage and notes payable - long term                                         2,386,000             333,000
Subordinated notes payable                                                     2,017,000           1,610,000
Senior convertible redeemable preferred stock, $100 par
  value, authorized 1,000,000 shares; issued and outstanding
  51,852 shares at September 28 and March 30, 2002                             1,400,000           1,400,000

Commitments and contingencies                                                          -                   -

Stockholders equity
  Common stock, $0.10 par value, authorized 100,000,000 shares
    at September 28 and March 30, 2002, issued and outstanding
    63,410,682 at September 28 and 56,394,016 at March 30, 2002                6,342,000           5,640,000
Capital in excess of par                                                      38,248,000          36,851,000
Accumulated deficit                                                          (36,715,000)        (36,595,000)
                                                                             -----------         -----------
    Stockholders equity                                                        7,875,000           5,896,000
                                                                             -----------         -----------
    Total liabilities and stockholders equity                                $29,480,000         $17,867,000
                                                                             ===========         ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       3
<PAGE>
                    AM Communications, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudtied)
<TABLE>
<CAPTION>
                                                         Quarter Ended                           Six Months Ended
                                              ----------------------------------        ----------------------------------
                                              September 28,        September 29,        September 28,        September 29,
                                                  2002                 2001                 2002                 2001
                                               -----------          -----------          -----------          -----------
<S>                                            <C>                  <C>                  <C>                  <C>
Revenues                                       $13,971,000          $ 4,075,000          $23,710,000          $ 8,101,000
                                               -----------          -----------          -----------          -----------
Costs and expenses
  Cost of sales                                  9,150,000            2,011,000           15,210,000            3,906,000
  Selling, general and administrative            3,611,000            1,136,000            6,350,000            2,035,000
  Research and development                       1,009,000            1,000,000            2,025,000            1,917,000
                                               -----------          -----------          -----------          -----------
                                                13,770,000            4,147,000           23,585,000            7,858,000
                                               -----------          -----------          -----------          -----------

Operating income (loss)                            201,000              (72,000)             125,000              243,000

Other expense, net                                (149,000)             (36,000)            (245,000)             (73,000)
                                               -----------          -----------          -----------          -----------

Income (loss) before income taxes                   52,000             (108,000)            (120,000)             170,000
Income tax (benefit) provision                           -                    -                    -                9,000
                                               -----------          -----------          -----------          -----------
Net income (loss)                              $    52,000          $  (108,000)         $  (120,000)         $   161,000
                                               ===========          ===========          ===========          ===========

Basic net income (loss) per share              $         -          $         -          $         -          $         -

Diluted net income (loss) per share            $         -          $         -          $         -          $         -
Shares used in computation of basic
  net income (loss) per share                   63,241,000           43,427,000           59,817,000           43,396,000
                                               ===========          ===========          ===========          ===========
Shares used in computation of diluted
  net income (loss) per share                   72,013,000           43,427,000           59,817,000           50,770,000
                                               ===========          ===========          ===========          ===========
</TABLE>
        The accompanying notes are an integral part of these statements.

                                       4
<PAGE>

                    AM Communications, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                             Six Months Ended
                                                                                    ----------------------------------
                                                                                    September 28,        September 29,
                                                                                       2002                 2001
                                                                                    -----------            ---------
<S>                                                                                <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                                                                 $  (120,000)           $ 161,000
  Adjustments to reconcile net income to net cash provided
    by (used in) operating activities
    Bad debt expense                                                                    325,000                    -
    Depreciation and amortization                                                       536,000               77,000
    Compensation related to stock purchase rights                                       101,000                    -
    Amortization of retention bonuses                                                    49,000                    -
    Changes in assets and liabilities which provided (used) cash:
      Accounts receivable                                                            (3,193,000)            (490,000)
      Due from affiliates                                                               (99,000)              27,000
      Inventory                                                                         434,000              493,000
      Prepaid expenses and other                                                       (738,000)            (253,000)
      Accounts payable                                                                   89,000             (120,000)
      Deferred revenue                                                                  (21,000)             (61,000)
      Due to affiliates                                                               1,142,000                    -
      Accrued and other expenses                                                       (166,000)             (41,000)
                                                                                    -----------            ---------
        Net cash provided by (used in) operating activities                          (1,661,000)            (207,000)
                                                                                    -----------            ---------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of capital assets                                                         (3,403,000)             (38,000)
  Acquisition of business, net of cash acquired                                        (998,000)                   -
  Note receivable - stockholders                                                       (300,000)                  -
                                                                                    -----------            ---------
        Net cash used in investing activities                                        (4,701,000)             (38,000)
                                                                                    -----------            ---------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from mortgages                                                             4,124,000                    -
  Proceeds from term loans                                                              600,000                    -
  Proceeds from borrowing under bank line                                             4,459,000                    -
  Exercise of stock options                                                               3,000               41,000
  Payments on mortgage and notes payable                                             (2,362,000)             (15,000)
  Payments on subordinated notes payable                                               (460,000)                   -
  Payments under capital lease obligations                                                    -               (1,000)
                                                                                    -----------            ---------
        Net cash provided by financing activities                                     6,364,000               25,000
                                                                                    -----------            ---------
        Net increase (decrease)  in cash                                                  2,000             (220,000)
Cash
  Beginning                                                                             192,000              350,000
                                                                                    -----------            ---------
  Ending                                                                            $   194,000            $ 130,000
                                                                                    ===========            =========
Interest paid                                                                       $   242,000            $  77,000
                                                                                    ===========            =========
Income taxes paid                                                                   $    19,000            $       -
                                                                                    ===========            =========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       5
<PAGE>

                    AM Communications, Inc. and Subsidiaries

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
       As of September 28, 2002 and for the Quarters and Six Months Ended
                    September 28, 2002 and September 29, 2001

The accompanying interim consolidated financial statements should be read in
conjunction with AM Communications, Inc.'s ("Company") annual consolidated
financial statements and notes thereto included in AM Communications, Inc.'s
Annual Report on Form 10-KSB for fiscal 2002 ended March 30, 2002. Certain
information and footnote disclosures normally included in financial statements
have been condensed or omitted. The accompanying unaudited financial information
as of September 28, 2002 and September 29, 2001 and for the quarters and six
months ended September 28, 2002 and September 29, 2001 have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The Consolidated Balance Sheet as of September 28, 2002 and the related
Consolidated Statements of Operations for the quarters and six months ended
September 28, 2002 and September 29, 2001 and the related Consolidated
Statements of Cash Flows for the six months ended September 28, 2002 and
September 29, 2001 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. Operating results for the quarter and six months ended
September 28, 2002 are not necessarily indicative of the results that may be
expected for the year ended March 29, 2003.

The consolidated financial statements include the accounts of AM Communications,
Inc. and its wholly owned subsidiaries, AM Broadband Services, Inc., SRS
Communications Corporation, AMC Services, Inc., AM Training Services, Inc. and
AM Nex-Link Communications, Inc. All significant intercompany balances and
transactions have been eliminated in consolidation.


1. ACQUISITIONS

Consistent with the Company's plan to expand its Broadband Service Business
Unit, the Company's wholly owned subsidiary, AM Broadband Services, Inc.
acquired all the issued and outstanding common stock of SRS Communications
Corporation and EDJ Communications, Inc. on October 1, 2001. These companies
provide services to the television cable and wireless industry. Their services
include installation and maintenance of television lines and wireless systems in
the Northeastern and Southeastern parts of the United States. Both of these
companies are Connecticut corporations and are, collectively, herein referred to
as the "Sellers". The transaction provides for the payment of $1,150,000 in cash
to the Sellers in weekly installments following the close of the stock
acquisition. Each installment is to equal the cash collection of the Sellers'
accounts receivable existing as of October 1, 2001 continuing until the total
amount of such installments equals $1,150,000. This obligation owed by the
Company to the Sellers has been satisfied in full. The Company also issued a
$3,000,000 subordinated promissory note to the Sellers. The note bears interest
at the rate of 5% per annum. The outstanding principal balance of the note and
all accrued interest is payable in twelve consecutive quarterly payments,
payable on the first day of each quarter, commencing on January 1, 2002. The
Company also issued 9,000,000 shares of its common stock to the Sellers at
closing, valued at $.30 per share, which was the closing price of AM
Communication's stock on October 1, 2001, with an aggregate value of $2,700,000.
The transaction has been accounted for under the purchase method of accounting.
Immediately following the completion of the acquisition of the Stock, AM
Broadband Services 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 Broadband.
During the fourth quarter of fiscal 2002, the Company renegotiated the purchase
price for this acquisition with the Sellers, based upon the fact that certain
receivables purchased by the Company from the Sellers were not collectible. As a
result of such subsequent negotiations, the purchase price payable by the
Company and the outstanding principal balance of the note delivered to the
Sellers were adjusted and reduced by $220,000.

