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UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-KSB


|   |  |                                                                                       
|-- |  | --------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|   |  | For the Fiscal Year Ended December 31, 2004                                           
|or
|  
|o  |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-27376





ELCOM INTERNATIONAL, INC.


(Name of small business issuer in its charter)


|                                          |  |                    
|----------------------------------------- |  | -------------------
|Delaware                                  |  | 04-3175156         
|(State or other jurisdiction of           |  | (I.R.S. Employer   
|Incorporation or organization)            |  | Identification No.)
|                                         
|10 Oceana Way, Norwood,
    Massachusetts |  | 02062(Zip Code)    
|(Address of principal executive offices)  |  |                    

Issuers telephone number


(781) 440-3333


Securities Registered pursuant to Section 12(b) of the
Exchange Act:


None


Securities Registered pursuant to Section 12(g) of the
Exchange Act:


Common Stock, $.01 par value


(Title of class)


þ o


þ








DOCUMENTS INCORPORATED BY REFERENCE




o þ










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TABLE OF CONTENTS



|                                                             |  |  |  |  |  |  |  | 
|------------------------------------------------------------ |  |  |  |  |  |  |  | 
|PART I                                                      
|PART II                                                     
|STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
|PART III                                                    
|SIGNATURES                                                  
|EXHIBIT INDEX                                               
|EX-23.1 Consent of Independent Registered Accounting Firm   
|EX-31.1 Section 302 Certification of C.E.O.                 
|EX-31.2 Section 302 Certification of C.F.O.                 
|EX-32.1 Section 906 Certification of C.E.O.                 
|EX-32.2 Section 906 Certification of C.F.O.                 



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PART I




|        |                        
|------- | -----------------------
|Item 1. | Description of Business

Introduction


tm


Overview








2



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Intention to Issue and Sell Common Stock under
Regulation S in the U.K.






3



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Product Overview


tm tm




Procurement and Sourcing Overview




Products and Pricing


Products. tm


Pricing. tm


Professional Services




Management Information Systems




4



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Sales and Marketing




Customer Service and Support




Competition






Intellectual Property




5



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tm


Government Regulation




Environmental Matters




Personnel




Company Trade Names and Trademarks




6



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|        |                        
|------- | -----------------------
|Item 2. | Description of Property



|                       |  |             |        |  |     |  |                        | 
|---------------------- |  | ----------- | ------ |  | --- |  | ---------------------- | 
|                       |  | Approximate |        |  |    
|                       |  | Square      |        |  |    
|Location               |  | Footage     |        |  | Use | 
|                       |  |             |        |  |     | 
|Norwood, Massachusetts |  |             | 36,000 |  |     |  | Corporate Headquarters | 





|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings





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






PART II




|        |                                                             
|------- | ------------------------------------------------------------
|Item 5. | Market for Common Equity and Related Stockholder
    Matters

Price Range of Common Stock




|              |  |      |       |  |      |   |       |      |  |   |       |  |  |   |       | 
|------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|              |  | 2004 |       |  | 2003 |  
|              |  |      |       |  |      |  
|Quarter Ended |  | High |       |  | Low  |   |       | High |  |   | Low   | 
|              |  |      |       |  |      |   |       |      |  |   |       | 
|March 31,     |  | $    | 0.280 |  |      | $ | 0.175 |      |  | $ | 0.240 |  |  | $ | 0.070 | 
|June 30,      |  | $    | 0.240 |  |      | $ | 0.140 |      |  | $ | 0.410 |  |  | $ | 0.120 | 
|September 30, |  | $    | 0.250 |  |      | $ | 0.130 |      |  | $ | 0.370 |  |  | $ | 0.190 | 
|December 31,  |  | $    | 0.165 |  |      | $ | 0.060 |      |  | $ | 0.260 |  |  | $ | 0.175 | 



7



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Sale of Unregistered Securities  Common Stock






Intention to Issue and Sell Common Stock under
Regulation S in the U.K.






8



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|        |                                                              
|------- | -------------------------------------------------------------
|Item 6. | Managements Discussion and Analysis or Plan of
    Operation

Introduction




Historical Overview




tm






9



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RESULTS OF OPERATIONS




|                                             |  |      |        |   |      |   |        |  
|-------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                             |  | 2004 |        |   | 2003 |  
|                                             |  |      |        |   |      |  
|Net revenues                                 |  | $    | 3,807  |   |      | $ | 3,028  |  
|Gross profit                                 |  |      | 3,347  |   |      |   | 2,742  |  
|Selling, general and administrative expenses |  |      | 6,032  |   |      |   | 8,273  |  
|Research and development expenses            |  |      | 320    |   |      |   | 155    |  
|Operating (loss) from continuing operations  |  |      | (3,005 | ) |      |   | (5,686 | )
|Interest expense                             |  |      | 251    |   |      |   | 188    |  
|Interest and other income (expense), net     |  |      | (16    | ) |      |   | (94    | )
|Income tax benefit                           |  |      |       |   |      |   | 558    |  
|Net loss from continuing operations          |  |      | (3,272 | ) |      |   | (5,410 | )
|Loss from discontinued operations            |  |      |       |   |      |   | (41    | )
|Net loss from total operations               |  | $    | (3,272 | ) |      | $ | (5,451 | )

Year ended December 31, 2004 compared to the year ended
December 31, 2003


Net Revenues.




Gross Profit.


10



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Selling, General and Administrative Expenses.


Research and Development Expenses.


Operating Loss.


Interest Expense.


Interest and Other Income (Expense), Net.


Income Tax Benefit.


Loss from Continuing Operations.


Net Loss From Discontinued Operations.


Net Loss.


11



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Liquidity and Capital Resources














12



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Risk Factors Relating to Liquidity








|                |  |                        |     |           |        |   |     |           |       |   |           |  |         |   |   |  |  |   |   | 
|--------------- |  | ---------------------- | --- | --------- | ------ | - | --- | --------- | ----- | - | --------- |  | ------- | - | - |  |  | - | - | 
|                |  | Payments Due by Period
|                |  |                       
|                |  |                        |     | Less Than |        |   |     |           | After
|                |  | Total                  |     |           | 1 Year |   |     | 1-3 Years |       |   | 4-5 Years |  | 5 Years
|                |  |                        |     |           |        |   |     |           |       |   |           |  |        
|Operating lease |  | $                      | 972 |           |        | $ | 617 |           |       | $ | 355       |  |         | $ |  |  |  | $ |  | 
|                |  |                        |     |           |        |   |     |           |       |   |           |  |         |   |  

Critical Accounting Policies and Estimates




13



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) The Company records a valuation allowance to reduce its
    deferred tax assets to the amount that is more likely than not
    to be realized. Based on the Companys recent losses and
    belief that 2005 will result in an overall loss, the Company has
    recorded a valuation allowance to reduce its deferred tax assets
    to zero. In the event the Company were to determine that it
    would be able to realize its deferred tax assets in the future,
    an adjustment to the deferred tax asset valuation allowance, it
    would increase income in the period such determination was made.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (ii) The Company records impairment losses on long-lived
    assets to be held and used or to be disposed of other than by
    sale when events and circumstances indicate that the assets
    might be impaired and the net undiscounted cash flows estimated
    to be generated by those assets are less than the carrying
    amount of those items. The Companys cash flow estimates
    are made for the remaining useful life of the assets and are
    based on historical results adjusted to reflect the best
    estimate of future market and operating conditions. The net
    carrying value of assets not recoverable is reduced to fair
    value. The Companys estimates of fair value represent a
    good faith estimate based on industry trends and reference to
    market rates and transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (iii) Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Revenue consists principally of fees for implementation and
    related professional services and a monthly, maintenance,
    hosting, and licensing fee. As part of the revenue recognition
    process significant management judgments and estimates must be
    made and used to determine the revenue recognized in any
    accounting period. Material differences may result in the amount
    and timing of our revenue for any period if we made different
    judgments or utilized different estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | We recognize revenue using the residual method in accordance
    with Statement of Position (SOP) 97-2, Software
    Revenue Recognition, as amended by SOP 98-9, Modification
    of SOP 97-2, Software Revenue Recognition, with Respect to
    Certain Transactions. Under the residual method, revenue is
    recognized in a multiple element arrangement in which
    Company-specific objective evidence of fair value exists for all
    of the undelivered elements in the arrangement, but does not
    exist for one or more of the delivered elements in the
    arrangement. Company-specific objective evidence of fair value
    of maintenance and other services is based on our customary
    pricing for such maintenance and/or services when sold
    separately. We typically sell our professional services
    separately on a time-and-materials basis and at times without a
    software license, and we have established Company-specific
    objective evidence on this basis. Company-specific objective
    evidence for maintenance is determined based upon the either the
    renewal rates when maintenance is sold separately or the option
    price for annual maintenance renewals included in the underlying
    customer contract. At the outset of the arrangement with the
    customer, we defer revenue for the fair value of its undelivered
    elements (e.g., maintenance, consulting, and training) and
    recognize revenue for the remainder of the arrangement fee
    attributable to the elements initially delivered in the
    arrangement (i.e., software product) when the basic criteria in
    SOP 97-2 have been met. If such evidence of fair value for
    each element of the arrangement does not exist, all revenue from
    the arrangement is deferred until such time that evidence of
    fair value does exist or until all elements of the arrangement
    are delivered. If evidence of fair-value does not exist for
    maintenance and/or hosting and there are no other undelivered
    elements, all revenue is recognized ratably over the maintenance
    period or hosting term. Changes to the elements of a software
    arrangement, the ability to identify which company-specific
    objective evidence and the fair value of the respective elements
    could materially impact the amount of earned and deferred
    revenue.
|
| | Under SOP 97-2, revenue attributable to an element in a
    customer arrangement is recognized when persuasive evidence of
    an arrangement exists, delivery has occurred, the fee is fixed
    or determinable, collection of the resulting receivable is
    probable, and the arrangement does not require services that are
    essential to the functionality of the software. Our ability to
    estimate if the collection of the resulting receivable is
    probable could materially impact the amount of revenue we record.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

