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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-K/Amendment 1

|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the fiscal year ended December 31,
    2003                                             
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-27376



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Elcom International, Inc.

(Exact name of registrant as specified in its
charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 04-3175156                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

10 Oceana Way


Norwood, Massachusetts 02062


(781) 440-3333


(Address, including zip code, and telephone
number, including


area code, of registrants principal
executive offices)


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

None


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

|                             |  |                                     
|---------------------------- |  | ------------------------------------
|Title of Each Class          |  | Name of Exchange on Which Registered
|                             |  |                                     
|Common Stock, $.01 par value |  | N/A                                 

Indicate by check
mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days.     Yes þ          No o

Indicate
by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrants
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K.     o

Indicate
by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the
Act.)     Yes o          No þ

The
aggregate market value of the common stock held by
non-affiliates of the registrant based on the price at which
such stock was last sold on the Over The Counter Bulletin Board
(the OTCBB) on March 22, 2004, was
approximately $5,444,000. For purposes of this disclosure only,
the registrant has assumed that its directors, executive
officers, and beneficial owners of 10% or more of the
registrants common stock are affiliates of the registrant.

The registrant had approximately
30,902,000 shares of Common Stock, $.01 par value,
outstanding as of March 22, 2004.



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TABLE OF CONTENTS  PART IIIItem 10. Directors and Executive Officers of the CompanyItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and ManagementItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accounting Fees and ServicesSIGNATURES    Table of Contents  The purpose of this Amendment 1 to Elcom International, Inc.s Form 10-K
for the year ended December 31, 2003, is to timely file required PART III
information. This PART III information was originally expected to be
incorporated from the Companys Proxy, however the Companys Proxy will not be
filed until May. Accordingly, the following PART III information is filed to
amend and replace the originally filed PART III information in Elcom
International, Inc.s Form 10-K for the year ended December 31, 2003. 
 PART III 
 Item 10.Directors and Executive Officers of the Company The name, age and position of the Companys Executive Officers and
Directors are as follows: NAME
    
    AGE
    
    POSITIONRobert J. Crowell
    
    
    52
    
    
    Class III Director, Chairman of the Board of Directors
and Chief Executive Officer of the CompanyMelinda F. Ellett
    
    
    42
    
    
    Secretary of the CompanyJohn E. Halnen
    
    
    37
    
    
    Class I Director, President and Chief Operating Officer
of the CompanyRichard J. Harries, Jr. (1)(2)(3)
    
    
    66
    
    
    Class II Director of the CompanyJohn Ortiz (1) (2)
    
    
    80
    
    
    Class I Director of the CompanyWilliam W. Smith (1) (2) (3)
    
    
    53
    
    
    Class III Director and Vice Chairman of the Board of Directors
   (1)
    
    Member of the Compensation Committee.(2)
    
    Member of the Audit Committee.(3)
    
    Member of Nominating Committee. A brief resume for each of the Companys Executive Officers and Directors
is set forth below. Robert J. Crowell, the Companys founder, has been the Chairman of the
Board of Directors and Chief Executive Officer of the Company since its
inception in 1992. Mr. Crowell has founded and managed several companies since
1977. From May 1990 to April 1992, he was the Chairman, and from May 1990 to
January 1992, Chief Executive Officer also, of JWP Information Services, Inc.,
a subsidiary of JWP INC. (JWP), with approximately $1.4 billion in 1992
revenues. From 1983 to 1990, Mr. Crowell was the Chairman and Chief Executive
Officer of NEECO, Inc. (NEECO), a publicly-held national PC reseller which
was acquired by JWP (forming JWP Information Services, Inc.) in May 1990 for
approximately $100 million. From 1977 to 1983, Mr. Crowell founded and managed
New England Electronics Co., Inc. (which was renamed NEECO and became a public
company in 1986), and Microamerica Distributing Co., Inc. (Microamerica), a
PC products distributor which Mr. Crowell founded in 1979 as a subsidiary of
NEECO. Microamerica was later spun-off by its acquirer and subsequently merged
with Softsel to form Merisel, then a PC products distributor, now a provider of
software license products to resellers. Mr. Crowell also founded Professional
Software, Inc. in 1980, a PC-based word processing and database software
company (Professional Software), which was sold in 1986. Mr. Crowell holds a
Magna Cum Laude Bachelor of Science degree in Accounting from the University of
Massachusetts and is a Vietnam veteran. Melinda F. Elletthas been the Secretary of the Company since April 2003
and the Vice President, Business Systems Development since January 2000. From
June 1998 through January 2000, Ms. Ellett was Director, Information Technology
of elcom.com, inc. From December 1996 through June 1998, Ms. Ellett was Vice
President, Quality Assurance of Elcom Services Group, Inc. and from May 1996
through December 1996, Ms. Ellett was Business Operations Executive. From
August of 1987 through May 1996, Ms. Ellett was Director, Advanced Systems for
GTSI, an IT solutions provider to federal, state, and local government
customers worldwide. Prior to that time Ms. Ellett was the Manager of
Purchasing for MBI, Inc. John Halnen, was appointed as a Class I Director in June 2003 and has been
the President of the Company since November 2000 and President and Chief
Operating Officer since June 2001. From December 1999 through October 2000,
Mr. Halnen was President and Chief Executive Officer of Elcom Services Group,
Inc. From April 1998 through December 1999, Mr. Halnen was Chief Operations
Officer for Elcom Services Group, Inc. From January 1995 through April 1998,
Mr. Halnen served as Vice President of Operations for Elcom Services Group,
Inc. and prior to that time held other positions at Elcom Services Group, Inc.
since joining the organization in October 1992. - 1 -




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Richard J. Harries, Jr., a Director of the Company since December 1993,
retired from IBM in 1992 after twenty-five years of service. In 1997, Mr.
Harries rejoined IBM North America as a Business Partner Senior Sales
Executive. He subsequently retired in 2001. During 1995 and 1996, Mr. Harries
was a Director of Sales of the Institute for Software Advancement. From July
1992 to August 1995, after retiring from IBM, Mr. Harries worked as the general
manager of Tascor; was a sales and marketing consultant; and was an independent
distributor for Equinox, Inc. Prior thereto, from 1988 to July 1992, Mr.
Harries served as a National Account Executive for IBM. During his career with
IBM, Mr. Harries has held a number of executive marketing and sales management
positions, including ten years of experience in IBMs National Distribution
Division Reseller Channel where he was responsible for field sales and
marketing programs. Mr. Harries holds a Bachelor of Arts Degree in Political
Science and a Master of Arts Degree in Economics from Boston College. John W. Ortiz, a Director of the Company since December 1993, is a retired
banking executive of South Shore Bank (now part of Bank of America) where he
was employed from 1942 to 1989, most recently as Senior Vice President and
Group Head of Commercial Lending. Mr. Ortiz also presided as the president of
the New England Chapter of Robert Morris Associates and as a director of the
Massachusetts Higher Education Loan Corporation at times during his banking
career. Mr. Ortiz is a graduate of Northeastern Universitys Bachelor of Arts
program. William W. Smithhas been Vice Chairman and a Director of the Company
since March 1993. Mr. Smith develops real estate and has been semi-retired
since August 1991. Mr. Smith joined NEECO as a major stockholder in 1978 and
served as Chief Financial Officer until its acquisition by JWP in May 1990.
Mr. Smith continued to serve as Chief Financial Officer of JWP Information
Services, Inc. until December 1990, then he served as a consultant until he
retired in August 1991. Mr. Smith holds a Magna Cum Laude Bachelor of Science
degree in Accounting from the University of Massachusetts and is a Vietnam
veteran. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the
Companys Officers and Directors and persons who beneficially own more than ten
percent of a registered class of the Companys equity securities (i.e., the
Common Stock), to file reports of ownership and changes in ownership of such
securities with the Commission. Officers, Directors and
greater-than-ten-percent beneficial owners are required by applicable
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely upon a review of the copies of the forms furnished to the
Company during or with respect to 2003, and written representations from
certain reporting persons, the Company believes that, except as set forth
below, no Officer, Director or greater-than-ten-percent beneficial owner failed
to file on a timely basis during the year ended December 31, 2003 any report
required by Section 16(a) of the Securities Exchange Act of 1934. Form 4 reports inadvertently were not timely filed in connection with the
following transactions: Name
    