                                       6
<PAGE>

On July 1, 2002, the Company completed the acquisition of all of the assets and
business of Nex-Link Communication Project Services, LLC, a Florida limited
liability company ("Nex-Link"). The transaction was completed as a merger (the
"Merger") in which Nex-Link was merged with and into a wholly-owned Delaware
corporate subsidiary of Broadband, Nex-Link Acquisition Corp. (the "Acquisition
Subsidiary"), which was formed for the sole purpose of completing the Merger. As
a result of the completion of the Merger on July 1, 2002, Nex-Link became a
wholly-owned corporate subsidiary of Broadband. Simultaneously with the
completion of the Merger, the Acquisition Subsidiary changed its name and is
currently operating under the name "AM Nex-Link Communications, Inc." Nex-Link
provided engineering, design, construction and installation services to owners
of broadband communications networks.

As a result of the Merger, the four members of Nex-Link (the "Members")
received, in the aggregate, the following consideration:

         a.)  $1,000,000.00 in cash, to be paid by the Acquisition Subsidiary to
              the Members in weekly installments following the closing for the
              Merger held on July 1, 2002 (the "Closing"), each in an amount
              equal to that portion of the Acquisition Subsidiary's accounts
              receivable (the "Nex-Link Receivables") collected during the
              applicable week, and continuing until the total of such
              installments equals $1,000,000.00. The Company will use funds
              received as payments on the Nex-Link Receivables to make the
              aforementioned weekly installment payments to the Members.

         b.)  $1,000,000.00 in the form of a subordinated promissory note (the
              "Subsidiary Note") delivered by the Acquisition Subsidiary to the
              Members at the Closing. The Subsidiary Note bears interest at the
              rate of five percent (5%) per annum. The outstanding principal
              balance of the Subsidiary Note, and all interest accrued thereon,
              is repayable in three (3) equal, consecutive annual payments,
              payable on the first, second and third anniversaries of the date
              of the Closing. The Company anticipates that internal funds of the
              Acquisition Subsidiary will be utilized to make all payments due
              under the Subsidiary Note.



                                       7
<PAGE>

         c.)  7,000,000 restricted shares of Common Stock of the Company, par
              value $.10 per share, were delivered by Acquisition Subsidiary to
              the Members at the Closing. These shares had a value of
              approximately $1,995,000.00 (based on the closing price of the
              Company's common stock on the date of the Closing).

In connection with the Merger, the Acquisition Subsidiary and the Members agreed
to restructure certain indebtedness owed to the Members by Nex-Link in the
principal amount of $300,000.00. As evidence of such restructuring, the
Acquisition Subsidiary executed and delivered to the Members at the Closing a
subordinated promissory note (the "Company Note"), in the original principal
amount of $300,000.00, which bears interest at the rate of five percent (5%) per
annum. The outstanding principal balance of the Company Note is payable in three
(3) equal annual installments in the amount of $100,000.00 each, on the first,
second and third anniversaries of the date of the Closing. Accrued interest on
the Company Note is payable in quarterly installments, commencing on October 1,
2002.

The Nex-Link transaction has been accounted for under the purchase method of
accounting. Accordingly, the excess cost over fair value of net assets acquired
of approximately $3,993,000 has been recorded on the September 28, 2002 balance
sheet. The Company is in the process of obtaining third-party valuations of
certain intangible assets and expects the valuations to be completed by fiscal
year-end. Thus, the allocation of the purchase price is subject to refinement.

         The following unaudited pro forma data summarizes the results of
operations as if the above-mentioned acquisitions had been completed as of the
beginning of the periods presented. The pro forma information is based on the
historical financial statements of the Company and the acquired companies after
giving effect to the acquisition using the purchase method of accounting. The
pro forma data gives effect to the actual operating results prior to the
acquisitions and adjustments to interest expense, income taxes and common shares
outstanding. No effect has been given to cost reductions or operating synergies
in the presentation. These pro forma amounts do not purport to be indicative of
the results that would have actually been obtained if the acquisitions had
occurred as of the beginning of the periods presented or that may be obtained in
the future.


                                       8
<PAGE>
                                           Quarter Ended        Six Months Ended
                                           September 29,         September 29,
                                               2001                  2001
                                               ----                  ----

(In thousands, except per share data)

Total revenue                              $  9,690,000          $ 17,865,000
Income before extraordinary items,
  accounting change and taxes
                                                806,000             1,416,000
Net income
                                                715,000             1,078,000

Earnings per share
             Basic                                 0.01                  0.02
             Diluted                               0.01                  0.02


2. REVENUE RECOGNITION

The Company's Broadband Products Unit derives its revenues principally from
sales of its products to the cable TV industry. Revenue is recognized when the
product is shipped to customers. The Company's software revenue is recognized in
accordance with the 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 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.

The Company's Broadband Services Unit derives its revenues from sales of
outside-plant services to CATV operators. Revenue is recognized as contracted
tasks are completed and billed. Individual work orders are of a short duration.


                                       9
<PAGE>

3. INVENTORY

Inventory consists of the following:

                                                 September 28,        March 30,
                                                    2002                2002
                                                 -----------        -----------

Raw material                                     $ 1,298,000        $ 1,703,000
Work in process                                      824,000            718,000
Finished goods                                       370,000            505,000
                                                 -----------        -----------
                                                   2,492,000          2,926,000
Inventory reserves                                  (100,000)          (100,000)
                                                 -----------        -----------

Net inventory                                    $ 2,392,000        $ 2,826,000
                                                 ===========        ===========

4. ACCRUED EXPENSES

Accrued expenses consist of the following:

                                                September 28,         March 30,
                                                    2002                2002
                                                 -----------        -----------


Accrued compensation and commissions              $  852,000        $   789,000
Accrued rent                                          22,000             22,000
Accrued real estate taxes                                  -             43,000
Warranty reserve                                     226,000            226,000
Accrued professional fees                              7,000             64,000
Accrued contracted services                          144,000            202,000
Accrued income taxes                                 116,000            135,000
Accrued interest and penalties                       320,000            284,000
Other                                                111,000             47,000
                                                 -----------        -----------
                                                 $ 1,798,000        $ 1,812,000
                                                 ===========        ===========

5. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Mr. Javad Hassan is the Chairman of the board of directors ("Chairman") of the
Company and has ownership interest in several other companies in the United
States, India and other parts of the world. Among these companies is NeST group
of companies (NeST), including NeST Technologies, Inc. and NeSTronix, Inc.,
which are U.S.-based technology service entities 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 the Chairman's brother, Mr. N. Jehangir. NeST
provides substantially all of the Company's engineering and manufacturing
requirements.



                                       10
<PAGE>

Mr. Hassan, the NeST companies and their respective affiliates collectively
control the voting of 23,254,171 shares of the Company's Common Stock. Under the
terms of an agreement with NeST (the "NeST Development Agreement"), the Company
has the option to pay for development services performed by NeST either in cash
or by the issuance of warrants to purchase AM Common Stock. During fiscal 1999,
the Company elected to issue NeST warrants to purchase 4,234,018 shares of the
Company's Common Stock, at an exercise price of $0.01 per share, in lieu of
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 $0.01
per share, in lieu of 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 ten
million total shares under the NeST Development Agreement, including the
7,862,334 shares already issued. During the second quarter and first six months
of fiscal 2003, the Company incurred expenses of $958,000 and $1,723,000
respectively, under the NeST Development Agreement. For the comparable periods
in fiscal 2002, the Company incurred expenses of $647,000 and $1,239,000
respectively. The Company has negotiated favorable rates with NeST for services
performed by both the India-based and U.S.-based employees of NeST. The Company
may not be able to obtain the same negotiated rates from outside third parties.