14



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company sells both an enterprise and non-enterprise
    (hosted) model of PECOS software. In accordance with
    EITF 00-03, Application of AICPA Statement of Position
    97-2, Software Revenue Recognition, Arrangements That Include
    the Right to Use Software Stored on Another Entitys
    Hardware, in order for revenue to be recognized, the customer
    must have the contractual right to take possession of the
    software at any time during the hosting period without
    significant penalty and it must be feasible for the customer to
    either run the software on its own or contract with another
    party unrelated to the vendor to host the software. The
    Companys treatment of software license revenue where the
    software is hosted by the Company has historically been
    consistent with EITF 00-03.                                                                                                                                                                                                                           
|
| | Our arrangements do not generally include acceptance clauses.
    However, if an arrangement includes an acceptance provision,
    acceptance occurs upon the earlier of receipt of a written
    customer acceptance or expiration of the acceptance period. Our
    arrangements do not generally provide for a right of return, and
    historically product returns have not been significant. We
    provide for revenues return allowances on an estimated basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Deferred revenue includes amounts received from customers for
    which revenue has not been recognized that generally result from
    deferred maintenance and support, hosting, consulting or
    training services not yet rendered and license revenue deferred
    until all requirements under SOP 97-2 are met. Deferred
    revenue is recognized upon delivery of our product, as services
    are rendered, or as other requirements requiring deferral under
    SOP 97-2 are satisfied.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (iv) Software Development Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | We account for software development costs in accordance with
    Statement of Financial Accounting Standards (SFAS)
    No. 86, Accounting for the Costs of Computer Software to
    Be Sold, Leased, or Otherwise Marketed.
    SFAS No. 86 specifies that costs incurred internally
    in creating a computer software product should be charged to
    expense when incurred as research and development costs until
    technological feasibility has been established for the product.
    Once technological feasibility is established, all development
    costs should be capitalized until the product is available for
    general release to customers. For new versions of our products
    we typically achieve technological feasibility far enough in
    advance of general release to warrant the capitalization of
    subsequent development costs. Judgment is required in
    determining when the technological feasibility of a product is
    established and in estimating the life of the product for which
    the capitalized costs will be amortized.

Off-Balance Sheet Financings




Factors Affecting Future Performance






15



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Outlook







STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT






|        |                     
|------- | --------------------
|Item 7. | Financial Statements





|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 8. | Changes In and Disagreements With Accountants on
    Accounting and Financial Disclosure



16



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | KPMGs report on the consolidated financial statements of
    the Company as of and for the years ended December 31, 2001
    and 2002, contained a separate paragraph stating the
    Company has suffered recurring losses from operations and has an
    accumulated deficit that raise substantial doubt about is
    ability to continue as a going concern. Managements plans
    in regards to these matters are also described in Note 1.
    The consolidated financial statements do not include any
    adjustments that might results from the outcome of this
    uncertainty.













|         |                         
|-------- | ------------------------
|Item 8A. | Controls and Procedures.







17



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|         |                  
|-------- | -----------------
|Item 8B. | Other Information






PART III




|        |                                                                                                                        
|------- | -----------------------------------------------------------------------------------------------------------------------
|Item 9. | Directors, Executive Officers, Promoters and Control
    Persons; Compliance With Section 16(a) of the Exchange
    Act





|         |                       
|-------- | ----------------------
|Item 10. | Executive Compensation





|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 11. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters





|         |                                               
|-------- | ----------------------------------------------
|Item 12. | Certain Relationships and Related Transactions

12% Secured Promissory Notes






18



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Collateral Agency and Security Agreement




Convertible Debentures










|         |                                  
|-------- | ---------------------------------
|Item 13. | Exhibits, and Reports on Form 8-K





| |                                           
| | ------------------------------------------
| | (a) (1) Consolidated Financial Statements:



| |                                                            
| | -----------------------------------------------------------
| | See Index to Consolidated Financial Statements on page F-1.



| |                       
| | ----------------------
| | (2) Index to Exhibits:



| |                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The exhibits filed as part of this Form 10-KSB are listed
    on the Index to Exhibits beginning on page E-1, which Index to
    Exhibits is incorporated herein by reference.

19



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| |                        
| | -----------------------
| | (b) Reports on Form 8-K



| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | During the quarter ended December 31, 2004, the Company
    filed the following Current Report on Form 8-K:



| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. Current Reports on Form 8-K, dated
    November 17, 2004, furnishing a press release under
    Item 9 concerning the Companys third quarter 2004
    financial results.



|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



20



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SIGNATURES






| |                          
| | -------------------------
| | Elcom International, Inc.
| | (Registrant)             



| |     |                      
| | --- | ---------------------
| | By: | /s/ Robert J. Crowell

| |                                     
| | ------------------------------------
| |                                     
| | Robert J. Crowell                   
| | Chairman and Chief Executive Officer





|                                                      |  |                                                                                                      |  |                |  | 
|----------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signatures                                            |  | Title                                                                                                |  | Date          
|                                                      |  |                                                                                                      |  |               
|                                                     
|/s/ Robert J. Crowell
    Robert J. Crowell           |  | Chairman of the Board of Directors and Chief Executive
    Officer
    (Principal Executive Officer) |  | April 11, 2005
|                                                     
|/s/ Laurence F. Mulhern
    Laurence F. Mulhern       |  | Chief Financial Officer
    (Principal Financial Officer)                                            |  | April 11, 2005
|                                                     
|/s/ John E. Halnen
    John E. Halnen                 |  | President, Chief Operating Officer
    and Director                                                  |  | April 11, 2005
|                                                     
|/s/ William W. Smith
    William W. Smith             |  | Vice Chairman and Director                                                                           |  | April 11, 2005
|                                                     
|/s/ Richard J. Harries Jr.
    Richard J. Harries Jr. |  | Director                                                                                             |  | April 11,2005 
|                                                     
|/s/ John W. Ortiz
    John W. Ortiz                   |  | Director                                                                                             |  | April 11, 2005

21



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CONSOLIDATED FINANCIAL STATEMENTS


ELCOM INTERNATIONAL, INC. AND SUBSIDIARIES


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2004




|                                                                                                                               |  |      |             | 
|------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ----------- | 
|                                                                                                                               |  | Page |            
|                                                                                                                               |  |      |            
|Report of Independent Registered Public Accounting Firm                                                                        |  |      | F-2         | 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                                                   |  |      | F-3         | 
|Consolidated Statements of Operations and Other Comprehensive
    Income (Loss) for the years ended December 31, 2004 and 2003 |  |      | F-4         | 
|Consolidated Statements of Stockholders Equity (Deficit)
    for the years ended December 31, 2004 and 2003                   |  |      | F-5         | 
|Consolidated Statements of Cash Flows for the years ended
    December 31, 2004 and 2003                                       |  |      | F-6         | 
|Notes to Consolidated Financial Statements                                                                                     |  |      | F-7 to F-24 | 

F-1



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














| |                                         
| | ----------------------------------------
| | /s/ Vitale,
    Caturano & Company, Ltd.
| |                                         
| | VITALE,
    CATURANO & COMPANY, LTD.    