    Description of Transaction
    
    Required FormRobert J. Crowell
    
    Purchase of $300,000 Senior Convertible Debenture on April 23, 2003
    
    Form 4Robert J. Crowell
    
    Purchase of $150,000 Senior Convertible Debenture on October 16,
2003
    
    Form 4John E. Halnen
    
    Purchase of $60,000 Senior Convertible Debenture on April 23, 2003
    
    Form 4William W. Smith
    
    Purchase of $300,000 Senior Convertible Debenture on April 23, 2003
    
    Form 4William W. Smith
    
    Purchase of $150,000 Senior Convertible Debenture on October 16,
2003
    
    Form 4
 Each of the above Officers and Directors reported their respective
transaction(s) on a Form 5 within 45 days of the end of fiscal year 2003. 
 Item 11.Executive Compensation The table below sets forth information concerning calendar 2003 annual and
long-term compensation for services in all capacities with respect to those
persons (collectively, the Named Executive Officers) who were (i) the Chief
Executive Officer and (ii) the other executive officers of the Company at the
end of the fiscal year, as well as the other individuals that were executive
officers during the year ended December 31, 2003. - 2 -




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Summary Compensation Table Long-TermAnnual
    
    CompensationCompensation(1)
    
    AwardsShares ofCommon StockUnderlying
    
    All OtherName and Principal Position (1)
    
    Year
    
    Salary
    
    Bonus
    
    Option Grants
    
    CompensationRobert J. Crowell
    
    
    2003
    
    
    $
    487,000
    
    
    
    
    
    
    
    400,000
    
    
    $
    250Chairman of the Board of Directors and
    
    
    2002
    
    
    $
    390,000
    
    
    
    
    
    
    
    790,000
    
    
    $
    500Chief Executive Officer of the Company (2)
    
    
    2001
    
    
    $
    524,000
    
    
    
    
    
    
    
    300,000
    
    
    $
    250John E. Halnen
    
    
    2003
    
    
    $
    281,000
    
    
    $
    11,000
    
    
    
    275,000
    
    
    
    President and Chief Operating Officer
    
    
    2002
    
    
    $
    184,000
    
    
    $
    66,000
    
    
    
    505,000
    
    
    $
    22,500of the Company (3)
    
    
    2001
    
    
    $
    225,000
    
    
    $
    75,000
    
    
    
    200,000
    
    
    
    Peter A. Rendall
    
    
    2003
    
    
    $
    45,000
    
    
    
    
    
    
    
    
    
    
    
    Former Chief Financial Officer and
    
    
    2002
    
    
    $
    215,000
    
    
    
    
    
    
    
    505,000
    
    
    $
    600Former Secretary of the Company (4)
    
    
    2001
    
    
    $
    240,000
    
    
    
    
    
    
    
    175,000
    
    
    
    Scott M. Soloway
    
    
    2003
    
    
    $
    38,000
    
    
    
    
    
    
    
    
    
    
    
    Former Vice President and General Counsel
    
    
    2002
    
    
    $
    193,000
    
    
    
    
    
    
    
    71,000
    
    
    
    of the Company (5)
    
    
    2001
    
    
    $
    195,000
    
    
    
    
    
    
    
    47,000
    
    
    
    
   (1)
    
    No Named Executive Officer received perquisites or other personal
benefits in excess of the lesser of $50,000 or 10% of such individuals
salary plus annual bonus unless otherwise indicated herein.(2)
    
    The Company and Mr. Crowell entered into an Amended and Restated
Employment Agreement on June 20, 2002, which was amended, effective as of
April 16, 2004 (the 2002 Crowell Agreement). See Employment
Contracts, Executive Profit Performance Bonus Plan and  Option
Grants in 2003. In order to assist the Company in conserving cash, Mr.
Crowell voluntarily reduced his cash compensation at various times in
2001, 2002 and 2003. Such reductions amounted to approximately $135,000
in 2002 and $257,000 in 2003. In April 2003, Mr. Crowell received a
$187,000 repayment of certain deferred base compensation amounts, which he
invested in the Companys Debentures. Mr. Crowell also received
withholding and estimated income taxes of $32,000, which were paid to the
appropriate tax authorities. These amounts ($219,000) are included in the
Summary Compensation Table for 2003. Mr. Crowell also invested an
additional $263,000 of cash in the Companys Debentures (see Transactions
With Management). As of December 31, 2003, Mr. Crowell has deferred a
net aggregate of $173,000 in base compensation, which may be paid to Mr.
Crowell depending upon the success of future operations, which is not
included in the Summary Compensation Table for 2003. Through April 16,
2004, Mr. Crowells 2004 cash compensation paid totaled $10,000. The
Company reinstated Mr. Crowells cash compensation to $364,000 per annum
in accordance with the 2002 Crowell Agreement, effective April 19, 2004.
The 2002 Crowell Agreement originally provided for annual base
compensation of $525,000, much of which was deferred as described herein
through April 16, 2004, when the annual base compensation was reduced to
$364,000. All other compensation represents premiums paid by the Company
for group term life insurance ($250 for 2003), see Employment Contracts.(3)
    
    On November 29, 2000, Mr. Halnen was appointed as President of the
Company; on June 12, 2001, Mr. Halnen also was appointed as Chief
Operating Officer of the Company and, on June 4, 2003, Mr. Halnen was
appointed as a Director of the Company. On June 20, 2002, the Company and
Mr. Halnen entered into an Employment Agreement, which was amended on
March 9, 2004. See Employment Contracts, Executive Profit
Performance Bonus Plan and  Option Grants in 2003. Mr. Halnens
employment contract provides for annual base compensation of $225,000 plus
an annual bonus opportunity of $75,000, payable quarterly. In order to
assist the Company in conserving cash, Mr. Halnen voluntarily reduced his
cash base and bonus compensation at various times in 2001, 2002 and 2003.
Such reductions were approximately $50,000 in 2002 and $107,000 in 2003.
In April 2003, Mr. Halnen received a $60,000 repayment of certain deferred
base compensation and bonuses, which he invested in the Companys
Debentures. Mr. Halnen also received $39,000 of withholding and estimated
income taxes, which were paid to the appropriate tax authorities. These
amounts ($99,000) are included in the Summary Compensation Table for 2003.
As of December 31, 2003, Mr. Halnen has deferred a net aggregate of
$58,000 of base and bonus compensation, which may be paid to Mr. Halnen
depending on the success of future operations, which is not included in
the Summary Compensation - 3 -




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Table for 2003. Through April 16, 2004, Mr. Halnens cash compensation is at
an annual rate of $172,000 and he has voluntarily deferred his bonus
payments. The Company reinstated Mr. Halnens cash compensation in
accordance with his employment agreement effective April 19, 2004. All other
compensation represents premiums paid by the Company for term life insurance
($22,500 for 2002), see Employment Contracts.(4)
    
    Mr. Rendall joined the Company in April 1999 and was appointed Chief
Financial Officer of Elcom International on October 4, 1999 at an annual
salary of $200,000 and a bonus opportunity of up to $40,000. During 2000,
Mr. Rendalls annual salary was increased to $240,000 with no bonus
opportunity. In April 2002, Mr. Rendall elected to reduce his 2002 annual
salary by $36,000 to $204,000. On January 6, 2003, Mr. Rendall elected to
reduce his salary by a further $24,000 resulting in an annual salary of
$180,000. All other compensation represents premiums paid by the Company
for Group Term Life Insurance ($570 for 2002), see Employment Contracts.
Mr. Rendall voluntarily left the employ of the Company, effective March 7,
2003.(5)
    