Pursuant to a Manufacturing Services Agreement between NeSTronix, Inc. and the
Company (the "Manufacturing Agreement"), 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 an additional 18-month
period unless either party gives written notice to the contrary to the other
party at least six 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. During the second
quarter and first six months of fiscal 2003, the Company incurred expenses of
$673,000 and $1,416,000, respectively, for services provided pursuant to the
Manufacturing Agreement. For the comparable periods in fiscal 2002, the Company
incurred expenses of $686,000 and $1,259,000, respectively.

During the second quarter and first six months of fiscal 2003, the Company
incurred expenses of $32,000 and $45,000, respectively, for legal services
provided the general counsel of NeST Technologies, Inc. No such expenses were
incurred in the comparable periods in fiscal 2002.

                                       11
<PAGE>

During the second quarter and first six months of fiscal 2003, the Company
incurred expenses of $300,000 and $320,000, respectively, for management
information system development costs provided by NeST Technologies, Inc. For the
quarter and six months ended September 29, 2001, the Company incurred $19,000 in
such expenses.

During the second quarter and first six months of fiscal 2003, the Company
incurred expenses of $25,000 and $47,000, respectively, for sales, marketing and
technical support costs provided by NeST Europe Ltd., an affiliate of NeST
Technologies, Inc. For the quarter and six months ended September 29, 2001, the
Company incurred $30,000 in such expenses.

The Company provides certain administrative and support services and office
space to NeST, NeSTronix and several other entities associated with Mr. Hassan's
non-AM business ventures. During the second quarter and first six months of
fiscal 2003, the Company charged fees totaling $87,000 and $145,000,
respectively, for such services. For the comparable periods in fiscal 2002, the
Company charged fees totaling $246,000 and $504,000, respectively, for such
services.

Under a consulting agreement with Lemuel A. Tarshis, a director of the Company,
the Company incurred expenses of $23,000 and $38,000 in the second quarter and
first six months of fiscal 2003, respectively. In the comparable periods in
fiscal 2002, the Company incurred expenses of $15,000 and $30,000, respectively,
under the consulting agreement. Mr. Tarshis also provides consulting services to
NeST Technologies, Inc. and serves as a director of that company.

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 28,   September 29,      September 28,        September 29,
                                                  2002            2001               2002                 2001
                                              -----------      -----------        -----------          -----------
<S>                                           <C>              <C>                <C>                  <C>
Net income (loss)                             $    52,000      $  (108,000)       $  (120,000)         $   161,000
                                              ===========      ===========        ===========          ===========

Basic shares                                   63,241,000       43,427,000         59,817,000           43,396,000
Convertible preferred stock                     5,185,000        2,644,000          5,185,000            2,644,000
Diluted options and warrants                    3,587,000        4,352,000          4,505,000            4,730,000
                                              -----------      -----------        -----------          -----------

Diluted shares                                 72,013,000       50,423,000         69,507,000           50,770,000

Shares used in computation
  of net income (loss) per share:
    Basic                                      63,241,000       43,427,000         59,817,000           43,396,000
    Diluted                                    72,013,000       43,427,000         59,817,000           50,770,000

Net income (loss) per common share:
    Basic                                             NIL              NIL                NIL                  NIL
    Diluted                                           NIL              NIL                NIL                  NIL
</TABLE>

The calculation of net loss per share-diluted for the quarter ended September
29, 2001 and for the six months ended September 28, 2002 does not reflect the
potential dilution that could occur if stock options and warrants were exercised
and preferred stock converted since the effect would be anti-dilutive.

                                       12
<PAGE>


7. SUPPLEMENTAL CASH FLOW AND COMPREHENSIVE INCOME

Supplemental cash flow and comprehensive income is as follows:

<TABLE>
<CAPTION>
                                                              Six Months Ended
                                                              ----------------
                                                      September 28,      September 29,
                                                          2002                2001
                                                          ----                ----
<S>                                                   <C>                <C>
Cash paid during the period for:

Interest                                               $  242,000          $  77,000
                                                       ==========          =========
Income taxes                                           $   19,000          $       -
                                                       ==========          =========

Non-cash investing and financing activities:

Common Stock issued for business acquired              $1,995,000          $       -
                                                       ==========          =========
Assumed debt of acquired business converted to
  subordinated notes                                   $  300,000          $       -
                                                       ==========          =========
</TABLE>


              There was no comprehensive income for the periods presented.


8. OPERATIONS BY BUSINESS SEGMENT

The Company has identified the following two business segments:

              The Broadband Products Unit (Products) manufactures and markets
              network monitoring systems, which include hardware and software
              sold to the broadband communications market, primarily for cable
              TV (CATV) systems.

              The Broadband Services Unit (Services) provides a range of
              outside-plant services to CATV operators which include
              fulfillment, engineering and construction services.

              Summarized financial information related to the Company's business
              segments for the quarters and six months ended September 28, 2002
              and September 29, 2001 are shown below:

                                       13
<PAGE>

<TABLE>
<CAPTION>
                                                               Products            Services           Consolidated
                                                               --------            --------           ------------
<S>                                                         <C>                 <C>                    <C>
Quarter Ended September 28, 2002
--------------------------------

               Net sales                                     $ 4,523,000         $ 9,448,000            $13,971,000
               Interest income                                         -               1,000                  1,000
               Interest expense                                   91,000              75,000                166,000
               Depreciation and amortization                     105,000             179,000                284,000
               Income tax expense                                      -                   -                      -
               Capital expenditures                               94,000             392,000                486,000
               Operating income (loss)                           213,000             (12,000)               201,000


               Total assets                                    9,334,000          20,146,000             29,480,000

Quarter Ended September 29, 2001
--------------------------------

               Net sales                                     $ 4,038,000         $    37,000            $ 4,075,000
               Interest income                                     1,000                   -                  1,000
               Interest expense                                   37,000                   -                 37,000
               Depreciation and amortization                      38,000               2,000                 40,000
               Income tax expense                                      -                   -                      -
               Capital expenditures                               20,000               3,000                 23,000
               Operating income (loss)                           245,000            (317,000)               (72,000)


               Total assets                                    6,108,000             229,000              6,337,000

Six Months Ended September 28, 2002
-----------------------------------

               Net sales                                     $ 9,504,000         $14,206,000            $23,710,000
               Interest income                                     1,000               1,000                  2,000
               Interest expense                                  168,000              10,000                278,000
               Depreciation and amortization                     192,000             344,000                536,000
               Income tax expense                                      -                   -                      -
               Capital expenditures                            2,955,000             448,000              3,403,000
               Operating income (loss)                           668,000            (543,000)               125,000


               Total assets                                    9,334,000          20,146,000             29,480,000

Six Months Ended September 29, 2001
-----------------------------------

               Net sales                                     $ 7,833,000         $   268,000            $ 8,101,000
               Interest income                                     1,000                   -                  1,000
               Interest expense                                   73,000                   -                 73,000
               Depreciation and amortization                      74,000               3,000                 77,000
               Income tax expense                                  9,000                   -                  9,000
               Capital expenditures                               29,000               9,000                 38,000
               Operating income (loss)                           591,000            (348,000)               243,000

               Total assets                                    6,108,000             229,000              6,337,000
</TABLE>

                                       14
<PAGE>


9. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB approved the issuance of SFAS No. 141, Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. For the
Company, these statements became effective after March 30, 2002. SFAS No. 141
addresses financial accounting and reporting for business combinations and
supercedes APB Opinion No. 16, Business Combinations, and SFAS No. 38,
Accounting for Preacquisition Contingencies of Purchased Enterprises. SFAS No.
141 is effective for all business combinations initiated after June 30, 2001 and
eliminates the pooling-of-interest method of accounting for business
combinations except for qualifying business combinations that were initiated
prior to July 1, 2001. SFAS No. 141 also changes the criteria to recognize
intangible assets apart from goodwill. The Company adopted SFAS No. 141 on July
1, 2001. The provisions of SFAS No. 141 were applied to the SRS acquisition in
October 2001.

SFAS No. 142 stipulates that goodwill and other intangible assets with
indefinite lives are no longer subject to amortization, but must be evaluated
periodically for impairment and written down and charged to results of
operations only in the periods in which the recorded value of goodwill and
certain intangibles is more than the fair value. Separable intangible assets
that are not deemed to have indefinite life will be amortized over their useful
lives.