F-2



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ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |     |        |          |        |       | 
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------------------------ | -------- | ------ | --- | ------ | -------- | ------ | ----- | 
|                                                                                                                                  |                                                                                                         | December 31,                         |                         
|                                                                                                                                  |                                                                                                         |                                      |                         
|                                                                                                                                  |                                                                                                         | 2004                                 |                          |          | 2003   |    
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  |                                                                                                         | (In thousands, except share          |                         
|                                                                                                                                  |                                                                                                         | and per share data)                  |                         
|ASSETS                                                                                                                           
|CURRENT ASSETS:                                                                                                                   |                                                                                                         |                                      |                          |          |        |     |        |         
|                                                                                                                                  | Cash and cash equivalents                                                                               |                                      | $                        | 390      |        |     | $      | 515      |       
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  | Accounts receivable:                                                                                    |                                      |                          |          |        |     |        |          |       
|                                                                                                                                  |                                                                                                         | Trade                                |                          |          | 354    |     |        |          | 938    |      
|                                                                                                                                  |                                                                                                         | Other                                |                          |          |       |     |        |          | 140    |      
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  |                                                                                                         |                                      | 354                      |          |        |     | 1,078  |         
|                                                                                                                                  |                                                                                                         | Less-Allowance for doubtful accounts |                          |          | 47     |     |        |          | 51     |      
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  |                                                                                                         |                                      | Accounts receivable, net |          |        | 307 |        |          |        | 1,027 | 
|                                                                                                                                  | Prepaids and other current assets                                                                       |                                      |                          | 53       |        |     |        | 43       |       
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  |                                                                                                         | Total current assets                 |                          |          | 750    |     |        |          | 1,585  |      
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|PROPERTY, EQUIPMENT AND SOFTWARE, AT COST:                                                                                        |                                                                                                         |                                      |                          |          |        |     |        |         
|                                                                                                                                  | Computer hardware and software                                                                          |                                      |                          | 20,639   |        |     |        | 19,805   |       
|                                                                                                                                  | Furniture, equipment and leasehold improvements                                                         |                                      |                          | 3,088    |        |     |        | 3,088    |       
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  |                                                                                                         |                                      | 23,727                   |          |        |     | 22,893 |         
|                                                                                                                                  | Less  Accumulated depreciation and amortization                                                        |                                      |                          | 22,708   |        |     |        | 22,110   |       
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  |                                                                                                         |                                      | 1,019                    |          |        |     | 783    |         
|OTHER ASSETS                                                                                                                      |                                                                                                         |                                      | 10                       |          |        |     | 15     |         
|NON-CURRENT ASSETS OF DISCONTINUED OPERATIONS                                                                                     |                                                                                                         |                                      | 48                       |          |        |     | 80     |         
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  |                                                                                                         | $                                    | 1,827                    |          |        | $   | 2,463  |         
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                 
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                                                                                   
|CURRENT LIABILITIES:                                                                                                              |                                                                                                         |                                      |                          |          |        |     |        |         
|                                                                                                                                  | Current portion of capital lease obligations                                                            |                                      | $                        | 30       |        |     | $      |         |       
|                                                                                                                                  | Loans payable                                                                                           |                                      |                          |         |        |     |        | 1,113    |       
|                                                                                                                                  | Accounts payable                                                                                        |                                      |                          | 468      |        |     |        | 681      |       
|                                                                                                                                  | Deferred revenue                                                                                        |                                      |                          | 510      |        |     |        | 733      |       
|                                                                                                                                  | Accrued expenses and other current liabilities                                                          |                                      |                          | 2,421    |        |     |        | 1,960    |       
|                                                                                                                                  | Current liabilities of discontinued operations                                                          |                                      |                          | 303      |        |     |        | 444      |       
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  |                                                                                                         | Total current liabilities            |                          |          | 3,732  |     |        |          | 4,931  |      
|CAPITAL LEASE OBLIGATIONS, NET OF CURRENT PORTION                                                                                 |                                                                                                         |                                      | 27                       |          |        |     |       |         
|OTHER LONG TERM LIABILITY                                                                                                         |                                                                                                         |                                      | 546                      |          |        |     |       |         
|CONVERTIBLE DEBENTURES, net of discount                                                                                           |                                                                                                         |                                      | 362                      |          |        |     | 254    |         
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  |                                                                                                         | Total liabilities                    |                          |          | 4,667  |     |        |          | 5,185  |      
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|COMMITMENTS AND CONTINGENCIES (Note 7)                                                                                            |                                                                                                         |                                      |                          |          |        |     |        |         
|STOCKHOLDERS EQUITY (DEFICIT):                                                                                                   |                                                                                                         |                                      |                          |          |        |     |        |         
|                                                                                                                                  | Preferred stock, $.01 par value; Authorized 
    10,000,000 shares  Issued and
    outstanding  none |                                      |                          |         |        |     |        |         |       
|Common stock, $.01 par value; Authorized 
    200,000,000 and 100,000,000 shares 
    issued  61,812,569 and 31,432,546 shares |                                                                                                         |                                      | 618                      |          |        |     | 314    |         
|                                                                                                                                  | Additional paid-in capital                                                                              |                                      |                          | 118,703  |        |     |        | 115,886  |       
|                                                                                                                                  | Accumulated deficit                                                                                     |                                      |                          | (116,643 | )      |     |        | (113,371 | )     
|                                                                                                                                  | Treasury stock, at cost  530,709 shares                                                                |                                      |                          | (4,712   | )      |     |        | (4,712   | )     
|                                                                                                                                  | Accumulated other comprehensive loss                                                                    |                                      |                          | (806     | )      |     |        | (839     | )     
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  |                                                                                                         | Total stockholders deficit          |                          |          | (2,840 | )   |        |          | (2,722 | )    
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    
|                                                                                                                                  |                                                                                                         | $                                    | 1,827                    |          |        | $   | 2,463  |         
|                                                                                                                                  |                                                                                                         |                                      |                          |          |        |    



F-3



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


AND OTHER COMPREHENSIVE INCOME (LOSS)


|                                           |                                                                 |                                       |        |        |       |   |        |        |       |  
|------------------------------------------ | --------------------------------------------------------------- | ------------------------------------- | ------ | ------ | ----- | - | ------ | ------ | ----- | -
|                                           |                                                                 | For the Years Ended                   |       
|                                           |                                                                 | December 31,                          |       
|                                           |                                                                 |                                       |       
|                                           |                                                                 | 2004                                  |        |        | 2003  |  
|                                           |                                                                 |                                       |        |        |       |  
|                                           |                                                                 | (In thousands, except                 |       
|                                           |                                                                 | per share data)                       |       
|Net revenues:                              |                                                                 |                                       |        |        |       |   |        |       
|                                           | License and other fees                                          |                                       | $      | 2,997  |       |   | $      | 2,118  |      
|                                           | Professional services                                           |                                       |        | 810    |       |   |        | 910    |      
|                                           |                                                                 |                                       |        |        |       |  
|                                           |                                                                 |                                       | 3,807  |        |       |   | 3,028  |       
|Cost of sales                              |                                                                 |                                       | 460    |        |       |   | 286    |       
|                                           |                                                                 |                                       |        |        |       |  
|Gross profit                               |                                                                 |                                       | 3,347  |        |       |   | 2,742  |       
|Operating Expenses:                        |                                                                 |                                       |        |        |       |   |        |       
|                                           | Selling, general and administrative                             |                                       |        | 6,032  |       |   |        | 8,273  |      
|                                           | Research and development                                        |                                       |        | 320    |       |   |        | 155    |      
|                                           |                                                                 |                                       |        |        |       |  
|Total operating expenses                   |                                                                 |                                       | 6,352  |        |       |   | 8,428  |       
|                                           |                                                                 |                                       |        |        |       |  
|Operating loss                             |                                                                 |                                       | (3,005 | )      |       |   | (5,686 | )     
|Interest expense                           |                                                                 |                                       | (251   | )      |       |   | (188   | )     
|Interest and other income (expense), net   |                                                                 |                                       | (16    | )      |       |   | (94    | )     
|                                           |                                                                 |                                       |        |        |       |  
|Loss before income taxes                   |                                                                 |                                       | (3,272 | )      |       |   | (5,968 | )     
|Income tax benefit                         |                                                                 |                                       |       |        |       |   | 558    |       
|                                           |                                                                 |                                       |        |        |       |  
|Loss from continuing operations            |                                                                 |                                       | (3,272 | )      |       |   | (5,410 | )     
|Discontinued operations, net of tax:       |                                                                 |                                       |        |        |       |   |        |       
|                                           |                                                                 | Net loss from discontinued operations |        |        |      |   |        |        | (41   | )
|                                           |                                                                 |                                       |        |        |       |  
|Net loss                                   |                                                                 |                                       | (3,272 | )      |       |   | (5,451 | )     
|Comprehensive income, net of tax           |                                                                 |                                       | 33     |        |       |   | 62     |       
|                                           |                                                                 |                                       |        |        |       |  
|Comprehensive loss                         |                                                                 | $                                     | (3,239 | )      |       | $ | (5,389 | )     
|                                           |                                                                 |                                       |        |        |       |  
|Basic and diluted net loss per share data: |                                                                 |                                       |        |        |       |   |        |       
|                                           | Continuing operations                                           |                                       | $      | (0.06  | )     |   | $      | (0.18  | )    
|                                           | Discontinued operations                                         |                                       |        |       |       |   |        |       |      
|                                           |                                                                 |                                       |        |        |       |  
|                                           |                                                                 | Basic and diluted net loss per share  |        | $      | (0.06 | ) |        | $      | (0.18 | )
|                                           |                                                                 |                                       |        |        |       |  
|                                           | Weighted average number of basic and diluted shares outstanding |                                       |        | 52,504 |       |   |        | 30,902 |      
|                                           |                                                                 |                                       |        |        |       |  



F-4



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(DEFICIT)