    Mr. Soloway joined the Company on March 29, 2000 at an annual salary of
$150,000 and a bonus opportunity of $30,000. During 2001, Mr. Soloways
annual salary was increased to $192,000 with no bonus opportunity. On
January 6, 2003, Mr. Soloway elected to reduce his fiscal 2003 salary by
$28,800, resulting in an annual salary of $163,200. Mr. Soloway
voluntarily left the employ of the Company, effective March 25, 2003. Stock Option Plans As of December 31, 2003, the Company has adopted the 1995 Non-Employee
Director Stock Option Plan (the Director Plan), The Stock Option Plan of
Elcom International, Inc. (the 1993 Stock Option Plan), The 1995
(Computerware) Stock Option Plan of the Company (the Computerware Stock Option
Plan), The 1996 Stock Option Plan of the Company (the 1996 Stock Option
Plan), The 1997 Stock Option Plan of the Company (the 1997 Stock Option
Plan), The 2000 Stock Option Plan (the 2000 Stock Option Plan), The 2001
Stock Option Plan, as amended and restated (the 2001 Stock Option Plan) and
The 2002 Stock Option Plan (the 2002 Stock Option Plan) (collectively
hereinafter the Stock Option Plans) covering 250,000, 5,000,000, 1,000,000,
2,400,000, 3,000,000, 2,750,000, 2,400,000 and 1,800,000 shares, respectively,
of the Companys Common Stock, pursuant to which officers, employees and
directors of the Company, as well as other persons who render services as
independent contractors to the Company, or any of its affiliates, are eligible
to receive incentive stock options (ISOs) and/or non-qualified stock options
(NQOptions). The 1993 Stock Option Plan has expired and no further options
may be granted thereunder. These plans generally operate in the following
manner. Overview of the Plans. Pursuant to the plans, key personnel, which
includes employees and outside directors of the Company or any affiliate, as
well as other persons who render services as independent contractors to the
Company, or any of its affiliates, who in the judgment of the Compensation
Committee, are important to the successful operation of the Company or an
affiliate, are eligible to receive stock options. Stock options may include
NQOptions, which may be granted to any key personnel, and/or ISOs, which may
only be granted to employees of the Company or a subsidiary. The plans are administered by the Compensation Committee of the Board of
Directors (the Committee), presently comprised of Messrs. Harries, Ortiz and
Smith. Members of the Committee must be persons who qualify as outside
directors under Section 162(m) of the Internal Revenue Code and who are
non-employee directors under Rule16(b)(3) of the Securities Exchange Act of
1934. Subject to the terms and conditions of the applicable plan, and in
addition to t he other authorizations granted to the Committee under the
applicable plan, the Committee shall have full and final authority in its
absolute discretion to (a) select the optionees to whom options will be
granted, (b) determine the number of shares of Common Stock subject to any
option, (c) determine the time when options will be granted, (d) determine the
option price of Common Stock subject to an option, (e) determine the time when
Common Stock subject to an option may be purchased, (f) prescribe the form of
the option agreements governing the options which are granted under the
applicable plan and to set the provisions of such option agreements as the
Committee may deem necessary or desirable provided such provisions are not
contrary to the terms and conditions of the applicable plan, (g) adopt, amend
and rescind such rules and regulations as, in the Committees opinion, may be
advisable in the administration of the applicable plan, and (h) construe and
interpret the applicable plan, the rules and regulations and the instruments
evidencing options granted under the applicable plan and to make all other
determinations deemed necessary or advisable for the administration of the
applicable plan. Subject to the approval of the Board of Directors, the Committee may at
any time amend, modify, suspend or terminate any plan. In no event, however,
without the prior approval of the Companys stockholders, shall any action of
the Committee or the Board result in: (a) amending, modifying or altering the
eligibility requirements for those persons eligible for options; (b) increasing
or decreasing, except in the event of stock splits, stock dividends,
combinations, exchanges of shares or similar capital adjustments, the maximum
number of shares for which options may be granted; (c) decreasing the minimum
option price per share at which options may be granted under the applicable
plan; (d) extending either the maximum period during which an option is
exercisable or the date on which the applicable plan shall terminate; or (e)
changing the requirements relating to the Committee; except as necessary to
conform the applicable plan and/or the option agreements to changes in the
Internal Revenue Code or other governing law. - 4 -




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Any decision made or action taken by the Committee in connection with the
administration, interpretation, and implementation of the applicable plan and
of its rules and regulations, shall, to the extent permitted by law, be
conclusive and binding
upon all optionees under the applicable plan and upon any person claiming under
or through such an optionee. Neither the Committee nor any of its members
shall be liable for any action taken by the Committee pursuant to the
applicable plan. No member of the Committee shall be liable for the action of
any other Committee member. In the event of stock splits, stock dividends, combinations, exchanges of
shares or similar capital adjustments, the Compensation Committee must make an
appropriate adjustment in the options granted under the applicable plan, and
the aggregate number of shares reserved for issuance thereunder also shall be
adjusted accordingly. If any option expires without having been fully
exercised, the shares with respect to which such options have not been
exercised will be available for further options as will any shares paid or
withheld to satisfy an optionees withholding tax or option payment liability. Subject to certain conditions, the duration of each option granted under
the applicable plan will be determined by the Committee, provided that no
option shall be exercisable later than the tenth anniversary of the date the
option was granted. Each option granted under the applicable plan may be
subject to restrictions with respect to the time and other conditions of
exercise as determined by the Committee. ISOs granted under the applicable plan are exercisable for a period of up
to ten years from the date of grant at an exercise price that is not less than
the fair market value of the Common Stock on the date of the grant, except that
the term of an ISO granted under the Stock Option Plan to a stockholder owning
more than 10% of the voting power of the Company on the date of grant may not
exceed five years and its exercise price may not be less than 110% of the fair
market value of the Common Stock on the date of the grant. NQOptions may be
granted at more or less than fair market value under the applicable plan.
Shares of Common Stock underlying an option shall be purchased by the optionee
(i) giving written notice to the Company of the optionees exercise of the
option accompanied by full payment of the purchase price either in cash or,
with the consent of the Committee (or as per the terms of the option
agreement), in whole or in part in shares of Common Stock by delivery to the
Company of shares of Common Stock that have been already owned by the optionee
for at least six months, having a fair market value on the date the option is
exercised equal to that portion of the purchase price for which payment in cash
is not made, and (ii) making appropriate arrangements acceptable to the Company
with respect to income tax withholding, as required, which arrangements may
include, at the absolute discretion of the Committee, in lieu of other
withholding arrangements, (a) the Company withholding from issuance to the
optionee such number of shares of Common Stock otherwise issuable upon exercise
of the option as the Company and the optionee may agree for the minimum
required withholding, or (b) the optionees delivery to the Company of shares
of Common Stock having a fair market value on the date the option is exercised
equal to that portion of the withholding obligation for which payment in cash
is not made. Options granted under the applicable plan are generally not
transferable other than upon an optionees death, provided that the Committee
has discretion to permit the transferability of NQOptions granted under the
applicable plan to certain parties. The 2001 Stock Option Plan and the 2002 Stock Option Plan each provide
that an optionee may exercise his or her stock options for up to 180 days
following the date of termination without cause if the option agreement so
provides. Under all other Stock Option Plans, upon an optionees termination
without cause, unless an option agreement contains differing terms with respect
to vesting and exercisability which supercedes the provisions of the applicable
plan, all unexercisable portions of the optionees options vest and the
optionee may exercise his or her options for up to 90 days following the date
of termination. Any options that are ISOs must be exercised within 90 days
after such termination, otherwise these options will receive the tax treatment
offered to NQOptions. The maximum number of options that can be granted to any one participant
during any one fiscal year is 500,000 under the 1993 Stock Option Plan, 210,000
under the Computerware Stock Option Plan, 300,000 under the 1996 Stock Option
Plan, 150,000 under the 1997, the 2000 and the 2001 Stock Option Plans, and
250,000 under the 2002 Stock Option Plan. The Director Plan. Non-employee Directors are entitled to participate in
the Director Plan, adopted by the Board of Directors in October 1995, and
approved by stockholders in November 1995. A total of 250,000 shares of Common
Stock have been reserved for issuance under the Director Plan. The Director
Plan provides for an automatic grant of an option to purchase 5,000 shares of
Common Stock to each non-employee Director serving as such on October 9, 1995
or for persons who become a non-employee Director thereafter, on their date of
election or appointment as applicable. Options granted under the Director Plan
have a term of ten years. One-third of the shares subject to each option vest
on each anniversary date of the grant of the option so long as the optionee
continues to serve as a Director on such dates. Of the 250,000 shares of Common
Stock reserved for issuance thereunder, as of December 31, 2003, options
covering 10,000 shares of Common Stock have been exercised, and options to
acquire an aggregate of 95,000 shares of Common Stock (85,250 of which were
exercisable at December 31, 2003) were outstanding at exercise prices ranging
from $0.20 to $6.7813 per share, and accordingly, as of December 31, 2003
additional options covering 145,000 shares of Common Stock could be granted
under such option plan. The 1993 Stock Option Plan. The 1993 Stock Option Plan was adopted by the
Board of Directors in February 1993, was approved by the Companys
stockholders, and terminated on February 23, 2003. Of the 5,000,000 shares of
Common Stock reserved for issuance thereunder, as of December 31, 2003, options
covering 2,817,497 shares of Common Stock have been exercised, options - 5 -




