<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark one)

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended March 31, 2002

                                        OR

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

         For the transition period from __________ to __________

                          Commission File No. 001-12739

                   ADVANCED ELECTRONIC SUPPORT PRODUCTS, INC.
             (Exact name of registrant as specified in its charter)

                 FLORIDA                                       59-2327381
     (State or other jurisdiction of                         (IRS Employer
     incorporation or organization)                        Identification No.)

         1810 N.E. 144TH STREET
         NORTH MIAMI, FLORIDA                                    33181
----------------------------------------                       ----------
(Address of Principal Executive Offices)                       (Zip Code)

         Registrant's Telephone Number, Including Area Code: (305) 944-7710

         Check whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
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 [ ]

         The number of shares outstanding of the registrant's common stock, as
of May 14, 2002, is 4,596,721 shares.


<PAGE>


                   Advanced Electronic Support Products, Inc.
                                and Subsidiaries


                                      INDEX


<TABLE>
<CAPTION>

                                                                                                               Page
                                                                                                               ----
<S>        <C>                                                                                                 <C>
                                       Part I. Financial Information

Item 1.    FINANCIAL STATEMENTS

           Condensed Consolidated Balance Sheets at December 31, 2001 and
           March 31, 2002 (unaudited).............................................................................3

           Condensed Consolidated Statements of Income for the three months
           ended March 31, 2002 and 2001 (unaudited)..............................................................4

           Condensed Consolidated Statement of Shareholders' Equity for the
           three months ended March 31, 2002 (unaudited)..........................................................5

           Condensed Consolidated Statements of Cash Flows for the three months
           ended March 31, 2002 and 2001 (unaudited)..............................................................6

           Notes to Condensed Consolidated Financial Statements (unaudited).......................................7

Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS.........................................................11

Item 3     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
            MARKET RISK..........................................................................................17

                                              Part II. Other Information

Item 1.    LEGAL PROCEEDINGS.....................................................................................18

Item 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS.............................................................18

Item 3.    DEFAULTS UPON SENIOR SECURITIES.......................................................................18

Item 4.    SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.....................................................18

Item 5.    OTHER INFORMATION.....................................................................................18

Item 6.    EXHIBITS AND REPORTS ON FORM 8-K......................................................................18


</TABLE>


                                       2
<PAGE>

                   Advanced Electronic Support Products, Inc.
                                and Subsidiaries



                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>


                                                                             March 31, 2002           December 31,
                                                                              (unaudited)                 2001
                                                                             --------------           ------------
<S>                                                                             <C>                     <C>
Current Assets
   Cash                                                                         $    840                $  1,288
   Accounts receivable, net of allowance for doubtful accounts
   of $319 at March 31, 2002 and $233 at December 31, 2001                         3,932                   4,094
   Inventories                                                                     5,256                   5,930
   Income tax receivable                                                              83                     148
   Due from employees                                                                 30                      31
   Prepaid expenses and other current assets                                         407                     211
                                                                                --------                --------
Total current assets                                                              10,548                  11,702
Property and equipment, net                                                          587                     580
Goodwill, net of $2,191 accumulated amortization                                     640                     643
Deferred tax assets                                                                   74                      78
Assets of business transferred under contractual arrangement                         719                     732
Investment in marketable equity securities                                           206                     270
Other assets                                                                          --                     200
                                                                                --------                --------
TOTAL ASSETS                                                                    $ 12,774                $ 14,205
                                                                                ========                ========