|                           |                                                                   |                                         |            |            |            |   |     |         |  |          |             |       |       |         |          |               |               |   |        |           |  |   |      |    |  |   |        |        |  
|-------------------------- | ----------------------------------------------------------------- | --------------------------------------- | ---------- | ---------- | ---------- | - | --- | ------- |  | -------- | ----------- | ----- | ----- | ------- | -------- | ------------- | ------------- | - | ------ | --------- |  | - | ---- | -- |  | - | ------ | ------ | -
|                           |                                                                   | Common Stock                            |            |            |            |   |     |         |  |          | Accumulated |       |       | Total   |         
|                           |                                                                   |                                         |            |            | Additional |   |     |         |  | Treasury |             |       | Other |         |          | Stockholders |              
|                           |                                                                   | Number of                               |            |            | $.01 Par   |   |     | Paid-in |  |          | Accumulated |       |       | Stock,  |          |               | Comprehensive |   |        | Equity    | 
|                           |                                                                   | Shares                                  |            |            | Value      |   |     | Capital |  |          | Deficit     |       |       | At Cost |          |               | Income (Loss) |   |        | (Deficit) | 
|                           |                                                                   |                                         |            |            |            |   |     |         |  |          |             |       |       |         |          |               |               |   |        |           | 
|                           |                                                                   | (In thousands, except number of shares) |           
|BALANCE, JANUARY 1, 2003   |                                                                   |                                         | 31,432,546 |            |            | $ | 314 |         |  | $        | 114,817     |       |       | $       | (107,920 | )             |               | $ | (4,712 | )         |  | $ | (901 | )  |  | $ | 1,598  |       
|                           | Beneficial conversion feature of Convertible Debentures           |                                         |            |           |            |   |     |        |  |          |             | 1,069 |       |         |          |              |               |   |        |          |  |   |      |   |  |   |        | 1,069  |  
|                           | Net loss                                                          |                                         |            |           |            |   |     |        |  |          |             |      |       |         |          | (5,451        | )             |   |        |          |  |   |      |   |  |   |        | (5,451 | )
|                           | Cumulative translation adjustment                                 |                                         |            |           |            |   |     |        |  |          |             |      |       |         |          |              |               |   |        |          |  |   |      | 62 |  |   |        | 62     |  
|                           |                                                                   |                                         |            |            |            |   |     |         |  |          |             |       |       |         |          |               |               |   |        |           | 
|BALANCE, DECEMBER 31, 2003 |                                                                   |                                         | 31,432,546 |            |            | $ | 314 |         |  | $        | 115,886     |       |       | $       | (113,371 | )             |               | $ | (4,712 | )         |  | $ | (839 | )  |  | $ | (2,722 | )     
|                           | Exercise of common stock options                                  |                                         |            | 52,450     |            |   |     | 1       |  |          |             | 4     |       |         |          |              |               |   |        |          |  |   |      |   |  |   |        | 5      |  
|                           | Common stock issued as compensation                               |                                         |            | 550,000    |            |   |     | 5       |  |          |             | 110   |       |         |          |              |               |   |        |          |  |   |      |   |  |   |        | 115    |  
|                           | Sale of common stock, net of offering costs of approximately $709 |                                         |            | 29,777,573 |            |   |     | 298     |  |          |             | 2,703 |       |         |          |              |               |   |        |          |  |   |      |   |  |   |        | 3,001  |  
|                           | Net loss                                                          |                                         |            |           |            |   |     |        |  |          |             |      |       |         |          | (3,272        | )             |   |        |          |  |   |      |   |  |   |        | (3,272 | )
|                           | Cumulative translation adjustment                                 |                                         |            |           |            |   |     |        |  |          |             |      |       |         |          |              |               |   |        |          |  |   |      | 33 |  |   |        | 33     |  
|                           |                                                                   |                                         |            |            |            |   |     |         |  |          |             |       |       |         |          |               |               |   |        |           | 
|BALANCE, DECMEBER 31, 2004 |                                                                   |                                         | 61,812,569 |            |            | $ | 618 |         |  | $        | 118,703     |       |       | $       | (116,643 | )             |               | $ | (4,712 | )         |  | $ | (806 | )  |  | $ | (2,840 | )     
|                           |                                                                   |                                         |            |            |            |   |     |         |  |          |             |       |       |         |          |               |               |   |        |           | 



F-5



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                           |                                                                                                |                                                                          |                                                        |        |       |        |        |        |       |        |  
|-------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------------------------------ | ------ | ----- | ------ | ------ | ------ | ----- | ------ | -
|                                                                           |                                                                                                | For the Years Ended                                                      |                                                       
|                                                                           |                                                                                                | December 31,                                                             |                                                       
|                                                                           |                                                                                                |                                                                          |                                                       
|                                                                           |                                                                                                | 2004                                                                     |                                                        |        | 2003  |       
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|                                                                           |                                                                                                | (In thousands)                                                           |                                                       
|CASH FLOWS FROM OPERATING ACTIVITIES:                                      |                                                                                                |                                                                          |                                                        |        |       |        |        |       
|                                                                           | Net loss from continuing operations                                                            |                                                                          | $                                                      | (3,272 | )     |        | $      | (5,410 | )    
|                                                                           | Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities  |                                                                          |                                                        |        |       |        |        |        |      
|                                                                           |                                                                                                | Depreciation and amortization                                            |                                                        |        | 706   |        |        |        | 1,397 |       
|                                                                           |                                                                                                | Compensation paid in common stock                                        |                                                        |        | 115   |        |        |        |      |       
|                                                                           |                                                                                                | Deferred rent expense                                                    |                                                        |        | 103   |        |        |        | 188   |       
|                                                                           |                                                                                                | Provisions for doubtful accounts receivable                              |                                                        |        | 8     |        |        |        | 39    |       
|                                                                           | Changes in current assets and liabilities:                                                     |                                                                          |                                                        |        |       |        |        |        |      
|                                                                           |                                                                                                | Accounts receivable                                                      |                                                        |        | 712   |        |        |        | (746  | )     
|                                                                           |                                                                                                | Prepaids and other current assets                                        |                                                        |        | (10   | )      |        |        | 162   |       
|                                                                           |                                                                                                | Accounts payable                                                         |                                                        |        | (213  | )      |        |        | 346   |       
|                                                                           |                                                                                                | Deferred revenue                                                         |                                                        |        | (223  | )      |        |        | 328   |       
|                                                                           |                                                                                                | Accrued expenses and other current liabilities                           |                                                        |        | 358   |        |        |        | (704  | )     
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|                                                                           |                                                                                                |                                                                          | Net cash used in continuing operations                 |        |       | (1,716 | )      |        |       | (4,400 | )
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|                                                                           |                                                                                                |                                                                          | Net cash provided by (used in) discontinued operations |        |       | (141   | )      |        |       | 600    |  
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|CASH FLOWS FROM INVESTING ACTIVITIES:                                      |                                                                                                |                                                                          |                                                        |        |       |        |        |       
|                                                                           | Purchase of property, equipment and software                                                   |                                                                          |                                                        | (772   | )     |        |        | (275   | )    
|                                                                           | Decrease in other assets and deferred costs                                                    |                                                                          |                                                        | 5      |       |        |        | 98     |      
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|                                                                           |                                                                                                | Net cash used in investing activities                                    |                                                        |        | (767  | )      |        |        | (177  | )     
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|                                                                           |                                                                                                | Net cash provided by investing activities of discontinued
    operations |                                                        |        | 32    |        |        |        | 26    |       
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                      |                                                                                                |                                                                          |                                                        |        |       |        |        |       
|                                                                           | Reduction of capital lease obligations                                                         |                                                                          |                                                        | (5     | )     |        |        | (275   | )    
|                                                                           | Proceeds from loans payable                                                                    |                                                                          |                                                        | 290    |       |        |        | 1,113  |      
|                                                                           | Reduction of loans payable                                                                     |                                                                          |                                                        | (1,403 | )     |        |        |       |      
|                                                                           | Increase in other long term liability                                                          |                                                                          |                                                        | 546    |       |        |        |       |      
|                                                                           | Issuance of convertible debentures                                                             |                                                                          |                                                        |       |       |        |        | 1,264  |      
|                                                                           | Issuance of common stock, net                                                                  |                                                                          |                                                        | 3,006  |       |        |        |       |      
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|                                                                           |                                                                                                | Net cash provided by financing activities                                |                                                        |        | 2,434 |        |        |        | 2,102 |       
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|FOREIGN EXCHANGE EFFECT ON CASH                                            |                                                                                                |                                                                          | 33                                                     |        |       |        | 62     |       
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                  |                                                                                                |                                                                          | (125                                                   | )      |       |        | (1,787 | )     
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                             |                                                                                                |                                                                          | 515                                                    |        |       |        | 2,302  |       
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                   |                                                                                                | $                                                                        | 390                                                    |        |       | $      | 515    |       
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                          |                                                                                                |                                                                          |                                                        |        |       |        |        |       
|                                                                           | Interest paid                                                                                  |                                                                          | $                                                      | 6      |       |        | $      | 15     |      
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|                                                                           | Income taxes paid                                                                              |                                                                          | $                                                      |       |       |        | $      |       |      
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING
    ACTIVITIES: |                                                                                                |                                                                          |                                                        |        |       |        |        |       
|                                                                           | Acquisition of equipment under capital lease                                                   |                                                                          | $                                                      | 62     |       |        | $      |       |      
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|                                                                           | Common stock issued as compensation                                                            |                                                                          | $                                                      | 115    |       |        | $      |       |      
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       
|                                                                           | Discount on issuance of Convertible Debentures related to
    beneficial conversion feature    |                                                                          | $                                                      |       |       |        | $      | (1,069 | )    
|                                                                           |                                                                                                |                                                                          |                                                        |        |       |       



F-6



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|    |                     
|--- | --------------------
|(1) | Nature of Operations

e e




tm tm




F-7



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                           
|--- | ------------------------------------------
|(2) | Summary of Significant Accounting Policies



|    |                       
|--- | ----------------------
|(a) | Basis of Consolidation





|    |                 
|--- | ----------------
|(b) | Reclassification





|    |                 
|--- | ----------------
|(c) | Use of Estimates





|    |                          
|--- | -------------------------
|(d) | Cash and Cash Equivalents





|    |                    
|--- | -------------------
|(e) | Accounts Receivable







|    |                                 
|--- | --------------------------------
|(f) | Property, Equipment and Software



Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use


F-8



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                                
|--- | -------------------------------
|(g) | Impairment of Long Lived Assets

Accounting for the
Impairment or Disposal of Long-Lived Assets




|    |                    
|--- | -------------------
|(h) | Revenue Recognition

Software Revenue
Recognition Modification of
SOP 97-2 Software Revenue Recognition with Respect
to Certain Transactions.






License Revenue.


F-9



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Professional and Other Services Revenue.