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covering
416,495 shares of Common Stock have expired, and options to acquire an
aggregate of 1,766,008 shares of Common Stock (1,757,758 of which were
exercisable at December 31, 2003) were outstanding at exercise prices ranging
from $0.445 to $22.50. The Computerware Stock Option Plan. The Computerware Stock Option Plan
was adopted by the Board of Directors in February 1995, was approved by the
Companys stockholders, and terminates on February 5, 2005. Of the 1,000,000
shares of Common Stock reserved for issuance under the Computerware Stock
Option Plan, options totaling 1,000,000 shares have been granted at an exercise
price of $4.00 per share, 414,000 of which have been exercised as of December
31, 2002, and 586,000 of which were exercisable as of December 31, 2003. The 1996 Stock Option Plan. The 1996 Stock Option Plan was adopted by the
Board of Directors in August 1996, was approved by the Companys stockholders
and terminates on August 19, 2006. Of the 2,400,000 shares of Common Stock
reserved for issuance under the 1996 Stock Option Plan, as of December 31,
2003, options covering 774,040 shares of Common Stock have been exercised, and
options to acquire an aggregate of 1,247,718 shares of Common Stock (912,969 of
which were exercisable at December 31, 2003) were outstanding as of December
31, 2003, at exercise prices ranging from $0.08 to $22.50 per share, and
accordingly, options covering 378,242 shares of Common Stock were available to
be granted under such option plan as of that date. The 1997 Stock Option Plan. The 1997 Stock Option Plan was adopted by the
Board of Directors in April 1997, initially amended in February 1998, and
approved by stockholders at the 1998 Annual Meeting. The 1997 Stock Option
Plan also was amended in March 1999 to increase the shares covered by 1,000,000
(to a total of 3,000,000 shares) and, as amended, was approved by the
stockholders at the 1999 Annual Meeting. Of the 3,000,000 shares reserved for
issuance thereunder, as of December 31, 2003, options covering 439,504 shares
of Common Stock have been exercised and options to acquire an aggregate of
2,271,713 shares of Common Stock (1,214,413 of which were exercisable at
December 31, 2003) were outstanding at exercise prices ranging from $0.08 to
$5.75 per share, and accordingly, options covering 288,783 shares of Common
Stock were available to be granted under such option plan as of that date. The 2000 Stock Option Plan. The 2000 Stock Option Plan was adopted by the
Board of Directors in March 2000, was approved by the Companys stockholders,
and terminates on March 21, 2010. Of the 2,750,000 shares of Common Stock
reserved for issuance thereunder, as of December 31, 2003, options covering
10,000 shares of Common Stock have been exercised, options to acquire an
aggregate of 2,400,838 shares of Common Stock were outstanding (1,060,061 of
which were exercisable at December 31, 2003) at exercise prices ranging from
$0.08 to $6.1563 per share, and accordingly, options covering 339,162 shares of
Common Stock were available to be granted under such option plan as of that
date. The 2001 Stock Option Plan. The 2001 Stock Option Plan was adopted by the
Board of Directors in November 2000 and was amended and restated to provide for
greater flexibility with respect to option agreement provisions related to the
vesting of options following an optionees termination of employment by reason
of a termination without cause, and was approved by the Companys stockholders
in May 2001. The 2001 Stock Option Plan terminates on November 10, 2010. Of
the 2,400,000 shares of Common Stock reserved for issuance thereunder, as of
December 31, 2003, options covering 59,950 shares of Common Stock have been
exercised, options to acquire an aggregate of 1,939,150 shares of Common Stock
(895,537 of which were exercisable at December 31, 2003) were outstanding at
exercise prices ranging from $0.08 to $1.68 per share, and accordingly, options
covering 400,900 shares of Common Stock were available to be granted under such
option plan as of that date. The 2002 Stock Option Plan. The 2002 Stock Option Plan was adopted by the
Board of Directors in June 2001 and was approved by the Companys stockholders
on June 12, 2002. The 2002 Stock Option Plan terminates on June 11, 2011. Of
the 1,800,000 shares of Common Stock reserved for issuance thereunder, as of
December 31, 2003, options to acquire an aggregate of 991,400 shares of Common
Stock (470,412 of which were exercisable at December 31, 2003) were outstanding
at exercise prices ranging from $0.08 to $1.68 per share, and accordingly,
options covering 808,600 shares of Common Stock were available to be granted
under such option plan as of that date. Change of Control Feature Generally, all option agreements under the Stock Option Plans, including those
relative to the Named Executive Officers, contain provisions requiring the cash
payment of the value of the options (represented by the difference between the
option exercise price and the then-current fair market value of the underlying
Common Stock), in some instances upon certain defined changes in control or
sales of substantially all of the Companys assets. Such changes of control
also may trigger, in certain cases, acceleration of the exercisability of
certain options, which may occur if the Company is reorganized, consolidated or
merged with another company and the Company is not the surviving company, or if
50% or more of the shares of the capital stock of the Company which are then
issued and outstanding are purchased by a single person or entity. - 6 -




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##### Table of Contents



Option Grants In 2003 Shown below is information relating to grants of stock options pursuant to
the Stock Option Plans during the year ended December 31, 2003 to the Named
Executive Officers. Such grants also are reflected in the Summary Compensation
Table above. Potential Realizable Value Individual Grants
    
    Potential Realizable
ValueAt Assumed Annual% of Total
    
    Exercise
    
    
    
    
    
    
    
    
    
    Rates of Stock PriceNo. of
    
    Granted To
    
    or Base
    
    
    
    
    
    
    
    
    
    Appreciation for theSecuritiesUnderlying
    
    EmployeesIn Fiscal
    
    Price($ per
    
    Grant
    
    Expiration
    
    Option Term (3)Name
    
    Options
    
    Year
    
    share)(1)
    
    Date
    
    Date
    
    5%
    
    10%Robert J. Crowell (4)
    
    
    357,142
    
    
    
    8.77
    
    
    $
    0.297
    (2)
    
    
    05/21/03
    
    
    
    05/21/08
    
    
    $
    135,000
    
    
    $
    171,00048,858
    
    
    