Liabilities and Shareholders' Equity
Current Liabilities
   Line of Credit                                                               $  2,011                $  1,546
   Accounts payable                                                                4,427                   5,619
   Accrued expenses                                                                  570                   1,058
   Income taxes payable                                                               41                      52
   Customer deposits and other                                                       219                     449
   Due to principal shareholders                                                      --                     152
   Other current liabilities                                                         409                     270
                                                                                --------                --------
Total current liabilities                                                          7,677                   9,146
Long term liabilities                                                                 16                      30
                                                                                --------                --------
TOTAL LIABILITIES                                                                  7,693                   9,176
                                                                                --------                --------
Shareholders' Equity
   Preferred stock, $.001 par value; 1,000 shares authorized;
   none issued                                                                        --                      --
   Common stock, $.001 par value; 20,000 shares authorized;
   issued: 4,597 and 4,407 shares at March 31, 2002 and December
   31, 2001, respectively                                                              5                       4
   Paid-in capital                                                                12,349                  12,198
   (Deficit)                                                                      (6,679)                 (6,684)
   Accumulated other comprehensive loss                                             (594)                   (489)
                                                                                --------                --------
TOTAL SHAREHOLDERS' EQUITY                                                         5,081                   5,029
                                                                                --------                --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                      $ 12,774                $ 14,205
                                                                                ========                ========

</TABLE>


     See accompanying notes to condensed consolidated financial statements.




                                       3
<PAGE>
                   Advanced Electronic Support Products, Inc.
                                and Subsidiaries

                   Condensed Consolidated Statements of Income
                                   (Unaudited)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                                   Three months ended
                                                                         March 31,
                                                              ------------------------------
                                                               2002                   2001
                                                              -------                -------
<S>                                                           <C>                    <C>
Net sales                                                     $ 7,486                $ 8,211

Operating expenses

   Cost of sales                                                5,037                  5,645
   Selling, general and administrative expenses                 2,379                  2,440
                                                              -------                -------

Total operating expenses                                        7,416                  8,085
                                                              -------                -------

Income from operations                                             70                    126

Other income (expense):
   Interest, net                                                  (51)                   (87)
   Other                                                           24                    (12)
                                                              -------                -------

Income before income taxes                                         43                     27
Provision  for income taxes                                        38                      5
                                                              -------                -------

Net income                                                    $     5                $    22
                                                              -------                -------

Net income per common share                                   $  0.00                $  0.01
Net income per common share assuming dilution                 $  0.00                $  0.01
                                                              -------                -------

</TABLE>

     See accompanying notes to condensed consolidated financial statements.





                                       4
<PAGE>
                   Advanced Electronic Support Products, Inc.
                                and Subsidiaries



            Condensed Consolidated Statement of Shareholders' Equity
                                   (Unaudited)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                     Accumulated
                                                                                        Other                             Total
                                     Common          Paid-In                         Comprehensive    Comprehensive    Stockholders
                                     Stock           Capital           Deficit       Income (Loss)    Income (Loss)       Equity
                                    --------         --------         --------         --------         --------         --------
<S>                <C>              <C>              <C>              <C>              <C>              <C>              <C>
Balance at January 1, 2002          $      4         $ 12,198         $ (6,684)        $   (489)              --         $  5,029

Net Income                                                                   5                                 5                5

Conversion of debt                         1              151                                                                 152

Investment in marketable
  equity securities,  net of
  tax                                     --               --               --              (64)             (64)             (64)

Cumulative foreign currency
  translation adjustment                  --               --               --              (41)             (41)             (41)
                                                                                                        --------
                                                                                                        $   (100)
                                    --------         --------         --------         --------         ========         --------
Balance at March 31, 2002           $      5         $ 12,349         $ (6,679)        $   (594)                         $  5,081
                                    ========         ========         ========         ========                          ========

</TABLE>


            See accompanying notes to condensed financial statements.