The Company had no recorded goodwill and intangibles with indefinite lives
recorded prior to the acquisition recorded on October 1, 2001. The Company has
applied the non-amortization and purchase accounting provisions of SFAS Nos. 141
and 142 to the SRS acquisition. In June 2001, the FASB issued SFAS No. 143,
Accounting for Asset Retirement Obligations. SFAS No. 143 establishes accounting
standards for the recognition and measurement of legal obligations associated
with the retirement of tangible long-lived assets that result from the
acquisition, development and (or) the normal operation of long-lived assets,
except for certain obligations of lessees. SFAS No. 143 is effective for
financial statements issued for fiscal years beginning after June 15, 2002 and
requires recognition of a liability for an asset retirement obligation in the
period in which it is incurred. Management is in the process of evaluating the
impact this standard will have on the Company's financial statements.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, that addresses financial accounting and reporting
for the impairment or disposal of long-lived assets. While SFAS No. 144
supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed of, it removes goodwill from its impairment
losses on long-lived assets held for use.
SFAS No. 144 also supercedes the accounting and reporting provisions of APB

Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, for the disposal of a segment of a business.
However, it retains the requirement in APB Opinion No. 30 to report separately
discontinued operations and extends that reporting to a component of an entity
that either has been disposed of (by sale, abandonment, or in a distribution to
owners) or is classified as held for sale. SFAS No. 144 is effective for fiscal
years beginning after December 15, 2001 and interim periods within those years.
The adoption of this statement did not have a significant impact on the
Company's financial position.


                                       15

<PAGE>


10. INCOME TAXES

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

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                              Six Months Ended
                                                              ----------------
                                                      September 28,      September 29,
                                                          2002                2001
                                                          ----                ----
<S>                                                   <C>                <C>

     Current income taxes                               $      -           $   9,000
     Deferred income taxes                               (30,000)             62,000
     Change in valuation allowance                        30,000             (62,000)
                                                        --------           ---------

     Net                                                $      -           $   9,000
                                                        ========           =========
</TABLE>

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:

<TABLE>
<CAPTION>
                                                              Six Months Ended
                                                              ----------------
                                                      September 28,      September 29,
                                                          2002                2001
                                                          ----                ----
<S>                                                   <C>                <C>
     Federal income tax provision at statutory rate    $ (41,000)          $  58,000
     State income taxes, net of federal benefit            5,000              11,000
     Research and development credits                          -             (10,000)
     Permanent differences                                 6,000               3,000
     Change in valuation allowance                        30,000             (62,000)
     Other                                                     -               9,000
                                                       ---------           ---------

     Income tax provision                              $       -           $   9,000
                                                       =========           =========
</TABLE>

The components of the net deferred tax asset as of September 28, 2002 and
March 30, 2002 are as follows:

<TABLE>
<CAPTION>
                                                      September 28,         March 30,
                                                          2002                2001
                                                          ----                ----
<S>                                                   <C>                <C>
     Inventory                                         $    63,000        $    296,000
     Accrued expenses and reserves                         597,000             403,000
     Depreciation and amortization                         (79,000)            (87,000)
     Net operating loss carryforwards                    7,199,000           7,138,000
     Tax credit carryforwards                              743,000             743,000
     Valuation allowance                                (8,523,000)         (8,493,000)
                                                       -----------        ------------

     Net deferred tax assets                           $         -        $          -
                                                       ===========        ============
</TABLE>

The Company has total net operating loss carryforwards available to offset
future taxable income of approximately $21 million expiring at various times
from 2003 to 2022. Due to certain statutory limitations under the Internal
Revenue Code, a portion of such carryforwards may expire unutilized.

The Company has a valuation allowance equal to 100% of the deferred tax assets.
In assessing the Company's ability to realize deferred income tax assets, the
Company considered whether it is more likely than not that some or all of the
deferred tax assets will be realized. Several factors such as changes in stock
ownership that may restrict the utilization of net operating loss and tax credit
carryforwards, and the Company's ability to generate sufficient taxable income
in the periods before the net operating loss and tax credit carryforwards expire
or the timing differences reverse were considered.



                                       16
<PAGE>





11. CREDIT FACILITY

On August 14, 2002, the Company entered into a $10,700,000 asset-based credit
facility with LaSalle Business Credit, Inc., as agent for Standard Federal Bank
National Association (the "Bank"), collateralized by all assets of the Company.
The credit facility consists of the following:

              1.  Revolving Credit Loan Facility

                  A revolving credit loan facility having a maximum availability
                  equal to the lesser of (a) Seven Million Five Hundred Thousand
                  Dollars ($7,500,000); and (b) eighty-five percent (85%) of the
                  Company's eligible accounts (as defined in the loan
                  documents). The revolving credit loans bear interest, at the
                  Company's option, at either (i) a base rate equal to the prime
                  rate of the Bank plus 0.50% or (ii) at the LIBOR rate plus
                  2.75%.

              2.  Letters of Credit

                  The ability for the Company to obtain standby letters of
                  credit, provided that the aggregate undrawn face amount of
                  such letters of credit is not in excess of, at any one time,
                  $1,000,000. In addition to the normal charges for letters of
                  credit, the Company is subject to an annual 3% administrative
                  fee of the face amount of the letters of credit, which fee is
                  payable monthly. The outstanding letters of credit will
                  automatically reduce, dollar for dollar, the amount that may
                  be borrowed by the Company as revolving credit loans under the
                  revolving credit facility.

              3.  Term Loans

                  a.) A $500,000 discretionary machinery and equipment
                      acquisition line. Advances are limited to 80% of the net
                      invoice cost, cannot be less than $100,000 and will be
                      permitted only during the first two years following the
                      closing date;

                  b.) A $2,200,000, three-year term loan with a balloon payment
                      payable upon the earlier to occur of the termination of
                      the credit facility or the expiration of the initial
                      contract term; (these two term loans bear interest, at the
                      Company's option, at either (i) the Bank's prime rate as
                      in effect from time to time plus 0.75% or (ii) the LIBOR
                      rate plus 3%); and

                  c.) Up to a $500,000 two-year term loan, with an annual excess
                      cash flow recapture provision of 50%. The interest rate
                      for this loan is the Bank's prime rate as in effect from
                      time to time plus 2%.

The proceeds of these credit facilities were used by the Company to refinance
all of its existing bank debt and for working capital needs associated with the
Company's growth.




                                       17
<PAGE>

Item 2. Management's Discussion and Analysis of Operations

Cautionary Statement For Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995

         The statements contained in this Quarterly Report on Form 10-QSB, along
with statements in other reports filed by the Company with the Securities and
Exchange Commission, external documents and oral presentations, which are not
historical are 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
present expectations or beliefs of the Company concerning future events. Such
statements must be qualified by important factors that could cause actual
results to differ materially from those achieved in the past or those expected
by the Company. 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 market 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,
dependence on certain suppliers, and reliance on Network Systems and
Technologies (P) Ltd. ("NeST"), and NeST-related companies, for engineering and
manufacturing services with respect to the Company's products unit.

         The following discussion should be read in conjunction with the
Company's Form 10-KSB for its 2002 fiscal year ended March 30, 2002.

Overview

         The Company provides products (which include hardware and software
systems) and services (which include network engineering, design and
construction and subscriber installation) to the broadband communications
industry, primarily for CATV systems. AM has applied its technical strengths,
and the strengths of its strategic partners, in RF communications,
microprocessor controlled circuits and application software in order to produce
a suite of products and services that allows CATV system operators to build
better networks, maintain them more efficiently, and continually monitor their
technical performance and operation.

         The Company's principal activity from its formation in 1974 to 1989 was
the construction of cable TV systems, which was discontinued in 1989. From 1989
to 2001, the Company's primary revenue was derived from the sale of its
OmniStatTM family of network monitoring and management systems. Beginning in
1999, the Company began to pursue a diversification strategy to broaden its
offerings to include services as well as products. As part of this
diversification strategy, the Company formed a new business unit, AM Broadband
Services, Inc. ("AMBS"). AMBS is a wholly owned subsidiary of the Company that
began operations in January 2001. This business unit provides a range of
outside-plant services to CATV systems operators that include design,
engineering, installation, certification and maintenance. The Company's
Broadband Products ("AMBP") business unit continues to market its OmniStatTM
product line and other newly developed products through its traditional sales
channels, but is also utilizing the AMBS services unit as an additional sales
channel.

                                       18
<PAGE>

         During fiscal 2002, the Broadband Services Unit embarked on an
aggressive growth strategy with the following actions:

         (a)  On October 1, 2001, with the acquisition of SRS Communications
              Corporation and EDJ Communications, Inc., AMBS entered into the
              subscriber fulfillment services business.