    1.05
    
    
    $
    0.27
    
    
    
    05/21/03
    
    
    
    05/21/13
    
    
    $
    19,000
    
    
    $
    30,000John E. Halnen (4)
    
    
    275,000
    
    
    
    6.76
    
    
    $
    0.27
    
    
    
    05/21/03
    
    
    
    05/21/13
    
    
    $
    121,000
    
    
    $
    193,000Melinda F. Ellett (5)
    
    
    75,000
    
    
    
    1.84
    
    
    $
    0.08
    
    
    
    03/25/03
    
    
    
    03/25/13
    
    
    $
    10,000
    
    
    $
    16,000
   (1)
    
    This price represents the fair market value at the date of grant pursuant
to the terms of the Companys Stock Option Plans, except for (2) below.(2)
    
    This price represents 110% of the fair market value at the date of grant
pursuant to the terms of the Stock Option Plans.(3)
    
    Potential Realizable Value is based on certain assumed rates of
appreciation pursuant to rules prescribed by the Securities and Exchange
Commission (the Commission). Actual gains, if any, on stock option
exercises are dependent on the future performance of the stock. There can
be no assurance that the amounts reflected in this table will be achieved.
In accordance with rules promulgated by the Commission, Potential
Realizable Value is based upon the exercise price of the options.(4)
    
    The options granted to Messrs. Crowell and Halnen vest in full on May 21,
2004.(5)
    
    The options granted to Ms. Ellett vest as follows: 30,000 on March 25,
2004; 22,500 on March 25, 2005 and 22,500 on March 25, 2006. - 7 -




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##### Table of Contents



Fiscal Year-End Option Value Table The following table shows the number of shares of Common Stock acquired
during 2003 by the exercise of options and the related value realized, as well
as the number of shares of Common Stock and values represented by outstanding
stock options held by each of the Named Executive Officers as of December 31,
2003. The value of unexercised in-the-money options at December 31, 2003 is
calculated using the $0.20 per share closing price of such shares on that date.
See note (2) below. Number of Securities
    
    Value of UnexercisedUnderlying
    
    In The MoneyUnexercised Options at
    
    Options AtSharesAcquired on
    
    Value
    
    December 31, 2003
    
    December 31, 2003(1)(2)Exercise
    
    Realized
    
    Exercisable
    
    Unexercisable
    
    Exercisable
    
    UnexercisableRobert J. Crowell
    
    
    
    
    
    
    
    
    
    
    2,798,587
    
    
    
    451,899
    
    
    
    
    
    
    
    John E. Halnen
    
    
    
    
    
    
    
    
    
    
    1,138,249
    
    
    
    287,250
    
    
    
    
    
    
    
    Melinda F. Ellett
    
    
    
    
    
    
    
    
    
    
    226,525
    
    
    
    150,725
    
    
    
    
    
    
    
    9,000
   (1)
    
    Options are in-the-money if the fair market value of the Common Stock
exceeds the exercise price.(2)
    
    Represents the total gain which would be realized if all in-the-money
options beneficially held at December 31, 2003 were exercised, determined
by multiplying the number of shares underlying the options by the
difference between the per share option exercise price and $0.20, the
closing sale price per share of the Companys Common Stock on the OTCBB
Market on December 31, 2003. Executive Profit Performance Bonus Plan At the Companys 1998 Annual Meeting, the stockholders approved the Elcom
International, Inc. Executive Profit Performance Bonus Plan For Executive
Officers (the Executive Performance Plan) which was approved by the Board of
Directors in September 1997. The Executive Performance Plan covers, for a
fiscal year, those persons who, on the ninetieth day of that particular fiscal
year, are the executive officers of the Company (Executive Officers). As
such, the number of people covered will generally be limited to no more than
ten, and in order to participate in the Executive Performance Plan, the
Executive Officer must be employed as of March 30th of the calendar year and
must be awarded a participation (also by March 30th) by the Compensation
Committee of the Board of Directors (the Committee). The Executive Performance Plan provides for incentive compensation
payments (limited in amount to the lesser of: (a) two times the executives
base salary or (b) one million dollars) to be made to covered Executive
Officers based upon the increase in the Companys reported operating income (or
reduction in operating loss) over the prior year. Accordingly, the Board of
Directors believes that the Executive Performance Plan provides a substantial
incentive to those Executive Officers in the best position to affect the
Companys operating performance and that substantial benefits will accrue to
the Company from granting participations in the Executive Performance Plan.
Such participations afford the Executive Officers a substantial incentive to
enhance the value of the Companys Common Stock through their own efforts in
improving the Companys operating results. The granting of participations also
is expected to be instrumental in attracting and retaining key executives.
Accordingly, the Company will, from time to time, grant participations to such
Executive Officers as may be selected to participate in the Executive
Performance Plan in accordance with the terms thereof. Although, the Companys
reported operating profit improved from 2002 to 2003 (i.e. the operating loss
decreased), no payments were made to Executive Officers for 2003 in respect of
the Executive Performance Plan. The Executive Performance Plan is administered by the Compensation
Committee of the Board, presently comprised of Messrs. Harries, Ortiz and
Smith. Members of the Committee must be persons who qualify as outside
directors under Section 162(m) of the Internal Revenue Code and who are
non-employee directors under Rule 16(b)(3) of the Securities Exchange Act of
1934. Through December 31, 2000, the Executive Performance Plan was not
permitted to be terminated or amended in any way that would adversely impact
any current participant, without such participants written consent.
Thereafter, the Board of Directors or the Committee may amend or terminate the
Executive Performance Plan. The participants have waived participation in the
Executive Performance Plan for calendar year 2003. For fiscal year 2004, Mr.
Crowell and Mr. Halnen each will participate in the Executive Performance Plan
with a 50% and 25% participation interest respectively. The Elcom International, Inc. Key Personnel Profit Performance Plan (the
Key Personnel Performance Plan), which is designed to operate in conjunction
with the Executive Performance Plan, is intended to provide a substantial
incentive to key personnel who are not Executive Officers, but who can, in the
performance of their duties, affect the Companys operating results. - 8 -