                                       5
<PAGE>
                   Advanced Electronic Support Products, Inc.
                                and Subsidiaries


                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                      Three months ended March 31,
                                                                                     ------------------------------
                                                                                       2002                  2001
                                                                                     -------                -------
<S>                                                                                  <C>                    <C>
Operating Activities:

   Net income                                                                        $     5                $    22

   Adjustments to reconcile net income to net cash (used in) operating
   activities:
   Provision, net of losses on accounts receivable                                        19                      1
   Depreciation and amortization                                                          67                     54
   Amortization of goodwill                                                               --                     54
   (Increase) decrease, net of acquired business, in:
       Accounts receivable                                                               162                   (937)
       Inventories                                                                       674                    350
       Income tax receivable                                                              65                    (11)
       Prepaid expenses and other current assets                                          10                     38
       Deferred tax assets                                                                (2)                    48
       Other assets                                                                       13                     (4)
   Increase (decrease), net of acquired business, in:
       Accounts payable and accrued expenses                                          (1,853)                  (580)
       Income taxes payables                                                             (11)                    11
       Other liabilities                                                                 (60)                   (20)
                                                                                     -------                -------
Net cash (used in) operating activities                                                 (911)                  (974)
                                                                                     -------                -------
Investing Activities:
   Additions to property and equipment                                                   (16)                   (63)
   Collection of loans due from related parties                                            2                      8
                                                                                     -------                -------
Net cash (used in) investing activities                                                  (14)                   (55)
                                                                                     -------                -------
Financing Activities:
   Net Proceeds (payments) on borrowings                                                 465                    229
                                                                                     -------                -------
   Net cash provided by financing activities                                             465                    229
                                                                                     -------                -------
Net (decrease) in cash                                                                  (460)                  (800)
Effect of exchange rate changes on cash                                                   12                    (80)
Cash, at beginning of period                                                           1,288                  1,769
                                                                                     -------                -------
Cash, at end of period                                                               $   840                $   889
                                                                                     =======                =======
Supplemental information:
   Cash paid for:
   Interest                                                                          $    51                $    87
   Taxes                                                                             $    48                $   137

Non-cash transactions:
   Note in exchange for sale of business                                                  --                $   772
</TABLE>




     See accompanying notes to condensed consolidated financial statements.



                                       6
<PAGE>
                   Advanced Electronic Support Products, Inc.
                                and Subsidiaries

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three-month period ended March 31, 2002 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2002. The condensed consolidated balance sheet information as of December 31,
2001 was derived from the audited consolidated financial statements included in
the Company's Annual Report on Form 10-K for 2001 (the "Form 10-K"). For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Form 10-K.

2. Line of Credit

The line of credit agreement requires the Company to comply with certain
covenants, including limitations on further borrowings, dividend payments and
certain financial covenants. As of March 31, 2002, the Company was not in
compliance with two of the financial covenants contained in the agreement, and
the lender has waived compliance with those covenants at that date.
Additionally, the Company will likely not meet certain of its financial
covenants during future periods unless its results of operations substantially
improve. While there can be no assurance, the Company expects that its lender
will continue to waive financial covenant violations which occur during future
periods.





                                       7
<PAGE>
                   Advanced Electronic Support Products, Inc.
                                and Subsidiaries


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


3. Earnings Per Share

The following reconciles the components of the earnings per share (EPS)
computation (in thousands, except per share amounts):

<TABLE>
<CAPTION>

 For the three months
   ended March 31,                          2002                                               2001
 --------------------   ---------------------------------------------      --------------------------------------------
                           Income          Shares           Per-Share        Income           Shares           Per-Share
                        (Numerator)     (Denominator)         Amount       (Numerator)     (Denominator)         Amount
                        -----------     -------------         ------       -----------     -------------         ------
<S>                        <C>              <C>              <C>              <C>              <C>              <C>
Earnings per
common share

Net income
available to
common shares              $   5            4,440            $   0.00         $  22            3,682            $   0.01

Effect of
dilutive
Securities:

Exercisable
options to
purchase shares
of common stock                               173                                                407

Net income
available to
common
shareholders
plus assumed
conversions                $   5            4,613            $   0.00         $  22            4,089            $   0.01


</Table>

Options to purchase 20,000 shares, 91,450 shares, 332,401 shares, and 19,000
shares of common stock at $3.69, $2.13, $1.75, and $2.86 per share,
respectively, were outstanding during 2002, but were not included in the
computation of diluted EPS as the options' exercise price were greater than the
average market price of the common shares. These options, which expire in 2007,
2009, 2010, and 2011 were outstanding at March 31, 2002.