         (b)  In January 2002, AMBS formed its design and engineering services
              division in order to provide specialized engineering services to
              the cable television and telecommunications industries.

         (c)  In January 2002, AMBS formed AMC Services, Inc. in order to
              provide construction services to the cable television and
              broadband communications industries.

         The formation of both of the new divisions of AMBS required significant
capital and employee-related expenditures to start and were built by procuring
the services of highly experienced, industry professionals with strong
reputations.

         On June 3, 2002, subsequent to the end of the 2002 fiscal year, the
Company entered into a definitive merger agreement with Nex-Link Communication
Project Services, LLC. On July 3, 2002, the Company announced the completion of
the merger with an effective date of July 1, 2002. Management of the Company
believes that the acquisition of this entity, as a result of the merger, will
add significant depth to AMBS's ability to provide engineering, design,
construction, and installation services to owners of broadband communications
networks.

Critical Accounting Policies

         In December 2001, the Securities and Exchange Commission ("SEC") issued
disclosure guidance for "critical accounting policies". The SEC defines
"critical accounting policies" as those that require application of management's
most difficult, subjective or complex judgments, often as a result of the need
to make estimates about the effect of matters that are inherently uncertain and
may change in subsequent periods.

         The Company's significant accounting policies are described in Note A
in the Notes to Consolidated Financial Statements. Not all of these significant
accounting policies require management to make difficult, subjective or complex
judgments or estimates. However, the following policies could be deemed to be
critical within the SEC definition:



                                       19
<PAGE>

Revenue Recognition

         The Company derives its revenues principally from sales of its products
to the cable television industry. Revenue is recognized when the product is
shipped to customers. The Company's software revenue is recognized in accordance
with the American Institute of Certified Public Accountant's Statement of
Position (SOP) 97-2 and related amendments. 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.

         The Broadband Services Unit segment derives its revenues from sales of
outside-plant services to CATV operators. Revenue is recognized as contracted
tasks are completed and billed. Individual work orders are of short duration.

Inventory

         Manufacturing inventory, which is comprised of raw materials,
work-in-process and finished goods, is valued at the lower of cost (first-in,
first-out method) or market.

Intangibles

         Intangibles include goodwill, customer relations, covenants not to
compete and the costs associated with the acquisition of patents and fees for
the successful defense of patents. Customer relationships and
covenants-not-to-compete are amortized on a straight-line basis over 10 and 5
years, respectively. Pursuant to SFAS No. 141, Business Combinations, and SFAS
No. 142, Goodwill and Other Intangible Assets, goodwill is not amortized but
evaluated periodically for impairment and charged to operations only in the
period of impairment. Patents are being amortized on a straight-line basis, over
their estimated useful lives of five years. Costs related to unsuccessful
patents or patents relating to products no longer manufactured are written off.

Use of Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

         The above listing is not intended to be a comprehensive list of all of
the Company's accounting policies. In some cases, the accounting treatment of a
particular transaction is specifically dictated by accounting principles
generally accepted in the United States of America, with no need for
management's judgment in their application. There are also areas in which
management's judgment in selecting any available alternatives would not produce
a materially different result. See the Company's audited Consolidated Financial
Statements and Notes thereto contained in the Company's Form 10-KSB for its 2002
fiscal year ended March 30, 2002 that contain accounting policies and other
disclosures required by accounting principles generally accepted in the United
States of America.

                                       20
<PAGE>


Results of Operations
<TABLE>
<CAPTION>

                                                  Quarter Ended                      Six Months Ended
                                                  -------------                      ----------------
                                         September 28,     September 29,      September 28,    September 29,
                                             2002              2001               2002             2001
                                             ----              ----               ----             ----
<S>                                      <C>               <C>                <C>              <C>
Revenues                                        100.0%            100.0%             100.0%            100.0%

Cost of Sales                                    65.5              49.3               64.2             48.2
Selling, General and Administrative              25.9              27.9               26.8             25.1
Research and Development                          7.2              24.6                8.5             23.7
                                                  ---              ----                ---             ----

Operating Income (Loss)                           1.4              (1.8)               0.5              3.0
Other Expense                                     1.0               0.9                1.0              0.9
                                                  ---               ---                ---              ---

Income (Loss) Before Income Taxes                 0.4              (2.7)              (0.5)             2.1
Income Taxes                                      0.0               0.0                0.0              0.1
                                                  ---               ---                ---              ---

Net Income (Loss)                                 0.4 %            (2.7)%             (0.5)%            2.0 %
                                                  ===               ===                ===              ===
</TABLE>

Revenues

Total revenues were $14.0 million and $23.7 million for the second quarter and
first six months of fiscal 2003, respectively, compared to $4.1 million and $8.1
million for the comparable periods in fiscal 2002. The increase in revenues in
fiscal 2003 from fiscal 2002 is primarily due to growth in the Company's
Broadband Services Unit. A major portion of this growth is attributable to the
acquisition of SRS Communications Corp./EDJ Communications, Inc. and Nex-Link
Communication Project Services, LLC, which together contributed $6.5 million and
$10.2 million in revenue during the second quarter and first six months of
fiscal 2003, respectively. Additionally, the Broadband Services Unit's new
offering of construction services generated $1.9 million and $2.3 million of
revenue during the second quarter and first six months of fiscal 2003,
respectively. The remaining increase in revenues is due to the Company's
Broadband Products Unit expanding its direct global sales and marketing efforts,
and sales made pursuant to its multi-year agreement with Charter Communications.

The Company's Broadband Products Unit maintains key strategic OEM (original
equipment manufacturer) relationships with Motorola, C-Cor, Scientific-Atlanta
and others, which purchase the Company's products under private label
relationships and re-sell them primarily to their international customers. The
Broadband Products Unit's revenue from OEMs and foreign distributors was 9% and
10% of its revenue for the second quarter and first six months of fiscal 2003,
respectively, compared to 26% and 43% for the comparable periods in fiscal 2002.
A greater portion of the Product Unit's revenue is coming from MSOs (multiple
system operators) and other direct end-user customers as a result of its
expanded direct global sales and marketing efforts and its multi-year agreement
with Charter Communications.

The Company's Broadband Services Unit primarily generates its revenue through
the sale of fulfillment, engineering and construction services to MSOs.

Three MSO customers contributed more than 10% of the Company's total revenues in
the second quarter of fiscal 2003 - 38%, 30% and 10%, respectively. For the
first six months of fiscal 2003, the same three MSO customers contributed more
than 10% of total revenues - 31%, 33% and 12% respectively. 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.

Sales to foreign customers represented less than 5% of total revenues for the
second quarter and first six months of fiscal 2003. For the second quarter and
first six months of fiscal 2002, sales to foreign customers represented 8% and
16% of total revenues, respectively. No individual foreign customer contributed
more than 5% of total revenue during these periods.

As the purchase of the Company's products and services is generally associated
with a customer's capital upgrade, expansion or marketing programs, contribution
levels of individual customers can be subject to wide fluctuations from year to
year.

Software revenues totaled $436,000 and $742,000 in the second quarter and first
six months of fiscal 2003, respectively, compared to $367,000 and $688,000 in
the comparable periods of fiscal 2002. All software development costs are
charged to research and development when incurred.

Development revenues were $2,000 in the second quarter and first six months of
fiscal 2003, compared to $15,000 and $83,000 in the second quarter and first six
months of fiscal 2002, 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.

Backlog for the Company's Broadband Products Unit was $3.6 million as of
September 28, 2002, compared to $4.0 million as of September 29, 2001. The
backlog has increased to $4.1 million as of November 6, 2002. One MSO customer
accounted for 61% of the total backlog as of November 6, 2002. The Company's
Broadband Services Unit has multi-year master contracts with MSO(s) that
currently generate in excess of $800,000 per week in billings.

                                       21

<PAGE>

Cost of Sales

Cost of sales includes all manufacturing costs of the Company's Broadband
Products Unit's hardware products and the job costs of the Company's Broadband
Services Unit's services. Total cost of sales represented 65.5% and 64.2% of
total revenues in the second quarter and first six months of fiscal 2003,
respectively, compared to 49.3% and 48.2% in the comparable periods of fiscal
2002. The increase in total cost of sales as a percentage of total revenues in
the fiscal 2003 is due to a much larger percentage of the Company's total
revenues coming from the Broadband Services Unit. These revenues carry a lower
gross margin.