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The Key Personnel Performance Plan Bonus Pool is limited to that portion of the
20% Bonus Pool (as defined in the Key Personnel Performance Plan) calculated
under the terms of the Executive Performance Plan less payments under the
Executive Performance Plan. Accordingly, the bonus pool available under the
Key Personnel Performance Plan is generally limited to that portion of the 20%
Bonus Pool calculated under the Executive Performance Plan, which is either
unallocated to Executive Officers or is in excess of the payment limitations
under the Executive Performance Plan (the annual payment to any one individual
is limited in amount to the lesser of: (a) two times the executives base
salary or (b) one million dollars). Thus, based on existing allocations under
the Executive Performance Plan, for 2002 approximately 65% of any Bonus Pool
would have been available for award under the Key Personnel Performance Plan.
The terms and administration of the Key Personnel Performance Plan generally
correspond to those of the Executive Performance Plan, except that in the case
of the Key Personnel Performance Plan, the annual payout to any one participant
is limited to the lesser of $500,000 or two times the participants base
salary. The Compensation Committee controls participation in the Key Personnel
Performance Plan. No payments were made under the Key Personnel Performance
Plan with respect to the calendar year 2003. Employment Contracts Effective June 20, 2002, the Company entered into an Amended and Restated
Employment Agreement with Robert J. Crowell, which was amended effective as of
April 16, 2004, (the 2002 Crowell Agreement) replacing the Employment
Agreement between the Company and Mr. Crowell entered into in 1997. Pursuant
to the 2002 Crowell Agreement, Mr. Crowell has been retained for a term ending
June 20, 2006 as the Chairman and Chief Executive Officer of the Company. Mr.
Crowell had voluntarily suspended portions of his compensation during 2001,
2002, and 2003 (see Footnote (2) to the Summary Compensation Table). The
2002 Crowell Agreement was amended and his annual base salary was reduced to
$364,000 effective April 16, 2004, from the original annual base salary of
$525,000. Mr. Crowell also may be awarded a quarterly bonus of up to $37,500
based upon the Compensation Committees evaluation of his performance. (see
Summary Compensation Table). The 2002 Crowell Agreement provides that Mr.
Crowell is entitled to participate in all Company compensation plans and fringe
benefit plans, on terms at least as favorable as other executives of the
Company, and that Mr. Crowell will have a minimum rate of 50% participation in
the Executive Performance Plan Bonus Pool, see Executive Profit Performance
Bonus Plan. Under the 2002 Crowell Agreement, Mr. Crowell is also entitled to
receive an annual option grant to purchase at least 400,000 shares of the
Companys Common Stock under the Companys Stock Option Plans to be made no
later than July of each year. The options will be exercisable as determined by
the Compensation Committee, and, to the maximum extent allowable, shall be
ISOs. If Mr. Crowells employment with the Company should terminate because of a
disability (as defined) he becomes entitled to receive (i) a payment equal to
two years each of base salary plus maximum potential bonus, payable in 24
equal monthly installments, and (ii) health, dental benefits and group term
life insurance for 24 months following termination of employment with the
Company. If Mr. Crowells employment with the Company should terminate other
than for cause (as defined in the agreement) or upon Mr. Crowells resignation
for good reason (as defined) after a change in control (as defined in the
agreement) he becomes entitled to receive (i) a severance payment equal to 2.99
times his base salary plus maximum potential bonus, payable 50% upon Mr.
Crowell executing a release in favor of the Company and 50% payable in twelve
equal monthly installments, (ii) all of Mr. Crowells stock options shall
become immediately vested and exercisable, and (iii) health, dental benefits
and group term life insurance for a three year period following termination of
employment with the Company. For purposes of calculating any such payment,
Mr. Crowells base salary and maximum potential bonus shall be calculated
without giving effect to any reduction in his base salary that might have
occurred after a change in control of the Company. Effective June 20, 2002, the Company entered into an Employment Agreement
with John E. Halnen, which was amended on March 9, 2004, (the Halnen
Agreement) and an Employment Agreement with Peter A. Rendall (the Rendall
Agreement). Together, the Halnen Agreement and the Rendall Agreement are
referred to herein as the Employment Agreement. Pursuant to the Halnen
Agreement, Mr. Halnen was retained for a term ending June 20, 2005 as the
President and Chief Operating Officer of the Company. During the term, Mr.
Halnen is entitled to receive a base salary of $225,000 per year, unless Mr.
Halnen voluntarily agrees to a reduction in his base salary, and shall have the
opportunity to receive an annual bonus of up to $75,000, payable quarterly, see
footnote to the Summary Compensation Table. Pursuant to the Rendall
Agreement, Mr. Rendall was retained for a term ending June 20, 2005 as the
Chief Financial Officer of the Company. During the term, Mr. Rendall was
entitled to receive a base salary of $240,000 per year, unless Mr. Rendall
voluntarily agreed to a reduction in his salary, see Summary Compensation
Table. Mr. Rendall voluntarily left the Company on March 7, 2003 and his
termination provisions were not triggered. The Halnen Agreement provides that Mr. Halnen is entitled to participate
in all Company compensation plans and fringe benefit plans, on terms at least
as favorable as other executives of the Company, and that Mr. Halnen will have
a minimum rate of 25% participation in the Executive Performance Plan Bonus
Pool, see Executive Performance Bonus Plan. Under the Halnen Agreement, Mr.
Halnen also is entitled to receive an annual option grant to purchase at least
200,000 shares of the Companys common stock under the Companys Stock Option
Plans to be made no later than July of each year. The options will be
exercisable as determined by the Compensation Committee, and, to the maximum
extent allowable, shall be incentive stock options. - 9 -




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If Mr. Halnens employment with the Company should terminate because of a
disability (as defined in the agreement) Mr. Halnen shall become entitled to
receive (i) a payment equal to twelve months base salary plus his maximum
potential bonus, payable in twelve equal monthly installments, and (ii) health,
dental benefits and group term life insurance for twelve months following
termination of employment with the Company. If Mr. Halnens employment with
the Company should terminate other than for cause (as defined in the
agreement), Mr. Halnen shall become entitled to receive (i) a severance payment
equal to twelve months base salary plus his maximum potential bonus payable in
twelve equal monthly installments or, if, at the time of such termination, Mr.
Crowell is no longer Chairman and Chief Executive Officer of the Company, then
such severance payment shall be equal to eighteen months base salary plus his
maximum potential bonus, payable 50% upon Mr. Halnen executing a release in
favor of the Company and 50% payable in twelve equal monthly installments, and
(ii) health, dental benefits and group term life insurance for twelve months
following termination of employment with the Company. If Mr. Halnens
employment with the Company should terminate other than for cause (as defined
in the agreement), following a change in control (as defined in the agreement)
Mr. Halnen shall be entitled to receive (i) a severance payment equal to the
greater of his base salary plus his maximum potential bonus for the remainder
of the term of the Halnen Employment Agreement or his base salary plus his
maximum potential bonus for two years, payable 50% upon Mr. Halnen executing a
release in favor of the Company and 50% payable in 24 equal monthly
installments, (ii) all of Mr. Halnens stock options shall become immediately
vested and exercisable, and (iii) Mr. Halnen shall become entitled to receive
health, dental benefits and group term life insurance for 24 months following
termination of employment with the Company. For purposes of calculating any
such payment, Mr. Halnens base salary and maximum potential bonus shall be
calculated without reference to any voluntary reductions then in effect. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The following report of the Compensation Committee describes the
philosophy, objectives and components of the Companys executive compensation
programs for 2003 and discusses the determinations concerning the compensation
for the Chief Executive Officer for 2003. The members of the Compensation Committee are William W. Smith, Richard J.
Harries, Jr., and John W. Ortiz. Each of Messrs. Smith, Harries and Ortiz is
an independent director, as defined under NASDAQ listing standards. Compensation Philosophy In reviewing and overseeing the Companys compensation programs, the
Compensation Committee adheres to a compensation philosophy which provides
executive compensation programs that are designed to: (i) attract and retain
key executives crucial to the long-term success of the Company; (ii) relate to
the achievement of operational and strategic objectives; and (iii) be
commensurate with each executives performance, experience and
responsibilities. In making its recommendations concerning salaries and awards
under compensation plans, the Committee considers the financial condition and
operational performance of the Company during the prior year, the Companys
success in achieving strategic objectives that may have a long-term beneficial
effect on the Companys results of operations and financial condition, and its
assessment of the contributions of the individual executive officer to the
Companys performance and to the achievement of its strategic objectives. The
Committee, however, has not specifically focused on the compensation levels of
executives in peer group companies in making compensation decisions.
Historically, the Committee has not relied extensively on objective criteria in
measuring individual performance and its decisions concerning compensation are
primarily based on subjective decisions concerning the appropriate levels of
compensation. Compensation Program As a means of implementing these compensation philosophies and objectives,
the Companys compensation program for executive officers consists of the
following primary elements: salary, participation in the Companys Stock Option
Plans, and participation in the Executive Performance Plan. These particular
elements are further explained below. Salaries Salary levels for executive officers reflect the Committees
subjective judgments of appropriate salaries in light of the duties and
responsibilities inherent in the executives respective positions. The
particular qualifications of an individual being considered for a position and
his or her level of experience are considered in establishing a salary level
when an individual is first appointed to a given position. The performance and
contribution of the individual to the Company, as well as Company performance,
are the primary criteria influencing salary administration. Salaries of
executive officers are generally reviewed each year. In many instances, the
primary factor in setting salary levels was the Companys desire to provide
compensation in amounts sufficient to induce these individuals to join or
remain with the Company. Stock Options The Company uses stock options as a long-term incentive
program for executives, management and employees. Stock options are used
because they directly relate the amounts earned by the executive to the amount
of appreciation realized by the Companys stockholders over comparable periods.
Stock options also provide executives with the opportunity to acquire and
build a meaningful ownership interest in the Company. The Committee considers
possible grants of stock options throughout the year. In determining the
number of options awarded to an individual executive, the Committee generally
establishes a - 10 -