Options to purchase 20,000 shares and 91,850 shares of common stock at $3.69 and
$2.13 per share, respectively, were outstanding during 2001, but were not
included in the computation of diluted EPS as the options' exercise price were
greater than the average market price of the common shares. These options, which
expire in 2007 and 2009, were outstanding at March 31, 2001.




                                       8
<PAGE>
                   Advanced Electronic Support Products, Inc.
                                and Subsidiaries


4. Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) finalized
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS
141 requires the use of the purchase method of accounting for business
combinations initiated after June 30, 2001. SFAS 141 also requires that the
Company recognize acquired intangible assets apart from goodwill if the acquired
intangible assets meet certain criteria. SFAS 141 applies to all business
combinations initiated after June 30, 2001 and for purchase business
combinations completed on or after July 1, 2001. It also requires, upon adoption
of SFAS 142, that the Company reclassify the carrying amounts of intangible
assets and goodwill based on the criteria in SFAS 141.

SFAS 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142. Other than its 1997
acquisition of Jotec, AS, the Company's previous business combinations were
accounted for using the purchase method of accounting. The Company initially
adopted SFAS 141 and SFAS 142 during the quarter ended March 31, 2002 and will
complete the transitional goodwill impairment test in the quarter ending June
30, 2002. Any resultant loss will be recognized as a cumulative effect of a
change in accounting principle and the Company will restate its March 31, 2002
financial statements for such loss, if any.




                                       9
<PAGE>
                   Advanced Electronic Support Products, Inc.
                                and Subsidiaries


The principal effect of initial adoption of SFAS 141 and SFAS 142 was to
eliminate amortization of the Company's goodwill. Had goodwill amortization
ceased at January 1, 2001, net income would have increased by $54,000 and net
income and net income per share for the three months ended March 31, 2001 would
have been $76,000 and $.02, respectively.

In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-lived Assets." This Statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. This
Statement supersedes FASB Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and 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 a Business" (as previously defined
in that Opinion). The provisions of this Statement are effective for financial
statements issued for fiscal years beginning after December 15, 2001, and
interim periods within those fiscal years, with early adoption encouraged. The
provisions of this Statement generally are to be applied prospectively. The
Company's adoption of SFAS 144 on January 1, 2002 had no material effect on the
Company's consolidated financial statements.



                                       10
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS QUARTERLY REPORT ON FORM 10-Q CONTAIN FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934 WHICH ARE INTENDED TO BE COVERED BY THE SAFE HARBORS CREATED THEREBY. THESE
FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, INCLUDING BUT NOT
LIMITED TO THE FOLLOWING: COMPETITION FROM OTHER MANUFACTURERS AND DISTRIBUTORS
OF CONNECTIVITY AND NETWORKING PRODUCTS BOTH NATIONALLY AND INTERNATIONALLY; THE
BALANCE OF THE MIX BETWEEN ORIGINAL EQUIPMENT MANUFACTURER SALES (WHICH HAVE
COMPARATIVELY LOWER GROSS PROFIT MARGINS WITH LOWER EXPENSES) AND NETWORKING AND
INTERNATIONAL SALES (WHICH HAVE COMPARATIVELY HIGHER GROSS PROFIT MARGINS WITH
HIGHER EXPENSES) FROM PERIOD TO PERIOD; THE COMPANY'S DEPENDENCE ON THIRD
PARTIES FOR MANUFACTURING AND ASSEMBLY OF PRODUCTS AND THE ABSENCE OF SUPPLY
AGREEMENTS; AND WORKING CAPITAL AVAILABILITY TO SUPPORT BOTH CURRENT OPERATIONS
AND FUTURE GROWTH, INCLUDING GROWTH THROUGH ACQUISITIONS. THESE AND ADDITIONAL
FACTORS ARE DISCUSSED HEREIN AND IN THE FORM 10-K. THE FORWARD-LOOKING
STATEMENTS CONTAINED HEREIN AND THEREIN INVOLVE AND ARE SUBJECT TO KNOWN AND
UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT COULD CAUSE THE COMPANY'S
ACTUAL RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS TO DIFFER
FROM THE FUTURE RESULTS, PERFORMANCE (FINANCIAL OR OPERATING), ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED
NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK
ONLY AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY
RELEASE ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.

         THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION
WITH THE INFORMATION SET FORTH IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" IN THE FORM 10-K.



                                       11
<PAGE>

CRITICAL ACCOUNTING POLICIES

         Financial Reporting Release No. 60, which was released by the U.S.
Securities and Exchange Commission, encourages all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. The Company's consolidated financial statements contained
in its 2001 Form 10-K included a summary of the significant accounting policies
and methods used in the preparation of the financial statements.

         Management believes the following critical accounting policies affect
the significant judgments and estimates used in the preparation of its financial
statements.

Revenue Recognition

         Revenues are recognized at the time of shipment of the respective
merchandise. The Company includes shipping and handling fees billed to customers
as revenues. Cost of sales include outbound freight and preparing customers'
orders for shipment.

Use of Estimate

         Management's discussion and analysis of financial condition and results
of operations is based upon the Company's consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements require management to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues, and expenses, and related
disclosure of contingent assets and liabilities. On an ongoing basis, management
evaluates these estimates, including those related to allowances for doubtful
accounts receivable and the carrying value of inventories and long-lived assets.
Management bases these estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.

RESULTS OF OPERATIONS

         For the three months ended March 31, 2002, the Company achieved net
sales of $7.5 million, a decrease of $725,000 or 8.8% from net sales of $8.2
million for the three months ended March 31, 2001. Revenues for the first
quarter of 2002 were positively impacted by $1.0 million of sales by Intelek,
which was acquired in August 2001. Without Intelek's sales, net sales for the
first quarter of 2002 would have decreased by $1.7 million or 21.3% compared to
first quarter 2001 net sales. The decrease in net sales for the first three
months of 2002 was due primarily to worsening worldwide economic conditions
generally in the technology market and worsening economic conditions
specifically in the networking, telecom and consumer sectors, which are the
Company's primary markets. The Company expects these factors will continue to
impact its net sales throughout 2002, although it believes that its net sales
will increase as the economy improves, which the Company believes will occur
during the latter part of 2002 and into 2003.




                                       12
<PAGE>

         For the three months ended March 31, 2002, U.S. original equipment
manufacturer (OEM) sales totaled $1.3 million reflecting an increase $303,000
(30.3%) when compared to $1.0 million for the three months ended March 31, 2001.
International sales were $4.7 million reflecting a decrease of $457,000 (8.9%)
when compared to $5.2 million for the three months ended March 31, 2001.
However, international sales for the three months ended March 31, 2002 were
positively impacted by Intelek's sales. Without sales by Intelek, international
sales for the three months ended March 31, 2002 would have been $3.7 million, or
29% lower from period to period. U.S. networking sales for the first three
months were $1.5 million for 2002, compared to $1.8 million for 2001.

         The Company's gross profit margin for the three months ended March 31
2002 was 32.7%, compared to 31.3% for the three months ended March 31, 2001. The
Company believes that the primary reason for the increase is related to the
Company's ongoing efforts to reduce its cost of sales through negotiation with
its suppliers.

         SG&A expenses were unchanged at $2.4 million for the three months ended
March 31, 2002 from the same period a year ago, despite the addition of
Intelek's SG&A expenses in 2002 aggregating approximately $215,000. SG&A also
benefited in 2002 from the impact of SFAS 142, since the Company amortized
$54,000 of goodwill in the first quarter of 2001 and no such goodwill
amortization was required in 2002. SG&A expenses as a percentage of net sales
for the three months ended March 31, 2002 were 31.8%, compared to 29.7% for the
first three months of 2001. The Company believes (although there can be no
assurance) that as sales increase in the future, it will see a reduction in SG&A
as a percentage of net sales, since many of its SG&A expenses are relatively
fixed.