Application of
AICPA Statement of Position 97-2, Software Revenue Recognition,
Arrangements That Include the Right to Use Software Stored on
Another Entitys Hardware


Deferred Revenue.




|    |                          
|--- | -------------------------
|(i) | Advertising and Marketing





|    |                         
|--- | ------------------------
|(j) | Research and Development

Accounting
for the Costs of Computer Software to Be Sold, Leased or
Otherwise Marketed.


F-10



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                             
|--- | ----------------------------
|(k) | Foreign Currency Translation

Foreign
Currency Translation.




|    |             
|--- | ------------
|(l) | Income Taxes

Accounting for Income Taxes.




|    |                         
|--- | ------------------------
|(m) | Stock-Based Compensation





F-11



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


elcom, inc.


|                               |            |           |            |            |              |          |              |                |  |   |      |      | 
|------------------------------ | ---------- | --------- | ---------- | ---------- | ------------ | -------- | ------------ | -------------- |  | - | ---- | ---- | 
|                               |            |           |            |            |              | Weighted |             
|                               |            | Number of |            |            | Option Price |          |              | Average        | 
|                               |            | Shares    |            |            | Per Share    |          |              | Exercise Price | 
|                               |            |           |            |            |              |          |              |                | 
|Outstanding, January 1, 2003   |            |           | 12,243,524 |            |              | $        | 0.11  24.06 |                |  | $ | 2.32 |     
|                               | Granted    |           |            | 4,070,000  |              |          |              | 0.08    .30   |  |   |      | 0.15 | 
|                               | Terminated |           |            | (5,015,697 | )            |          |              | 0.08  24.06   |  |   |      | 1.52 | 
|                               | Exercised  |           |            |           |              |          |              |               |  |   |      |     | 
|                               |            |           |            |            |              |          |              |                | 
|Outstanding, December 31, 2003 |            |           | 11,297,827 |            |              | $        | 0.08  22.50 |                |  | $ | 1.89 |     
|                               | Granted    |           |            | 6,549,999  |              |          |              | 0.10   0.24   |  |   |      | 0.16 | 
|                               | Terminated |           |            | (700,874   | )            |          |              | 0.08  12.63   |  |   |      | 1.70 | 
|                               | Exercised  |           |            | (52,450    | )            |          |              | 0.08   0.20   |  |   |      | 0.09 | 
|                               |            |           |            |            |              |          |              |                | 
|Outstanding, December 31, 2004 |            |           | 17,094,502 |            |              | $        | 0.08  22.50 |                |  | $ | 1.24 |     
|                               |            |           |            |            |              |          |              |                | 
|Exercisable, December 31, 2003 |            |           | 6,982,400  |            |              | $        | 0.20  22.50 |                |  | $ | 2.75 |     
|                               |            |           |            |            |              |          |              |                | 
|Exercisable, December 31, 2004 |            |           | 9,251,303  |            |              | $        | 0.08  22.50 |                |  | $ | 2.16 |     
|                               |            |           |            |            |              |          |              |                | 

elcom, inc.


|                         |  |                     |            |          |                     |  |          |          |  |   |             |          |  |          |           |  |  |   |       | 
|------------------------ |  | ------------------- | ---------- | -------- | ------------------- |  | -------- | -------- |  | - | ----------- | -------- |  | -------- | --------- |  |  | - | ----- | 
|                         |  | Options Outstanding |            |          | Options Exercisable | 
|                         |  |                     |            |          |                     | 
|                         |  |                     |            | Weighted |                     |  | Weighted |          |  |   |             | Weighted | 
|                         |  |                     |            | Average  |                     |  | Average  |          |  |   |             | Average  | 
|                         |  | Number              |            |          | Remaining           |  |          | Exercise |  |   | Number      |          |  | Exercise |          
|Range of Exercise Prices |  | Outstanding         |            |          | Contractual Life    |  |          | Price    |  |   | Exercisable |          |  | Price    |          
|                         |  |                     |            |          |                     |  |          |          |  |   |             |          |  |          |          
|$ 0.08   0.11           |  |                     | 2,944,999  |          |                     |  | 8.19     |          |  | $ | 0.09        |          |  |          | 618,000   |  |  | $ | 0.08  | 
|0.14   0.20             |  |                     | 5,263,000  |          |                     |  | 9.16     |          |  |   | 0.17        |          |  |          | 623,250   |  |  |   | 0.20  | 
|0.22   0.30             |  |                     | 1,825,000  |          |                     |  | 6.55     |          |  |   | 0.25        |          |  |          | 966,750   |  |  |   | 0.27  | 
|0.45   0.49             |  |                     | 1,874,250  |          |                     |  | 6.75     |          |  |   | 0.45        |          |  |          | 1,874,250 |  |  |   | 0.45  | 
|0.60   0.94             |  |                     | 449,000    |          |                     |  | 5.43     |          |  |   | 0.85        |          |  |          | 449,000   |  |  |   | 0.84  | 
|1.00   1.69             |  |                     | 1,381,864  |          |                     |  | 5.56     |          |  |   | 1.47        |          |  |          | 1,369,614 |  |  |   | 1.48  | 
|1.77   3.81             |  |                     | 614,813    |          |                     |  | 4.67     |          |  |   | 3.40        |          |  |          | 608,863   |  |  |   | 3.40  | 
|4.00   4.81             |  |                     | 1,593,130  |          |                     |  | 3.05     |          |  |   | 4.27        |          |  |          | 1,593,130 |  |  |   | 4.27  | 
|5.03   5.88             |  |                     | 677,753    |          |                     |  | 2.80     |          |  |   | 5.33        |          |  |          | 677,753   |  |  |   | 5.33  | 
|6.00   8.00             |  |                     | 421,193    |          |                     |  | 2.11     |          |  |   | 7.29        |          |  |          | 421,193   |  |  |   | 7.29  | 
|12.63  22.50            |  |                     | 49,500     |          |                     |  | 5.01     |          |  |   | 14.62       |          |  |          | 49,500    |  |  |   | 14.62 | 
|                         |  |                     |            |          |                     |  |          |          |  |   |             |          |  |          |          
|                         |  |                     | 17,094,502 |          |                     |  |          |          |  |   |             |          |  |          | 9,251,303 |  |  |   |       | 
|                         |  |                     |            |          |                     |  |          |          |  |   |             |          |  |          |          





F-12



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Accounting for
Stock-Based Compensation Accounting for Stock Based
Compensation Transition and Disclosure, an Amendment to FASB
Statement No. 123






|          |                                 |                       |   |        |      |  |   |        |  
|--------- | ------------------------------- | --------------------- | - | ------ | ---- |  | - | ------ | -
|          |                                 | 2004                  |   |        | 2003 | 
|          |                                 |                       |   |        |      | 
|          |                                 | (In thousands, except |  
|          |                                 | per share data)       |  
|Net loss: |                                 |                       |   |        |      |  |   |       
|          | As reported                     |                       | $ | (3,272 | )    |  | $ | (5,451 | )
|          | Pro forma                       |                       | $ | (4,104 | )    |  | $ | (5,978 | )
|          | Net loss per share:             |                       |   |        |      |  |   |        |  
|          | As reported  basic and diluted |                       | $ | (0.06  | )    |  | $ | (0.18  | )
|          | Pro forma  basic and diluted   |                       | $ | (0.08  | )    |  | $ | (0.19  | )



|                         |  |      |         |   |      |  |         |  
|------------------------ |  | ---- | ------- | - | ---- |  | ------- | -
|                         |  | 2004 |         |   | 2003 | 
|                         |  |      |         |   |      | 
|Volatility               |  |      | 117.9   | % |      |  | 142.7   | %
|Risk-free interest rate  |  |      | 3.61    | % |      |  | 2.67    | %
|Expected life of options |  |      | 5 years |   |      |  | 5 years |  
|Expected dividend yield  |  |      | 0       | % |      |  | 0       | %





|    |                   
|--- | ------------------
|(n) | Net Loss Per Share

Earnings Per Share.


F-13



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                                    
|--- | -----------------------------------
|(o) | Fair Value of Financial Instruments





|    |                            
|--- | ---------------------------
|(p) | Comprehensive Income (Loss)

Reporting
Comprehensive Income




|    |                  
|--- | -----------------
|(q) | Segment Reporting

, Disclosures about
Segments of an Enterprise and Related Information




|    |                                                           
|--- | ----------------------------------------------------------
|(r) | Concentration of Credit Risk and Significant
    Customers

Disclosure of Information about
Financial Instruments with Off-Balance-Sheet Risk and Financial
Instruments with Concentrations of Credit Risk








F-14



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                      
|--- | ---------------------
|(s) | Recent Pronouncements

Exchanges
of Nonmonetary Assets  An Amendment of APB Opinion
No. 29. Accounting for
Nonmonetary Transactions


Share-Based Payment Accounting for Stock-Based
Compensation Accounting for Stock Issued to Employees.






| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | All new awards issued after the effective date;                                                     
|
| |  | All modifications, repurchased or cancellations of existing
    awards after the effective date; and
|
| |  | Unvested awards at the effective date.                                                              



Consolidation
of Variable Interest Entities


Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity.