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##### Table of Contents



level of award based upon the position of the individual, his or her level of
responsibility and length of service. The Committee also considers (without
assigning any particular weight) amounts of base salary and/or bonus payments
which executives and other personnel may elect to forgo, in determining the
quantity of options to be granted. Executive Performance Plan and Bonuses The Executive Performance Plan
and potential bonuses reflect the Committees desire to provide the Companys
executives an opportunity to earn bonuses based upon actual reported
improvements in the Companys performance and/or subjective assessments of an
executives performance. Accordingly, the Committee believes that the
Executive Performance Plan and potential bonuses provides substantial
incentives to the executives who are in the best position to affect the
Companys operating performance. The Committee believes that by granting
participation in the Executive Performance Plan and/or providing bonus
opportunities, the executives will have a substantial incentive to enhance the
value of the Companys Common Stock through their own efforts in improving the
Companys operating profitability. Benefit Programs The executive officers also participate in various
welfare and benefit programs that are generally made available to all salaried
employees. Executive officers also receive certain traditional perquisites,
which are customary for their positions. Chief Executive Officer Compensation The compensation arrangements for Mr. Crowell with respect to the 2003
fiscal year were primarily based upon the terms of his employment contracts
with the Company, as described under Executive CompensationEmployment
Contracts. Pursuant to the 2002 Crowell Agreement, Mr. Crowell is entitled to
an annual minimum base salary of $525,000, which was reduced to $364,000
effective April 16, 2004. In order to assist the Company in conserving cash,
Mr. Crowell voluntarily reduced his cash compensation at various times in 2001,
2002 and 2003. Such reductions amounted to approximately $135,000 in 2002 and
$257,000 in 2003. In April 2003, Mr. Crowell received a $187,000 repayment of
certain deferred base compensation amounts, which he invested in the Companys
Debentures. Mr. Crowell also received withholding and estimated income taxes
of $32,000, which were paid to the appropriate tax authorities. These amounts
($219,000) are included in the Summary Compensation Table for 2003. Mr.
Crowell also invested an additional $263,000 of cash in the Companys
Debentures (see Transactions With Management). As of December 31, 2003, Mr.
Crowell has deferred a net aggregate of $173,000 in base compensation, which
may be paid to Mr. Crowell depending upon the success of future operations.
Through April 16, 2004, Mr. Crowells 2004 cash compensation paid totaled
$10,000. The Company reinstated Mr. Crowells cash compensation in accordance
with the 2002 Crowell Agreement to the level of $364,000 per year, effective
April 19, 2004. The 2002 Crowell Agreement originally provided for annual base
compensation of $525,000, much of which was deferred as described herein
through April 16, 2004, when the annual base compensation was reduced to
$364,000. The Compensation Committee did not conduct any official surveys of
competitive, industry or revenue peer groups, but believed that, over the
course of negotiation on the 2002 Crowell Agreement, that this annual base
salary in 2003 was fair and reasonable given the position of the Company and
Mr. Crowells responsibilities. In addition, the 2002 Crowell Agreement provides that Mr. Crowell is
entitled to participate in all of the other Company compensation plans and
fringe benefit plans, on terms at least as favorable as other executives of the
Company and that he participates in the Executive Performance Plan at a minimum
rate of 50% of any bonus pool generated by such plan. Under the 2002 Crowell
Agreement, Mr. Crowell also is entitled to receive annual grants of options
under the Companys Stock Option Plans of no less than 400,000, to be made no
later than July of each year, under terms to be determined by the Compensation
Committee. Section 162(m) Section 162(m) of the Internal Revenue Code (the Section) disallows a
tax deduction for any publicly traded company for individual compensation
exceeding $1 million in any year for any of the Named Executive Officers,
unless the compensation is performance-based or otherwise meets an applicable
exemption. Since the aggregate compensation of each of the Companys executive
officers is below the $1 million threshold and since the Committee believes
that options granted under the Companys Stock Option Plans generally will meet
the performance based provisions under the Section, the Committee currently
believes that the Section will not reduce the tax deduction available to the
Company for compensation paid in 2003 to the Companys executive officers. Compensation Committee
William W. Smith, Chairman
Richard J. Harries, Jr.
John W. Ortiz - 11 -




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Compensation Committee Interlocks And Insider Participation The Companys Compensation Committee is currently composed of Messrs.
Harries, Ortiz, and Smith. No current member of the Compensation Committee has
ever been an officer or employee of the Company or any of its subsidiaries. No
interlocking relationship exists between the Companys Board of Directors or
Compensation Committee and the board of directors or compensation committee of
any other company. During 2003, Mr. Smith invested $350,000 in the Companys
Convertible Debentures. See Transactions with Management. PERFORMANCE GRAPH Set forth below is a line graph and a table of the related underlying data
comparing the percentage change in the cumulative total stockholders return on
the Companys Common Stock against the cumulative total return of the Total
Return Index for The Nasdaq Stock Market  U.S. and Foreign (Nasdaq Total),
and the index for Nasdaq Computer and Data Processing Services Stocks
(Industry) for the period beginning on December 31, 1999 and as of the last
trading day on the Nasdaq or OTCBB, as applicable, in each calendar year
thereafter through 2003. The Industry index includes all Nasdaq listed
securities with a Standard Industrial Classification (SIC) of 737. The graph
assumes that the value of an investment in the Common Stock of Elcom
International, Inc., at the average of its high and low price, and each index
was $100 on December 31, 1999 and that all dividends, if any were reinvested. Comparison of the Common Stock of Elcom International, Inc. (The Company),
The Total Return Index for The Nasdaq Stock Market - U.S. and Foreign (Nasdaq Total), And
The Index for Nasdaq Computer and Data Processing Services Stocks (SIC Code 737) (Industry) (LINE GRAPH) 12/31/1999
    
    12/29/2000
    
    12/31/2001
    
    12/31/2002
    
    12/31/2003The Company
    
    
    100
    
    
    
    4
    
    
    
    4
    
    
    
    1
    
    
    
    1Nasdaq Total
    
    
    100
    
    
    
    60
    
    
    
    48
    
    
    
    33
    
    
    
    49Industry
    
    
    100
    
    
    
    46
    
    
    
    37
    
    
    
    25
    
    
    
    34
 - 12 -




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Item 12.Security Ownership of Certain Beneficial Owners and Management EQUITY COMPENSATION PLAN INFORMATION The following table provides information as of December 31, 2003 with
respect to compensation plans maintained by the Company under which equity
securities of the Company are authorized for issuance: Number of securitiesNumber of securities
    
    
    
    
    
    remaining available forto be issued
    
    
    
    
    
    future issuance underupon exercise of
    
    Weighted-average
    
    equity compensationoutstanding
    
    exercise price of
    
    plans (excludingoptions,
    
    outstanding options,
    
    securitiesPlan Category
    
    warrants and rights
    
    warrants and rights
    
    reflected in column (a))(a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    
    11,297,827
    (1)(2)
    
    $
    1.89
    
    
    
    2,360,687
    (2)(3)Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    11,297,827
    
    
    $
    1.89
    
    
    
    2,360,687
  (1)
    
    Includes shares of Common Stock to be issued upon the exercise of options
outstanding as of December 31, 2003, under the following Company Stock
Option Plans: The Director Plan, 95,000; The 1993 Stock Option Plan,
1,766,008; The Computerware Stock Option Plan, 586,000; The 1996 Stock
Option Plan, 1,247,718; The 1997 Stock Option Plan, 2,271,713; The 2000
Stock Option Plan, 2,400,838; The 2001 Stock Option Plan, 1,939,150; and
The 2002 Stock Option Plan, 991,400.(2)
    