         As a result of the aforementioned factors, income from operations for
the three months ended March 31, 2002 was $70,000, a decrease of 44.4% compared
to income from operations of $126,000 for the three months ended March 31, 2001.

         Interest expense for the three months ended March 31, 2002 decreased
41.4% to $51,000, compared to $87,000 for the three months ended March 31, 2001,
due to reduced borrowings and slightly lower interest rates from period to
period. Lower borrowings from period to period primarily resulted from funds
obtained from the completion of a private placement in July 2001.

         Other income (expense) for the 2002 three month period compared to the
2001 three month period was positively impacted by changes in currency exchange
rates from period to period. The Company had an exchange gain of $17,000 in the
first quarter of 2002, compared to an exchange loss of $(21,000) in the first
quarter of 2001.

        The Company's consolidated effective tax rate was higher for the three
months ending March 31, 2002 compared to the 2001 three month period. The
Company's U.S. operations lost money in the first quarter of 2002 and the
Company has a U.S. net operating loss carryforward. However, several of the
Company's non-U.S. businesses generated taxable income during the 2002 first
quarter, and the  income from such businesses was taxed in the jurisdictions in
which such businesses operate.  The Company anticipates that its consolidated
effective tax rate in future periods will be impacted by which of its business
operations are profitable in any future period and whether it will be able to
take advantage of its U.S. net operating loss carryforward to offset its income
in any such future period.




                                       13
<PAGE>

         As a result of the foregoing factors, the Company had net income of
$5,000 for the three months ended March 31, 2002, a decrease of 77.3% over net
income of $22,000 for the three months ended March 31, 2001.

         Basic earnings per share were $.00 for the three months ended March 31,
2002, compared to basic earnings per share of $.01 for the three months ended
March 31, 2001. Diluted earnings per share were $.00 for the first three months
of 2002, compared to diluted earnings per share of $.01 for the first three
months of 2001.

LIQUIDITY & CAPITAL RESOURCES

         Historically, the Company has financed its operations primarily with
cash flow from operations and with borrowings under its line of credit
agreement.

         At March 31, 2002, the Company's working capital was $2.9 million, an
increase of 12.3% over working capital of $2.6 million as of December 31, 2001.
The principal causes of the increase were decreases of approximately $1.2
million in accounts payable (21.2%) and approximately $488,000 (46.1%) in
accrued expenses, offset by an approximately $674,000 (11.4%) decrease in
inventories, approximately $448,000 decrease in cash (34.8%), and approximately
$465,000 (30.1%) increase in borrowings on the line of credit. At March 31,
2002, cash had decreased approximately $448,000 (including the $12,000 increase
as a result of exchange rate changes), or 34.8%, as the Company's net income was
applied to the aforementioned.

         For the three months ended March 31, 2002, $911,000 of cash was used in
operations. Net income of approximately $5,000 was applied to the aforementioned
decrease in accounts payable offset by decreases in inventories. Net cash used
in investing activities was $14,000. Cash of $465,000 was generated in financing
through increased borrowings on the line of credit. As a result of the
foregoing, the Company's cash position decreased $460,000 between December 31,
2001 and March 31, 2002. That decrease, combined with a increase of $12,000
attributable to the effects of exchange rate changes on cash, produced an
overall decrease in cash of $448,000.

         In September 2001, the Company obtained a renewal of a $4.0 million
line of credit from a financial institution. Borrowings available under the line
of credit, which matures on September 23, 2002, bear interest at the rate of
prime plus one-half (.50) percent (increased, as described below, to prime plus
one percent (1.0%) in March 2002). Borrowings under the line of credit are based
on specific percentages of the Company's receivables and inventories. The line
of credit is secured by a lien on the Company's U.S. assets, including accounts
receivable and inventories. The line of credit is also guaranteed by the
Company's principal shareholders, who have pledged a portion of the shares of
the Company's common stock which they own to secure their guarantees.