Gross margin for the Broadband Products Unit was 58.7% and 56.4% for the second
quarter and first six months of fiscal 2003, respectively, compared to 51.9% and
53.4% in the comparable period of fiscal 2002. The Broadband Products Unit's
gross margin is generally dependent on customer mix and product mix.

Gross margin for the Broadband Services Unit was 22.9% and 22.1% for the second
quarter and first six months of fiscal 2003, respectively, compared to a
negative gross margin of 85.3% for the second quarter of fiscal 2002 and a gross
margin of 4.3% for the first six months of fiscal 2002. The Broadband Services
Unit was in its early stages of operations in the comparable periods in fiscal
2002. The Broadband Services Unit's gross margin is dependent upon the mix of
fulfillment, engineering and construction services.

Selling, General and Administrative

Selling, general and administrative expenses were $3.6 million and $6.3 million
in the second quarter and first six months of fiscal 2003, respectively,
compared to $1.1 million and $2.0 million in the comparable periods of fiscal
2002. Selling expenses increased from fiscal 2002 as the result of the Company's
Broadband Products Unit expanding its direct global sales and marketing efforts.
Additionally, selling expenses increased due to higher sales commissions
associated with a greater percentage of revenues coming from MSO(s) and other
direct-end user customers.

General and administrative costs increased to support the Company's new
Broadband Services Unit and its increased business levels, including the
acquisition of SRS Communications Corporation/EDJ Communications, Inc. Compared
to fiscal 2002, the Company has in place additional personnel and infrastructure
that it believes will support growth to an annual revenue level of over $45
million. Selling, general and administrative expenses are expected to increase
in fiscal 2003, but such expenses are expected to decline as a percentage of
revenue.

Included in general and administrative costs in the first six months of fiscal
2003, is a $325,000 charge related to the Company's outstanding receivables from
Adelphia Communications Corporation, which filed for bankruptcy protection in
June. In the second quarter and first six months of fiscal 2003, the Company
incurred $88,000 and $201,000 in start-up expenses related to the Broadband
Services Unit's plan to offer training services. Additionally, the Company
incurred $300,000 of costs in developing management information systems to
support its growing Broadband Services Unit during the second quarter and first
six months of fiscal 2003.

Research and Development

Research and development expense were $1.0 million and $2.0 million in the
second quarter and first six months of fiscal 2003, respectively, compared to
$1.0 million and $1.9 million in the comparable periods of fiscal 2002. The
Company continues to spend a significant amount on research and development
during in fiscal 2003, including expenditures related to its major development
efforts to upgrade and expand its software and hardware products. The Company
expects research and development spending to increase in response to increased
customer demand for more advanced systems and software, but anticipates that
such expenses will decline as a percentage of revenue.

Operating Income (Loss)

The Company had operating income of $201,000 and $125,000 in the second quarter
and first six months of fiscal 2003, respectively, compared to an operating loss
of $72,000 in the second quarter of fiscal 2002 and operating income of $243,000
in the first six months of fiscal 2002. Despite the significant increase in
revenues in fiscal 2003, operating income has not increased proportionately due
to several factors. A much larger percentage of the Company's total revenues are
coming from the Broadband Services Unit. These revenues carry a lower gross
margin. Compared to fiscal 2002, the Company has in place additional personnel
and infrastructure that it believes will support growth to an annual revenue
level of over $45 million. Included in general and administrative costs in the
first six months of fiscal 2003, is a $325,000 charge related to the Company's
outstanding receivables from Adelphia Communications Corporation, which filed
for bankruptcy protection in June. In the second quarter and first six months of
fiscal 2003, the Company incurred $88,000 and $201,000 in start-up expenses
related to the Broadband Services Unit's plan to offer training services.
Additionally, the Company incurred $300,000 of costs in developing management
information systems to support its growing Broadband Services Unit during the
second quarter and first six months of fiscal 2003.

                                       22

<PAGE>

Interest and Other Expense

The Company had interest and other expense of $149,000 and $245,000 in the
second quarter and first six months of fiscal 2003, respectively, compared to
$36,000 and $73,000 in the comparable periods of fiscal 2002. In both fiscal
2003 and 2002 this consists primarily of interest expense on the Company's debt
obligations. The increase in fiscal 2003 is due to the additional interest
expense associated with the Company's larger bank line of credit facility, the
mortgage on the Company's corporate headquarters and the subordinated notes
issued in connection with Company's acquisitions.

Income Taxes

Due to the significant net operating loss carry-forward, the Company pays
minimal income taxes, which includes federal income taxes, based on an
"alternative minimum tax" calculation and state taxes in those states where the
Company does not have net operating loss carry-forwards.

Operations by Business Segment

The Company has identified the following two business segments:

              The Broadband Products Unit (Products) manufactures and markets
              network monitoring systems, which include hardware and software
              sold to the broadband communications market, primarily for cable
              TV (CATV) systems.

              The Broadband Services Unit (Services) provides a range of
              outside-plant services to CATV operators that include fulfillment,
              engineering and construction services.

Summarized financial information related to the Company's business segments for
the quarters and six months ended September 28, 2002 and September 29, 2001 are
shown below:

<TABLE>
<CAPTION>

                                                                 Products                 Services                Consolidated
                                                                 --------                 --------                ------------
<S>                                                             <C>                      <C>                      <C>
            Quarter Ended September 28, 2002
            --------------------------------

                        Net sales                               $ 4,523,000              $ 9,448,000               $ 13,971,000
                        Interest income                                   -                    1,000                      1,000
                        Interest expense                             91,000                   75,000                    166,000
                        Depreciation and amortization               105,000                  179,000                    284,000
                        Income tax expense                                -                        -                          -
                        Capital expenditures                         94,000                  392,000                    486,000
                        Operating income (loss)                     213,000                  (12,000)                   201,000

                        Total assets                              9,334,000               20,146,000                 29,480,000

            Quarter Ended September 29, 2001
            --------------------------------

                        Net sales
                                                                $ 4,038,000                 $ 37,000                $ 4,075,000
                        Interest income                               1,000                        -                      1,000
                        Interest expense                             37,000                        -                     37,000
                        Depreciation and amortization                38,000                    2,000                     40,000
                        Income tax expense                                -                        -                          -
                        Capital expenditures                         20,000                    3,000                     23,000
                        Operating income (loss)                     245,000                 (317,000)                   (72,000)

                        Total assets                              6,108,000                  229,000                  6,337,000

            Six Months Ended September 28, 2002
            -----------------------------------

                        Net sales                               $ 9,504,000             $ 14,206,000               $ 23,710,000
                        Interest income                               1,000                    1,000                      2,000
                        Interest expense                            168,000                  110,000                    278,000
                        Depreciation and amortization               192,000                  344,000                    536,000
                        Income tax expense                                -                        -                          -
                        Capital expenditures                      2,955,000                  448,000                  3,403,000
                        Operating income (loss)                     668,000                 (543,000)                   125,000

                        Total assets                              9,334,000               20,146,000                 29,480,000

            Six Months Ended September 29, 2001
            -----------------------------------

                        Net sales
                                                                $ 7,833,000                $ 268,000                $ 8,101,000
                        Interest income                               1,000                        -                      1,000
                        Interest expense                             73,000                        -                     73,000
                        Depreciation and amortization                74,000                    3,000                     77,000
                        Income tax expense                            9,000                        -                      9,000
                        Capital expenditures                         29,000                    9,000                     38,000
                        Operating income (loss)                     591,000                 (348,000)                   243,000

                        Total assets                              6,108,000                  229,000                  6,337,000
</TABLE>

                                       23
<PAGE>

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

Liquidity and Capital Resources

In the first six months of fiscal 2003, the Company generated net cash of $2,000
compared to consuming net cash of $220,000 in the first six months of fiscal
2002.

Net cash consumed by operating activities was $1,661,000 in the first six months
of fiscal 2003 versus net cash consumed of $207,000 in the first six months of
fiscal 2002. The increase in fiscal 2003 was primarily due to an increase in
accounts receivable ($3.2 million) and in prepaid expenses ($738,000) which was
partially offset by an increase in due to affiliates ($1.1 million). The
increase in accounts receivable is due to the rapid growth of the Company's
Broadband Services Unit and to the timing of sales in the second quarter of
fiscal 2003. The increase in due to affiliates represents amounts due to NeST
Technologies, Inc. and NeSTronix, Inc. for contracted manufacturing and
engineering services.