F-15



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |              
|--- | -------------
|(3) | Loans Payable







|    |                                               
|--- | ----------------------------------------------
|(4) | Accrued Expenses and Other Current Liabilities



|                                      |  |              |       |  |      |   |       | 
|------------------------------------- |  | ------------ | ----- |  | ---- | - | ----- | 
|                                      |  | December 31, |      
|                                      |  |              |      
|                                      |  | 2004         |       |  | 2003 |  
|                                      |  |              |       |  |      |  
|Salary, wages and benefits            |  | $            | 982   |  |      | $ | 626   | 
|Taxes, including U.K. Value Added Tax |  |              | 116   |  |      |   | 276   | 
|Financial consulting                  |  |              | 580   |  |      |   | 580   | 
|Legal and audit fees                  |  |              | 124   |  |      |   | 138   | 
|Deferred rent                         |  |              | 291   |  |      |   | 188   | 
|Interest                              |  |              | 249   |  |      |   | 72    | 
|Other accruals                        |  |              | 79    |  |      |   | 80    | 
|                                      |  |              |       |  |      |  
|                                      |  | $            | 2,421 |  |      | $ | 1,960 | 
|                                      |  |              |       |  |      |  





|    |                  
|--- | -----------------
|(5) | Employee Benefits



F-16



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                     
|--- | --------------------
|(6) | Stockholders Equity



|    |             
|--- | ------------
|(a) | Common Stock





|    |                
|--- | ---------------
|(b) | Preferred Stock





|    |                     
|--- | --------------------
|(c) | Sale of Common Stock





F-17



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                         
|--- | ------------------------
|(d) | Stock Based Compensation





|    |         
|--- | --------
|(e) | Warrants









|    |                       
|--- | ----------------------
|(f) | Convertible Debentures





F-18



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios Application of Issue No. 98-5 to Certain Convertible
Instruments






|    |                              
|--- | -----------------------------
|(7) | Commitments and Contingencies



|    |       
|--- | ------
|(a) | Leases





F-19



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                             |                                         |                |    |    |           |   |     |     | 
|---------------------------- | --------------------------------------- | -------------- | -- | -- | --------- | - | --- | --- | 
|                             |                                         | Capital        |    |    | Operating |  
|Year Ending December 31,     |                                         | Lease          |    |    | Lease     |  
|                             |                                         |                |    |    |           |  
|                             |                                         | (In thousands) |   
|2005                         |                                         | $              | 34 |    |           | $ | 617 |    
|2006                         |                                         |                | 29 |    |           |   | 355 |    
|                             |                                         |                |    |    |           |  
|Total minimum lease payments |                                         | $              | 63 |    |           | $ | 972 |    
|                             | Less amounts representing interest      |                |    | (6 | )         |   |     |     | 
|                             |                                         |                |    |    |           |  
|                             | Present value of minimum lease payments |                | $  | 57 |           |   | $   | 972 | 
|                             |                                         |                |    |    |           |  
|                             | Current portion                         |                |    | 30 |           |   |     |     | 
|                             |                                         |                |    |    |           |  
|                             | Long term portion                       |                | $  | 27 |           |   |     |     | 
|                             |                                         |                |    |    |           |  





|    |                                            
|--- | -------------------------------------------
|(b) | Employment Contracts and Personnel Expenses







|    |              
|--- | -------------
|(c) | Contingencies







|    |                        
|--- | -----------------------
|(8) | Discontinued Operations



F-20



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                                                        |  |              |   |      |  |   |     |  
|------------------------------------------------------- |  | ------------ | - | ---- |  | - | --- | -
|                                                        |  | Year Ended   |  
|                                                        |  | December 31, |  
|                                                        |  |              |  
|                                                        |  | 2004         |   | 2003 | 
|                                                        |  |              |   |      | 
|Revenue                                                 |  | $            |  |      |  | $ |    |  
|Net income (loss) from discontinued operations          |  | $            |  |      |  | $ | (41 | )
|Gain on disposal of discontinued operations, net of tax |  | $            |  |      |  | $ |    |  





|                                               |  |              |     |  |              |   |     | 
|---------------------------------------------- |  | ------------ | --- |  | ------------ | - | --- | 
|                                               |  | December 31, |     |  | December 31, |  
|                                               |  | 2004         |     |  | 2003         |  
|                                               |  |              |     |  |              |  
|Other non-current assets                       |  | $            | 48  |  |              | $ | 80  | 
|                                               |  |              |     |  |              |  
|Accrued expenses and other current liabilities |  | $            | 303 |  |              | $ | 444 | 
|                                               |  |              |     |  |              |  



|    |                             
|--- | ----------------------------
|(9) | Business Segment Information



F-21



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                        |      |                 |       |       |      |   |       |       | 
|--------------------------------------- | ---- | --------------- | ----- | ----- | ---- | - | ----- | ----- | 
|                                        |      | For Years Ended |      
|                                        |      | December 31,    |      
|                                        |      |                 |      
|                                        |      | 2004            |       |       | 2003 |  
|                                        |      |                 |       |       |      |  
|Net revenues from continuing operations |      |                 |       |       |      |   |       |      
|                                        | U.S. |                 | $     | 836   |      |   | $     | 1,117 | 
|                                        | U.K. |                 |       | 2,971 |      |   |       | 1,911 | 
|                                        |      |                 |       |       |      |  
|Net revenues                            |      | $               | 3,807 |       |      | $ | 3,028 |      
|                                        |      |                 |       |       |      |  
|Gross profit from continuing operations |      |                 |       |       |      |   |       |      
|                                        | U.S. |                 | $     | 804   |      |   | $     | 1,036 | 
|                                        | U.K. |                 |       | 2,543 |      |   |       | 1,706 | 
|                                        |      |                 |       |       |      |  
|Gross profit                            |      | $               | 3,347 |       |      | $ | 2,742 |      
|                                        |      |                 |       |       |      |  



|                                                 |      |      |       |       |      |   |       |       | 
|------------------------------------------------ | ---- | ---- | ----- | ----- | ---- | - | ----- | ----- | 
|                                                 |      | 2004 |       |       | 2003 |  
|                                                 |      |      |       |       |      |  
|Identifiable assets from continuing operations   |      |      |       |       |      |   |       |      
|                                                 | U.S. |      | $     | 1,517 |      |   | $     | 1,522 | 
|                                                 | U.K. |      |       | 262   |      |   |       | 861   | 
|                                                 |      |      |       |       |      |  
|                                                 |      |      | 1,779 |       |      |   | 2,383 |      
|Identifiable assets from discontinued operations |      |      | 48    |       |      |   | 80    |      
|                                                 |      |      |       |       |      |  
|                                                 |      | $    | 1,827 |       |      | $ | 2,463 |      
|                                                 |      |      |       |       |      |  



|     |             
|---- | ------------
|(10) | Income Taxes



|        |  |      |        |   |      |   |        |  
|------- |  | ---- | ------ | - | ---- | - | ------ | -
|        |  | 2004 |        |   | 2003 |  
|        |  |      |        |   |      |  
|U.S.    |  | $    | (2,010 | ) |      | $ | (5,273 | )
|Foreign |  |      | (1,262 | ) |      |   | (1,036 | )
|        |  |      |        |   |      |  
|        |  | $    | (3,272 | ) |      | $ | (6,309 | )
|        |  |      |        |   |      |  



|                                   |                               |                       |                                     |      |   |   |      |      |      |      |  
|---------------------------------- | ----------------------------- | --------------------- | ----------------------------------- | ---- | - | - | ---- | ---- | ---- | ---- | -
|                                   |                               | 2004                  |                                     | 2003 |  
|                                   |                               |                       |                                     |      |  
|Continuing operations              |                               |                       |                                     |      |   |   |      |     
|                                   | Current tax expense (benefit) |                       |                                     |      |   |   |      |      |     
|                                   |                               | United States federal |                                     | $    |  |   |      | $    | (125 | )   
|                                   |                               | State                 |                                     |      |  |   |      |      | (68  | )   
|                                   |                               | Foreign               |                                     |      |  |   |      |      | (365 | )   
|                                   |                               |                       |                                     |      |   |  
|                                   |                               |                       | Total current tax expense (benefit) |      |   |  |      |      |      | (558 | )
|                                   |                               |                       |                                     |      |   |  
|Discontinued operations            |                               |                       |                                     |      |   |   |      |     
|                                   | Foreign                       |                       |                                     |     |   |   |      | (300 | )   
|                                   |                               |                       |                                     |      |   |  
|Expense (benefit) for income taxes |                               | $                     |                                    |      |   | $ | (858 | )   
|                                   |                               |                       |                                     |      |   |  

F-22



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                       |  |      |       |   |      |  |       |  
|-------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- |  | ----- | -
|                                                                                       |  | 2004 |       |   | 2003 | 
|                                                                                       |  |      |       |   |      | 
|Statutory tax rate                                                                     |  |      | 34.0  | % |      |  | 34.0  | %
|Reversal of reserves no longer required                                                |  |      |      |   |      |  | 7.2   |  
|Non deductible debenture costs and other                                               |  |      | 1.3   |   |      |  |      |  
|Valuation reserve provided against utilization of net operating
    loss carryforwards |  |      | (35.3 | ) |      |  | (31.9 | )
|                                                                                       |  |      |       |   |      | 
|                                                                                       |  |      |      |   |      |  | 9.3   | %
|                                                                                       |  |      |       |   |      | 



|                          |                                                    |      |         |        |      |   |         |        |  
|------------------------- | -------------------------------------------------- | ---- | ------- | ------ | ---- | - | ------- | ------ | -
|                          |                                                    | 2004 |         |        | 2003 |  
|                          |                                                    |      |         |        |      |  
|Deferred tax assets:      |                                                    |      |         |        |      |   |         |       
|                          | Nondeductible reserves                             |      | $       | 314    |      |   | $       | 322    |  
|                          | Accrued expenses                                   |      |         | 623    |      |   |         | 228    |  
|                          | Other temporary differences                        |      |         | 70     |      |   |         | 92     |  
|                          | Depreciation                                       |      |         | 6,220  |      |   |         | 6,114  |  
|                          | Foreign net operating loss carryforwards           |      |         | 5,350  |      |   |         | 3,886  |  
|                          | Net federal and state operating loss carryforwards |      |         | 51,308 |      |   |         | 50,574 |  
|                          |                                                    |      |         |        |      |  
|                          |                                                    |      | 63,885  |        |      |   | 61,216  |       
|Valuation allowance       |                                                    |      | (61,353 | )      |      |   | (58,684 | )     
|                          |                                                    |      |         |        |      |  
|Net deferred tax assets   |                                                    |      | 2,532   |        |      |   | 2,532   |       
|                          |                                                    |      |         |        |      |  
|Deferred tax liabilities: |                                                    |      |         |        |      |   |         |       
|                          | Other intangible assets                            |      |         | (2,532 | )    |   |         | (2,532 | )
|                          |                                                    |      |         |        |      |  
|                          |                                                    |      | (2,532  | )      |      |   | (2,532  | )     
|                          |                                                    |      |         |        |      |  
|Net deferred taxes        |                                                    | $    |        |        |      | $ |        |       
|                          |                                                    |      |         |        |      |  







F-23



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##### Table of Contents



ELCOM INTERNATIONAL, INC.


AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










F-24



---



##### Table of Contents






EXHIBIT INDEX


|        |   |                         |  |                                                                                                                                                                                                                                                                           |  |     
|------- | - | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Exhibit |   |                         |  |                                                                                                                                                                                                                                                                          
|No.     |   | Description of Document |  |                                                                                                                                                                                                                                                                          
|        |   |                         |  |                                                                                                                                                                                                                                                                          
|        | 2 | .1                      |  | Agreement for the sale and purchase of shares in the capital of
    Prophet Group Limited dated December 6, 1996, by and among
    Lantec (Management) Limited (a subsidiary of the Registrant) and
    the Vendors (as defined therein).                                 |  | (2) 
|        | 2 | .2                      |  | Agreement for the sale and purchase of shares in the capital of
    Data Supplies Limited dated February 21, 1997, by and among
    Elcom Group Limited (a subsidiary of the Registrant), the Vendor
    (as defined therein) and Mr. Savage                              |  | (3) 
|       
|        | 2 | .3                      |  | Offer for the Sale of Business and Certain Assets of Elcom
    Holdings Limited and Elcom Information Technology Limited                                                                                                                                                  |  | (21)
|       
|        | 2 | .4.1                    |  | Domain Name Transfer Documents                                                                                                                                                                                                                                            |  | (21)
|       
|        | 2 | .4.2                    |  | Lloyds TSB Novation Agreement                                                                                                                                                                                                                                             |  | (21)
|       
|        | 2 | .4.3                    |  | Property Document.                                                                                                                                                                                                                                                        |  | (21)
|       
|        | 2 | .4.4                    |  | Elcom Logo License.                                                                                                                                                                                                                                                       |  | (21)
|       
|        | 2 | .4.5                    |  | Starbuyer Trademark License.                                                                                                                                                                                                                                              |  | (21)
|       
|        | 2 | .5                      |  | Asset Purchase and Sale Agreement by and among Elcom Services
    Group, Inc., elcom, inc. and Elcom International, Inc. and ePlus
    Technology, Inc. dated March 25, 2002                                                                                              |  | (25)
|       
|        | 2 | .6.1                    |  | Amendment to Asset Purchase Agreement.                                                                                                                                                                                                                                    |  | (25)
|       
|        | 2 | .6.2                    |  | Managed Services Agreement by and among Elcom Services Group,
    Inc., elcom, inc. and Elcom International, Inc. and ePlus
    Technology, Inc. dated March 29, 2002.                                                                                                    |  | (25)
|       
|        | 2 | .6.3                    |  | Registration Rights Agreement by and between Registrant and
    Elcom International, Inc. and ePlus Technology, Inc. dated
    March 29, 2002.                                                                                                                            |  | (25)
|       
|        | 3 | .3                      |  | Second Restated Certificate of Incorporation of the Registrant,
    as amended                                                                                                                                                                                            |  | (4) 
|       
|        | 3 | .4                      |  | By-Laws of the Registrant, amended as of November 6, 1995.                                                                                                                                                                                                                |  | (1) 
|       
|        | 4 | .4                      |  | Specimen certificate of the Registrants Common Stock.                                                                                                                                                                                                                    |  | (1) 
|       
|        | 4 | .5                      |  | Form of 8% Series A Cumulative Convertible Preferred
    (Series A) Stock Purchase Agreement, with
    attached list of purchasers and number of shares purchased, as
    of December 10, 1993.                                                                         |  | (1) 
|       
|        | 4 | .6                      |  | Form of Series B Preferred Stock Purchase Agreement for
    Closings held on April 15, June 21 and August 11,
    1994, with attached list of purchasers and number of shares
    purchased.                                                                              |  | (1) 
|       
|        | 4 | .7                      |  | Form of Series B Preferred Stock Purchase Agreement for
    Closings held on December 30, 1994 and February 6,
    1995, with attached list of purchasers and number of shares
    purchased.                                                                             |  | (1) 
|       
|        | 4 | .8                      |  | Form of Series C Preferred Stock Purchase Agreement for
    Closings held on June 22 and June 30, 1995, with attached
    list of purchasers and number of shares purchased.                                                                                              |  | (1) 
|       
|        | 4 | .9                      |  | Securities Agreement, dated September 1, 1993, as amended
    February 1, 1994, by and among the Registrant, Robert J.
    Crowell, and 19 other listed purchasers, as of June 2,
    1995(1), and list of other assignees of certain registration
    rights thereunder. |  | (11)
|       
|        | 4 | .10                     |  | Securities Agreement, dated October 28, 1994, by and among
    the former stockholders of CSI and the Registrant.                                                                                                                                                         |  | (1) 
|       
|        | 4 | .11                     |  | Computerware Stockholders Agreement, dated
    February 6, 1995, by and among the Registrant, Robert J.
    Crowell and the former shareholders of Computerware.                                                                                                         |  | (1) 

E-1



---



##### Table of Contents



|        |    |     |                         |                                                                                                                                                                                                                                                                                                             |  |            
|------- | -- | --- | ----------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|Exhibit |    |     |                         |                                                                                                                                                                                                                                                                                                             | 
|No.     |    |     | Description of Document |                                                                                                                                                                                                                                                                                                             | 
|        |    |     |                         |                                                                                                                                                                                                                                                                                                             | 
|       
|        | 4  | .12 |                         | Amended and Restated Lantec Stockholders Agreement, dated
    April 6, 1996, by and among the Registrant, Robert J.
    Crowell and the former shareholders of Lantec(5) and
    Renouncement of related Board Observer Right effective
    December 16, 1999.                                             |  | (16)       
|       
|        | 4  | .13 |                         | Form of Lantec Warrant Agreement, dated January 7, 2000,
    with attached Second Amended List of Holders of Warrants to
    Purchase Common Shares of the Registrant.                                                                                                                                      |  | (16)       
|       
|        | 4  | .14 |                         | AMA Securities Agreement, dated February 29, 1996, by and
    among the Registrant and the former stockholders of AMA
    (UK) Limited.                                                                                                                                                                     |  | (7)        
|       
|        | 4  | .15 |                         | Final Agreement of Settlement and Mutual Release of All Claims
    and Demands, dated March 26, 1997, by and among the
    Registrant and certain of its subsidiaries, and the Former
    Shareholders of Computerware Business Trust.                                                                      |  | (10)       
|       
|        | 4  | .16 |                         | Warrant by and between Registrant and ePlus Technology, Inc.
    dated March 29, 2002.                                                                                                                                                                                                                      |  | (25)       
|       
|        | 4  | .17 |                         | Form of Elcom International, Inc. 10% Convertible Senior
    Debenture Due April 25, 2003                                                                                                                                                                                                                   |  | (26)       
|       
|        | 4  | .18 |                         | Warrant Agreement, dated December 3, 2001, between the
    Company and Cripple Creek Securities, LLC.                                                                                                                                                                                                       |  | (24)       
|       
|        | 10 | .1  |                         | Form of Indemnity Agreement for Executive Officers and/or
    Directors of the Registrant(1), with attached list of Director
    and/or Executive Officer Indemnitees.                                                                                                                                      |  | (13)(*)    
|       
|        | 10 | .2  |                         | Stock Option Plan of the Registrant dated February 23,
    1993, as amended June 3, 1994 and November 6, 1995.                                                                                                                                                                                              |  | (1)(*)     
|       
|        | 10 | .3  |                         | 1995 (Computerware) Stock Option Plan of the Registrant, dated
    February 6, 1995(1), as amended by Amendment No. 1
    dated August 19, 1996.                                                                                                                                                            |  | (7)(*)     
|       
|        | 10 | .4  |                         | Lease Agreement for the Registrants Headquarters, dated
    July 5, 1993, by and among Oceana Way Associates and the
    Registrant(1), and Agreement of Amendment thereto, dated
    October 20, 1997 (11), and December 31, 2000.                                                                        |  | (1)(11)(19)
|       
|        | 10 | .5  |                         | Lease Agreements for Lantec Headquarters, among Allied Dunbar
    Assurance PLC to Businessland (UK) Limited and Businessland
    Inc., dated November 23, 1988, with Licenses to Assign to
    Lantec Information Services Ltd., and Supplemental Deed dated
    November 4, 1993.                         |  | (1)        
|       
|        | 10 | .6  |                         | Structured Equity Line Flexible Financing Agreement, dated
    December 30, 1999, between the Registrant and Cripple Creek
    Securities, LLC (15), Amended and Restated Structured Equity
    Line Flexible Financing Agreement, dated April 7, 2000
    (15), Amendment No. 1 (15), and Amendment No. 2. |  | (15)(17)   
|       
|        | 10 | .7  |                         | Registration Rights Agreement, dated December 30, 1999,
    between the Registrant and Cripple Creek Securities, LLC. (16),
    and Amended and Restated Registration Rights Agreement, dated
    April 7, 2000.                                                                                            |  | (16)(15)   
|       
|        | 10 | .8  |                         | Form of Warrant and Minimum Commitment Warrant of the Registrant
    issuable to Cripple Creek Securities, LLC.                                                                                                                                                                                             |  | (15)       
|       
|        | 10 | .9  |                         | 1995 Non-Employee Director Stock Option Plan of the Registrant,
    dated October 9, 1995(1), and Amendment No. 1 thereto.                                                                                                                                                                                  |  | (8)(*)     
|       
|        | 10 | .10 |                         | The 1996 Stock Option Plan of Elcom International, Inc.                                                                                                                                                                                                                                                     |  | (6)(*)     
|       
|        | 10 | .11 |                         | The 1997 Stock Option Plan of Elcom International, Inc.(8), and
    Amendments One and Two thereto.                                                                                                                                                                                                         |  | (11)(12)(*)
|       
|        | 10 | .12 |                         | The 2000 Stock Option Plan of the Registrant.                                                                                                                                                                                                                                                               |  | (18)       
|       
|        | 10 | .13 |                         | The 2001 Stock Option Plan of the Registrant, as amended and
    restated.                                                                                                                                                                                                                                  |  | (20)       
|       
|        | 10 | .14 |                         | The 2002 Stock Option Plan of the Registrant.                                                                                                                                                                                                                                                               |  | (22)       