         Under the terms of the loan agreement, the Company is required to
comply with certain affirmative and negative covenants and to maintain certain
financial benchmarks and ratios. As of September 30, 2001, the Company was not
in compliance with the tangible net worth and leverage convents. A waiver was
granted by the lender, and in



                                       14
<PAGE>
connection therewith, the Company agreed to reduce the size of the line of
credit to $3.0 million. The Company was also not in compliance with the tangible
net worth and leverage covenants at December 31, 2001. While the lender granted
a waiver of this covenant violation, it increased the interest rate payable on
the line of credit by .5%, to prime plus 1%. Further, as of March 31, 2002, the
Company was again not in compliance with the tangible net worth and leverage
covenants, and the lender has granted a waiver of these covenant violations.
Additionally, the Company will likely not meet its financial covenants during
future periods unless its results of operations improve substantially. While
there can be no assurance, the Company expects that its lender will continue to
waive financial covenant violations during future periods. As of March 31, 2002,
$2,011,000 was outstanding under the line of credit and $323,000 was available
for borrowing based on applicable borrowing base formulas. As of April 30, 2002,
$1,845,000 was outstanding under the line of credit and $139,000 was available
for borrowing, based on applicable borrowing base formulas.

         The Company is making efforts to improve its cash situation through
cost reductions, collection of accounts receivable, and further reduction in
inventory. In that regard, the Company believes that revenue growth requires
working capital to support the accounts receivable generated from increased
sales. The Company believes that its internally generated cash flow from
operations, combined with funds available under its line of credit, will be
sufficient to fund its current operations for the next twelve months. Although
there can be no assurance, the Company expects that its lender will renew its
line of credit in September 2002 or that the Company will otherwise successfully
refinance the line of credit with another lender. The failure to obtain an
extension of the line of credit (or obtain a suitable replacement for the line
of credit) would likely have an adverse impact on the Company's business and
financial position. The Company may also consider selling debt or equity
securities in order to meet its current and future working capital requirements
or to fund future acquisitions.

         In March 2002, debt of $152,000 owed to the Company's principal
stockholders was converted into 190,000 shares of the Company's common stock (at
$.80 per share, the fair market value of the common stock at the date of the
conversion).

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board (FASB) finalized
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS
141 requires the use of the purchase method of accounting for business
combinations initiated after June 30, 2001. SFAS 141 also requires that the
Company recognize acquired intangible assets apart from goodwill if the acquired
intangible assets meet certain criteria. SFAS 141 applies to all business
combinations initiated after June 30, 2001 and for purchase business
combinations completed on or after July 1, 2001. It also requires, upon adoption
of SFAS 142, that the Company reclassify the carrying amounts of intangible
assets and goodwill based on the criteria in SFAS 141.

         SFAS 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill for impairment at least annually.
In addition, SFAS 142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142. Other than its 1997
acquisition of Jotec, AS, the Company's previous business combinations




                                       15
<PAGE>

were accounted for using the purchase method. The Company initially adopted SFAS
141 and SFAS 142 during the quarter ended March 31, 2002 and will complete the
transitional goodwill impairment test in the quarter ending June 30, 2002. Any
resultant loss will be recognized as a cumulative effect of a change in
accounting principle and the Company will restate its March 31, 2002 financial
statements for such loss, if any.

         The principal effect of initial adoption of SFAS 141 and SFAS 142 was
to eliminate amortization of the Company's goodwill. Had goodwill amortization
ceased at January 1, 2001, net income would have increased by $54,000 and net
income per share for the three months ended March 31, 2001 would have been
$76,000 and $.02, respectively.