Net cash used in investing activities was $4.7 million in the first six months
of fiscal 2003 versus $38,000 in the first six months of fiscal 2002. This is
due to increase in capital expenditures in the first six months of fiscal 2003
which included $2.6 million associated with the purchase of the Company's
corporate headquarters and $163,000 for the purchase of a new trade show
exhibit. In fiscal 2003, the Company also expended net cash of $998,000 for the
acquisition of Nex-Link Communication Project Services, LLC.

Cash flow from financing activities was $6.4 million in the first six months of
fiscal 2003 versus $32,000 in the first six months of fiscal 2002. The major
sources of cash in the first six months of fiscal 2003 were the Company's new
bank line of credit and mortgage proceeds associated with the purchase of the
Company's corporate headquarters.

On August 14, 2002, the Company entered into a $10,700,000 asset-based credit
facility with LaSalle Business Credit, Inc., as agent for Standard Federal Bank
National Association (the "Bank"), collateralized by all assets of the Company.
The credit facility consists of the following:

              1.) Revolving Credit Loan Facility

                  A revolving credit loan facility having a maximum availability
                  equal to the lesser of (a) Seven Million Five Hundred Thousand
                  Dollars ($7,500,000); and (b) eighty-five percent (85%) of the
                  Company's eligible accounts (as defined in the loan
                  documents). The revolving credit loans bear interest, at the
                  Company's option, at either (i) abase rate equal to the prime
                  rate of the Bank plus 0.50% or (ii) at the LIBOR rate plus
                  2.75%.

              2.) Letters of Credit

                  The ability for the Company to obtain standby letters of
                  credit, provided that the aggregate undrawn face amount of
                  such letters of credit is not in excess of, at any one time,
                  $1,000,000. In addition to the normal charges for letters of
                  credit, the Company is subject to an annual 3% administrative
                  fee of the face amount of the letters of credit, which fee is
                  payable monthly. The outstanding letters of credit will
                  automatically reduce, dollar for dollar, the amount that may
                  be borrowed by the Company as revolving credit loans under the
                  revolving credit facility.

                                       24

<PAGE>

              3.) Term Loans

                        a.)  A $500,000 discretionary machinery and equipment
                             acquisition line. Advances are limited to 80% of
                             the net invoice cost, cannot be less than $100,000
                             and will be permitted only during the first two
                             years following the closing date;
                        b.)  A $2,200,000, three-year term loan with a balloon
                             payment payable upon the earlier to occur of the
                             termination of the credit facility or the
                             expiration of the initial contract term; (these two
                             term loans bear interest, at the Company's option,
                             at either (i) the Bank's prime rate as in effect
                             from time to time plus 0.75% or (ii) the LIBOR rate
                             plus 3%); and
                        c.)  Up to a $500,000 two year term loan, with an annual
                             excess cash flow recapture provision of 50%. The
                             interest rate for this loan is the Bank's prime
                             rate as in effect from time to time plus 2%.

The proceeds of these credit facilities were used by the Company to refinance
all of its existing bank debt with Comerica Bank and for working capital needs
associated with the Company's growth. As of September 28, 2002, the outstanding
balance under the revolving credit facility was $7,450,000. The outstanding
balances on the cash flow term loan and the equipment line were $500,000 and
$100,000, respectively.

On May 10, 2002, the Company purchased the property where its corporate
headquarters is located for $2,565,000. The Company obtained a $1,923,750,
15-year mortgage loan, with a five-year balloon payment. The mortgage bore
interest at prime plus 2%. This mortgage was refinanced on August 14, 2002 as
part of the Company's new credit facility with LaSalle Business Credit, Inc. The
mortgage was replaced with a $2,200,000, 15-year mortgage loan, with a
three-year balloon payment. The mortgage bears interest at prime plus .75%.

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 28, 2002 was
$45,000.

In June 1999, the Company entered into an agreement with its chairman, Javad K.
Hassan, whereby Mr. Hassan will 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, 2002. No amounts were borrowed under this line
as of September 28, 2002. Subsequent to the end of the second quarter of fiscal
2003, the Company borrowed $250,000 under the line.

                                       25

<PAGE>

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 lieu of 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 lieu of 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.
The Company has negotiated favorable rates with NeST for services performed by
both the India-based and U.S.-based employees of NeST. The Company may not be
able to obtain the same negotiated rates from outside third parties.

In October 2000, the Company's majority shareholder exercised his right to
convert 6,000 shares of senior convertible preferred stock into 800,000 shares
of the Company's common stock. In October 2001, the Company's majority
shareholder exercised his right to convert 19,825 shares of senior convertible
preferred stock into 3,965,000 shares of the Company's common stock at an
exercise price of $0.50 per share. Following such conversion, no shares of the
Company's senior convertible preferred stock remained outstanding.

In January 2001, 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.

In January 2002, the Company's Board of Directors authorized the Company's
investment banker to raise up to $2,000,000 in additional equity financing
through a private placement of restricted shares of the Company's Series A
Preferred Stock, at a price of $27.00 per share. The Series A Preferred Stock
bears a 10% annual cumulative dividend. Each share of the Series A Preferred
Stock can be converted into 100 shares of the Company's Common Stock, subject to
standard anti-dilution provisions. Purchasers of each share of the Company's
Series A Preferred Stock in this offering are entitled to receive a warrant to
purchase up to 25 shares of the Company's Common Stock, at a price of $0.27 per
share. These warrants vest immediately and are exercisable for six years from
the date of purchase. The sale of shares of the Series A Preferred Stock in this
offering is restricted to accredited investors, including without limitation
certain members of the Company's Board of Directors. On January 29, 2002, the
Company's Chairman and CEO purchased $1,000,000 of the shares. In February 2002,
one of the Company's Board of Directors and a family member of such director
each purchased $200,000 of the preferred shares. The remaining $600,000 of the
equity offering was not purchased as of May 21, 2002, at which time the
Company's Board of Directors voted to terminate the offering.

Capital expenditures totaled $3,403,000 in the first six months of fiscal 2003
compared to $38,000 in the first six months of fiscal 2002. Capital expenditures
include computer equipment, software, manufacturing assembly/test equipment,
test lab equipment, office furniture/fixtures, vehicles, facility improvements
and service technician equipment. In addition, in fiscal 2003, these
expenditures also include $2.6 million associated with the purchase of the
Company's corporate headquarters and $163,000 for the purchase of a new trade
show exhibit. The increase in capital expenditures in fiscal 2003 is also due to
the growth of the Company's Broadband Services Unit.

                                       26

<PAGE>

The Company believes that cash from profitable operations, available credit
facilities 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.

Item 3. Controls and Procedures

     Based on their evaluation of the Company's disclosure controls and
procedures (as defined in 17 C.F.R. Sections 240.13a-14(c) and 240.15d-14(c)) as
of a date within 90 days prior to the filing of this quarterly report, the
issuer's Chief Executive Officer and Chief Financial Officer concluded that the
effectiveness of such controls and procedures was adequate in timely alerting
them to material information relating to the Company required to be included in
its SEC periodic filings.

     Due to the tremendous growth anticipated in the Company's operations during
the next fiscal year, the Company does not believe that cash from profitable
operations, available credit facilities and the ability to pay for NeST
development services in cash or warrants will provide sufficient liquidity to
support its projected operations through the next fiscal year. Accordingly,
management of the Company is currently evaluating potential sources of funding
to finance the Company's projected cash needs, including without limitation
additional sources of debt and/or equity financing. There can be no assurances,
however, that additional equity offerings, additional banking arrangements or
other sources of financing, if needed, will be available to the Company on
acceptable terms, if at all.