E-2



---



##### Table of Contents



|        |    |     |                         |                                                                                                                                                                               |  |        
|------- | -- | --- | ----------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------
|Exhibit |    |     |                         |                                                                                                                                                                               | 
|No.     |    |     | Description of Document |                                                                                                                                                                               | 
|        |    |     |                         |                                                                                                                                                                               | 
|       
|        | 10 | .15 |                         | International, Inc. Executive Profit Performance Bonus Plan for
    Executive Officers dated September 4, 1997.                                                               |  | (9)(*) 
|       
|        | 10 | .16 |                         | Elcom International, Inc. Key Personnel Profit Performance Bonus
    Plan dated September 4, 1997.                                                                            |  | (9)(*) 
|       
|        | 10 | .17 |                         | Amended and Restated Employment Agreement dated June 20,
    2002 by and between Elcom International, Inc. and Robert J.
    Crowell.                                         |  | (23)(*)
|       
|        | 10 | .18 |                         | Employment Agreement dated June 20, 2002 by and between
    Elcom International, Inc. and John E. Halnen.                                                                     |  | (23)(*)
|       
|        | 10 | .19 |                         | Form of Registration Agreement, dated April 23, 2003,
    between Elcom International, Inc. and the Investors party
    thereto.                                              |  | (26)   
|       
|        | 10 | .20 |                         | Form of Collateral Agency and Security Agreement, dated
    April 23, 2003, between Elcom International, Inc. and the
    Investors party thereto.                            |  | (26)   
|       
|        | 10 | .21 |                         | Amendment to Amended and Restated Employment Agreement, dated
    March 8, 2004, by and between Elcom International, Inc. and
    Robert J. Crowell.                          |  | (26)(*)
|       
|        | 10 | .22 |                         | Amendment to Employment Agreement, dated March 9, 2003, by
    and between Elcom International, Inc. and John E. Halnen.                                                      |  | (26)(*)
|       
|        | 10 | .23 |                         | Form of Investment Agreement by and among the Company,
    Smith & Williamson Corporate Finance Limited, several
    investors and the Directors of the Company named therein |  | (27)   
|       
|        | 10 | .24 |                         | Form of 12% Secured Promissory Note                                                                                                                                           |  | (28)   
|       
|        | 10 | .25 |                         | Collateral Agency and Security Agreement, dated as of
    April 6, 2005, among the Company, William W. Smith, as
    Collateral Agent and the holders of the Notes            |  | (28)   
|       
|        | 21 | .1  |                         | List of the Registrants Subsidiaries.                                                                                                                                        |  | (16)   
|       
|        | 23 | .1  |                         | Consent of Vitale, Caturano & Company PC.                                                                                                                                     |  | (x)    
|       
|        | 31 | .1  |                         | Rule 13a-14(a) Certification of Chief Executive Officer                                                                                                                       |  | (x)    
|       
|        | 31 | .2  |                         | Rule 13a-14(a) Certification of Chief Financial Officer                                                                                                                       |  | (x)    
|       
|        | 32 | .1  |                         | Section 1350 Certification of Chief Executive Officer                                                                                                                         |  | (x)    
|       
|        | 32 | .2  |                         | Section 1350 Certification of Chief Financial Officer                                                                                                                         |  | (x)    






|    |                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(x) | Filed herewith.                                                                                                                                                     
|   
|(*) | Management contract or compensatory plan or arrangement.                                                                                                            
|   
|(1) | Previously filed as an exhibit to Registration Statement
    No. 33-98866 on Form S-1 and incorporated herein by
    reference.                                     
|   
|(2) | Previously filed as an exhibit to Current Report on
    Form 8-K dated December 6, 1996 (filed
    December 19, 1996), and incorporated herein by reference.        
|   
|(3) | Previously filed as an exhibit to Current Report on
    Form 8-K dated February 21, 1997 (filed March 6,
    1997), and incorporated herein by reference.           
|   
|(4) | Previously filed as an exhibit to Registrants Annual
    Report on Form 10-K for the year ended December 31,
    2002, and incorporated herein by reference.       
|   
|(5) | Previously filed as an exhibit to Registrants Quarterly
    Report on Form 10-Q for the quarter ended March 31,
    1996, and incorporated herein by reference.    
|   
|(6) | Previously filed as an exhibit to Registrants Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 1996, and incorporated herein by reference.
|   
|(7) | Previously filed as an exhibit to Registrants Annual
    Report on Form 10-K for the year ended December 31,
    1996, and incorporated herein by reference.       
|   
|(8) | Previously filed as an exhibit to Registrants Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    1997, and incorporated herein by reference.     

E-3



---



##### Table of Contents





|    |                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(9) | Previously filed as an exhibit to Registrants Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 1997, and incorporated herein by reference.



|     |                                                                                                                                                                              
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Previously filed as an exhibit to Registrants Current
    Report on Form 8-K dated March 26, 1997 (filed
    April 8, 1997), and incorporated herein by reference.          
|    
|(11) | Previously filed as an exhibit to Registrants Annual
    Report on Form 10-K for the year ended December 31,
    1997, and incorporated herein by reference.                
|    
|(12) | Previously filed as an exhibit to Registrants Annual
    Report on Form 10-K for the year ended December 31,
    1998 and incorporated herein by reference.                 
|    
|(13) | Previously filed as an exhibit to Registrants Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    1999, and incorporated herein by reference.              
|    
|(14) | Previously filed as an exhibit to Registrants Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 1999, and incorporated herein by reference.         
|    
|(15) | Previously filed as an exhibit to Registration Statement
    No. 333-94743 on Form S-3 and incorporated herein by
    reference.                                             
|    
|(16) | Previously filed as an exhibit to Registrants Annual
    Report on Form 10-K for the year ended December 31,
    1999, and incorporated herein by reference.                
|    
|(17) | Previously filed as an exhibit to Registrants Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    2000, and incorporated herein by reference.              
|    
|(18) | Previously filed as an exhibit to Registration Statement
    No. 333-54852 on Form S-8 and incorporated herein by
    reference.                                             
|    
|(19) | Previously filed as an exhibit to Registrants Annual
    Report on Form 10-K for the year ended December 31,
    2000, and incorporated herein by reference.                
|    
|(20) | Previously filed as an exhibit to Registration Statement
    No. 333-61316 on Form S-8 and incorporated herein by
    reference.                                             
|    
|(21) | Previously filed as an exhibit to Registrants Current
    Report on Form 8-K dated December 31, 2001, (filed on
    January 11, 2002), and incorporated herein by reference.
|    
|(22) | Previously filed as an exhibit to Registration Statement
    No. 333-91488 on Form S-8, and incorporated herein by
    reference.                                            
|    
|(23) | Previously filed as an exhibit to Registrants Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    2002, and incorporated herein by reference.              
|    
|(24) | Previously filed as an exhibit to Registrants Annual
    Report on Form 10-K for the year ended December 31,
    2001, and incorporated herein by reference.                
|    
|(25) | Previously filed as an exhibit to Current Report on
    Form 8-K dated March 29, 2002 (filed April 10,
    2002) and incorporated herein by reference.                       
|    
|(26) | Previously filed as an exhibit to Registrants Annual
    Report on Form 10-K, as amended, for the year ended
    December 31, 2003, and incorporated herein by reference.   
|    
|(27) | Previously filed as an exhibit to Registrants Quarterly
    Report on Form 10-QSB for the quarter ended June 30,
    2004, and incorporated herein by reference.            
|    
|(28) | Previously filed as an exhibit to Current Report on
    Form 8-K dated April 6, 2005 (filed April 8,
    2005) and incorporated herein by reference.                         

E-4