         In August 2001, the FASB issued SFAS 144, "Accounting for the
Impairment or Disposal of Long-lived Assets." This Statement addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
This Statement supersedes FASB Statement No. 121, "Accounting for the Impairment
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," and 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 a Business" (as
previously defined in that Opinion). The provisions of this Statement are
effective for financial statements issued for fiscal years beginning after
December 15, 2001, and interim periods within those fiscal years, with early
adoption encouraged. The provisions of this Statement generally are to be
applied prospectively. The Company's adoption of SFAS 144 on January 1, 2002 had
no material effect on the Company's consolidated financial statements.






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<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to market risk from changes in interest rates,
and as a global company, the Company also faces exposure to adverse movements in
foreign currency exchange rates.

         The Company's earnings are affected by changes in short-term interest
rates as a result of the terms of its line of credit. If short-term interest
rates averaged 2% more in the quarter ended March 31, 2002, the Company's
interest expense would have increased, and loss before taxes would have
increased by $28,000; comparably, the Company's interest expense would have
increased, and income before taxes would have decreased by $43,000 in the first
three months ended March 31, 2001. In the event of a change of such magnitude,
management would likely take actions to try to mitigate its exposure to such
change.

         The Company's revenues and net worth are affected by foreign currency
exchange rates due to having operations in Norway, Sweden, Germany, and the
Czech Republic. While the Company's intercompany sales to its subsidiaries are
denominated in U.S. dollars, each subsidiary owns assets and conducts business
in its local currency and, upon consolidation, the subsidiaries' financial
results will be impacted by the value of the U.S. dollar. A uniform 10%
strengthening for the first three months of March 2002 in the value of the
dollar would have resulted in reduced revenues of $364,000. A uniform 10%
strengthening for the first three months of March 2001 in the value of the
dollar would have resulted in reduced revenues of $348,000. A uniform 10%
strengthening as of March 31, 2002 in the value of the dollar would have
resulted in a reduction of the Company's consolidated net worth by $200,000. A
uniform 10% strengthening as of March 31, 2001 in the value of the dollar would
have resulted in a reduction of the Company's consolidated net worth by
$354,000. The Company periodically evaluates the materiality of foreign exchange
risk and the financial instruments available to mitigate this exposure. The
Company attempts to mitigate its foreign exchange exposures by only maintaining
assets directly related to the local operations in the exposed currency wherever
possible. However, the Company finds it impractical to hedge foreign currency
exposure, and as a result will continue to experience foreign currency gains and
losses in the future.



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<PAGE>


                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        None

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

        Not applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

        None

ITEM 5. OTHER INFORMATION

        The Company has received a letter from the NASDAQ Small-Cap Market
advising the Company that as a consequence of its common stock having traded
below $1.00 for a consecutive thirty trading day period, the Company is not in
compliance with the NASDAQ continued listing maintenance standards. Under
NASDAQ rules, the Company is subject to delisting of its common stock if the
closing bid price of its common stock is not $1.00 per share or more for a
minimum of ten consecutive trading days between this date and October 21, 2002.
If the Company does not meet this requirement, NASDAQ will determine as of
October 2002 whether or not the Company meets the initial listing criteria
under NASDAQ Marketplace Rule 4310(c)(2)(A). In that regard, the Company
believes that it will meet the initial listing criteria at that date so long as
its shareholders' equity remains over $5.0 million at the time such criteria is
tested. If the Company meets the initial listing criteria at that time, it will
receive an additional 180 day extension of the period in which its shares must
trade (for ten consecutive trading days) over $1.00 per share to avoid
delisting. As a result, there can be no assurance that the Company will be able
to maintain its listing on the NASDAQ Small-Cap Market.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a) Exhibits

            None

        (b) Reports on Form 8-K

            None





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                                   SIGNATURES

         In accordance with 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.

                                      ADVANCED ELECTRONIC SUPPORT PRODUCTS, INC.



Date: May 14, 2002                    By: /s/ Roy Rafalco
                                          --------------------------------------
                                      Roy Rafalco, Chief Financial Officer










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