                                       27
<PAGE>
                           PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

      (a) (1) Exhibits

                       3.1   (3.1) Restated Certificate of Incorporation of
                             Registrant(1)

                       3.2   (3.1) Certificate of Amendment to Certificate of
                             Incorporation of Registrant(2)

                       3.3   (3.3) Certificate of Designation for Series A
                             Preferred Stock dated January 23, 2002(9)

                       3.4   (3.2) Amended By-Laws of Registrant(1)

                       4.1   (4.1) Specimen of Common Stock Certificate, par
                             value $.10 per share(1)

                       4.2   (4.2) Series A Common Stock Purchase Warrant(9)

                       4.3   (4.3) Amended and Restated Warrant issued to
                             Scientific-Atlanta(9)

                       9.1   (9.1) Voting Trust and Share Participation
                             Agreement(4)

                       9.2   (9-b) First Amendment to Voting Trust and Share
                             Participation Agreement dated November 30, 2001(3)

                       9.3   (9-c) Stock Purchase Rights Agreement, dated as of
                             December 30, 2001, between AM and Javad K.
                             Hassan(3)

                      10.1   (10-a) 1991 Incentive Stock Option Plan(5)

                      10.2   (10-b) Joint Development Agreement between AM and
                             Scientific-Atlanta dated May 1996(6)

                      10.3   (10-c) Distribution Agreement and Manufacturing
                             License dated June 14, 1996(6)

                      10.4   (10-d) Registration Rights Agreement dated June 17,
                             1996(6)



                                       28
<PAGE>

                      10.5   (10-e) Warrant Agreement dated June 17, 1996(6)

                      10.6   (10-f) 1999 Stock Option Plan(4)

                      10.7   (10.7) Loan and Security Agreement dated as August
                             13, 2002 between the Company, its direct and
                             indirect subsidiaries and LaSalle Business Credit,
                             Inc., as agent for Standard Federal Bank National
                             Association, as lender(10)

                      10.8   (10-i) Consulting Services Agreement between the
                             Company and NeST(7)

                      10.9   (10.1)Manufacturing Services Agreement between the
                             Company and NeSTronix(4)

                      10.10  (10.10) Common Stock Purchase Warrant issued to
                             Investec PMG Capital(9)

                      10.11  (2) Stock Purchase Agreement between the Company,
                             AMBS, SRS Communications Corporation, EDJ
                             Communications, Inc, David P. Sylvestre, Clifford
                             P. Sylvestre, Edward L. Reynolds, Joanne Sylvestre,
                             and Elizabeth D. Reynolds(8)

                      10.12  (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(8)

                      10.13  (10-m) Agreement to Terminate Service Agreement
                             between the Company and Javad Hassan (Executive)
                             dated November 1, 2001(3)

                      10.14  (10-n) Executive Employment Agreement between the
                             Company and Javad Hassan dated November 1, 2001(3)

                      10.15  (10-o) Loan Agreement between Javad Hassan
                             (Executive Borrower) and the Company dated December
                             30, 2001(3)

                      10.16  (10-16) Agreement and Plan or Merger for
                             Acquisition of Nex-Link Communications Project
                             Services, LLC(9)


                                       29
<PAGE>


                      10.17  (10.17) Amended and Restated Subordinated Note from
                             AM Broadband Services, Inc. in favor of David P.
                             Sylvestre, Clifford P. Sylvestre, Edward L.
                             Reynolds, Joanne Sylvestre, Donna M. Sylvestre and
                             Elizabeth D. Reynolds(10)

                      10.18  (10.18) First Amendment to Stock Purchase Agreement
                             (SRS/EDJ acquisition)(9)

                      10.19  (10.19) Employment Agreement with Linda Johnson(9)

                      10.20  (10.20) Employment Agreement with Michael N.
                             Johnson(9)

                      21.    Subsidiaries of the Company (filed herewith)

                      99.1   Certification of Chief Executive Officer Pursuant
                             to Section 1350 of Title 18 of the United States
                             Code (filed herewith)

                      99.2   Certification of Chief Financial Officer Pursuant
                             to Section 1350 of Title 18 of the United States
                             Code (filed herewith)


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

(2)      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.

(3)      Incorporated by reference to the Exhibit number indicated in
         Registrant's Report Form 10-QSB for the fiscal quarter ended December
         29, 2001.

(4)      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.

(5)      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.

(6)      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.

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

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



                                       30
<PAGE>

(9)      Incorporated by reference to the Exhibit number indicated in the
         Registrant's Report on Form 10-KSB for the fiscal year ended March 30,
         2002.

(10)     Incorporated by reference to the Exhibit number indicated in the
         Registrant's Report on Form 10-QSB for the fiscal quarter ended
         June 29, 2002.

(b)      Reports on Form 8-K.

         The Company filed a report on Form 8-K on July 16, 2002 regarding the
completion of the acquisition of all of the assets and business of Nex-Link
Communication Project Services, LLC, a Florida limited liability company
("Nex-Link"). The transaction was completed as a merger (the "Merger") in which
Nex-Link was merged with and into a wholly-owned Delaware corporate subsidiary
of Broadband, Nex-Link Acquisition Corp. (the "Acquisition Subsidiary"), which
was formed for the sole purpose of completing the Merger. As a result of the
completion of the Merger on July 1, 2002, Nex-Link became a wholly-owned
corporate subsidiary of Broadband. Simultaneously with the completion of the
Merger, the Acquisition Subsidiary changed its name and is currently operating
under the name "AM Nex-Link Communications, Inc."

         As a result of the Merger, the four members of Nex-Link (the "Members")
received, in the aggregate, the following consideration:

              (a) $1,000,000.00 in cash, to be paid by the Acquisition
Subsidiary to the Members in weekly installments following the closing for the
Merger held on July 1, 2002 (the "Closing"), each in an amount equal to that
portion of the Acquisition Subsidiary's accounts receivable (the "Nex-Link
Receivables") collected during the applicable week, and continuing until the
total of such installments equals $1,000,000.00. The Registrant will use funds
received as payments on the Nex-Link Receivables to make the aforementioned
weekly installment payments to the Members.

              (b) $1,000,000.00 in the form of a subordinated promissory note
(the "Subsidiary Note") delivered by the Acquisition Subsidiary to the Members
at the Closing. The Subsidiary Note bears interest at the rate of five percent
(5%) per annum. The outstanding principal balance of the Subsidiary Note, and
all interest accrued thereon, is repayable in three (3) equal, consecutive
annual payments, payable on the first, second and third anniversaries of the
date of the Closing. The Registrant anticipates that internal funds of the
Acquisition Subsidiary will be utilized to make all payments due under the
Subsidiary Note.

              (c) 7,000,000 restricted shares of Common Stock of the Registrant,
par value $.10 per share, were delivered by Acquisition Subsidiary to the
Members at the Closing. These shares had a value of approximately $1,995,000.00
(based on the closing price of the Registrant's common stock on the date of the
Closing).

         In connection with the Merger, the Acquisition Subsidiary and the
Members agreed to restructure certain indebtedness owed to the members by
Nex-Link in the principal amount of $300,000.00. As evidence of such
restructuring, the Acquisition Subsidiary executed and delivered to the Members
at the Closing a subordinated promissory note (the "Company Note"), in the
original principal amount of $300,000.00, which bears interest at the rate of
five percent (5%) per annum. The outstanding principal balance of the Company
Note is payable in three (3) equal annual installments in the amount of
$100,000.00 each, on the first, second and third anniversaries of the date of
the Closing. Accrued interest on the Company Note is payable in quarterly
installments, commencing on October 1, 2002.

                                       31
<PAGE>

         The consideration payable by the Acquisition Subsidiary to the Members,
as evidenced by the Subsidiary Note, and any amounts due under the Company Note,
will be reduced on a dollar-for-dollar basis if and to the extent that the
aggregate Net Book Value of Nex-Link (defined as the book value of Nex-Link's
assets minus the book value of Nex-Link's liabilities), as of the Closing, is
less than $200,000.00. The Aggregate Net Book Value of Nex-Link as of the
Closing shall be determined by Broadband within sixty (60) days of the Closing
pursuant to the procedures set forth in the Agreement and Plan of Merger entered
into between Broadband, Acquisition Subsidiary, Nex-Link and the Members dated
as of June 3, 2002 (the "Merger Agreement").

         The consideration payable by Acquisition Subsidiary to the Members, as
evidenced by the Subsidiary Note, and any amounts due under the Company Note,
will be further reduced on a dollar-for-dollar basis if and to the extent that
any of Nex-Link's account receivables outstanding as of the date of the Closing
remains outstanding and uncollected on the one hundred twentieth (120th) day
following the date of the Closing.


                                   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 18, 2002           By:  /s/ H. Charles Wilson, III
                                       ---------------------------------------
                                       H. Charles Wilson, III, Chief Financial
                                       Officer and Authorized Representative
                                       of the Registrant



                                       32