    All outstanding options are subject to adjustments for stock splits,
stock dividends, recapitalizations, and other similar transactions or
events.(3)
    
    Reflects options covering shares of Common Stock which may be issued,
under the following Company Stock Option Plans: The Director Plan,
145,000; The 1996 Stock Option Plan, 378,242; The 1997 Stock Option Plan,
288,783; The 2000 Stock Option Plan, 339,162; The 2001 Stock Option Plan,
400,900; and The 2002 Stock Option Plan, 808,600. - 13 -




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PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP The following table sets forth the beneficial ownership of Common
Stock as of April 16, 2004 by (i) each Director of the Company, (ii) any
executive officer who was (a) the Chief Executive Officer and (b) an
executive officer of the Company at the end of the fiscal year, as well as
the individuals that were executive officers during the year ended
December 31, 2003, (iii) all Directors and executive officers as a group,
and (iv) each person or group known by the Company to own beneficially
more than 5% of its outstanding shares of Common Stock. All information
with respect to beneficial ownership has been furnished by the respective
Director or executive officer, or by reference to a public filing, as the
case may be. Unless otherwise indicated below, each stockholder named
below has sole voting and investment power with respect to the number
of shares set forth opposite his or its respective name. Directors and Executive Officers and
    
    Number of Shares
    
    Percentage ofOther Beneficial Owners(2)
    
    Beneficially Owned (1)
    
    Common Stock (1)Class I Director - Term expires at the 2005 Annual MeetingJohn E. Halnen (3)
    
    
    1,426,299
    
    
    
    2.3
    %John W. Ortiz (4)
    
    
    54,625
    
    
    
    *Class II Director - Term expires at the 2006 Annual MeetingRichard J. Harries, Jr. (4)
    
    
    54,625
    
    
    
    *Class III Directors - Term expires at the 2004 Annual MeetingRobert J. Crowell (5)
    
    
    7,136,295
    
    
    
    11.1
    %William W. Smith (4)(6)
    
    
    53,075
    
    
    
    *Named Executive OfficersPeter A. Rendall (7)
    
    
    
    
    
    
    *Scott M. Soloway (7)
    
    
    
    
    
    
    *Melinda F. Ellett (4) (8)
    
    
    309,450
    
    
    
    *All Directors And Executive Officers as a Group (6 Persons)(9)
    
    
    9,034,370
    
    
    
    13.6
    %
   *
    
    Less than 1%.  (1)
    
    In accordance with Securities and Exchange Commission rules, each
beneficial owners holdings have been calculated assuming full exercise of
all outstanding options and warrants to acquire Common Stock, regardless
of the option price, which are exercisable by such owner within 60 days
after April 16, 2004, while assuming no exercise of outstanding options
and warrants covering Common Stock held by any other person.(2)
    
    For purposes hereof, the address of the Companys Directors and executive
officers is the same as that of the Company: 10 Oceana Way, Norwood,
Massachusetts 02062.(3)
    
    Mr. Halnen is a Director and President and Chief Operating Officer of the
Company. Mr. Halnens Common Stock ownership is comprised of 800 shares
held in an Individual Retirement Account and 1,425,499 shares, which he
has the right to acquire at various prices within 60 days of April 16,
2004 through the exercise of stock options. See Executive Compensation 
Option Grants in 2003, and Fiscal Year End Option Value Table. During
2003, Mr. Halnen invested $60,000 in the Companys Convertible Debentures,
as described elsewhere herein. After April 23, 2005 (or earlier in
certain circumstances) Mr. Halnen may convert his debenture into
481,542 shares of Common Stock, which shares are not included in Mr. Halnens
beneficial ownership in the accompanying table.(4)
    
    This number represents shares of Common Stock which can be acquired
through the exercise of options that are exercisable by the owner
regardless of the option price, within 60 days of April 16, 2004.(5)
    
    Mr. Crowell is Chairman of the Board of Directors and Chief Executive
Officer of the Company. Mr. Crowells Common Stock ownership is comprised
of 3,636,742 shares which he owns directly (including 110,000 shares in a
retirement plan account); 188,401 shares held in a revocable trust for the
benefit of one of Mr. Crowells daughters, for which Mr. Crowell serves as
Trustee; 121,616 shares held by the Crowell Educational Foundation with
respect to which Mr. Crowell shares the power to vote and dispose of and
3,189,537 shares which he has the right to acquire at various prices
within 60 days of April 16, 2004 through the exercise of stock options.
See Executive Compensation  Option Grants in 2003, and Fiscal Year End
Option Value Table. During 2003, Mr. Crowell invested $450,000 in the
Companys Convertible Debentures, as described elsewhere herein. After
April 23, 2005 (or earlier in certain circumstances), Mr. Crowell may
convert these Debentures into 3,611,557 shares of Common Stock, which shares are not included in Mr. Crowells beneficial ownership in the
accompanying table.(6)
    
    During 2003, Mr. Smith invested $350,000 in the Companys Convertible
Debentures, as described elsewhere herein. After April 23, 2005 (or
earlier in certain circumstances), Mr. Smith may convert these Debentures
into 2,808,989 shares of Common Stock, which shares are not included in
Mr. Smiths beneficial ownership in the accompanying table. - 14 -




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(7)
    
    As of March 7, 2003, and March 25, 2003, Messrs. Rendall and Soloway
voluntarily left the employ of the Company and their respective options
terminated as of their last day of employment.(8)
    
    Ms. Ellett was elected as Secretary by the Board of Directors on April 2,
2003.(9)
    
    Includes 5,086,811 shares of Common Stock which the Directors and
executive officers of the Company have the right to acquire within 60 days
of April 16, 2004 through the exercise of stock options. 
 Item 13.Certain Relationships and Related Transactions Transactions with Management On April 23, 2003, the Company closed a private placement to accredited
investors (the Private Placement) of ten-year 10% Senior Convertible
Debentures (the Debentures), generating gross proceeds of $949,000 and net
cash to the Company of $702,000. Robert J. Crowell, the Chairman and CEO
invested $300,000, John E. Halnen, the President and COO invested $60,000,
William W. Smith, the Companys Vice Chairman and Director invested $300,000,
Andres Escallon, the Chief Technology Officer invested $50,000 (collectively,
the Inside Investors). The Company paid Robert J. Crowell $187,000 and John
E. Halnen $60,000 in repayment of a portion of their salaries which they had
voluntarily suspended in order to assist the Company in its efforts to retain
cash. Robert J. Crowell and John E. Halnen immediately reinvested these
proceeds into their purchase of the Debentures. The Company also paid
estimated income and withholding taxes on such amounts of $32,000 on behalf of
Mr. Crowell and $39,000 on behalf of Mr. Halnen. In addition, Smith and
Williamson LLC (U.K.) and other Elcom stockholders in the U.K. invested
$239,000. Inside Investors are considered related parties and invested a total
of $710,000 in the Company via purchases of Debentures. On October 16, 2003, the Company closed a second round of the private
placement of its Debentures (the Second Closing), generating cash proceeds of
$315,000. Robert J. Crowell, the Chairman and CEO invested $150,000, William
W. Smith, the Vice Chairman and Director invested $50,000 (both the Inside
Investors) and Smith & Williamson LLC (U.K.) and another Elcom stockholder
invested $115,000. Inside Investors are considered related parties and
invested a total of $200,000 in the Company via purchases of Debentures in the
Second Closing. To date, Inside Investors have invested an aggregate of $910,000 of the
$1,264,000 invested in the Company via the purchases of Debentures. The Debentures carry a 10% interest rate, which is payable in cash or
payment in-kind. Interest is due annually, in arrears, commencing April 23,
2004 and October 16, 2004. The principal amount is due at maturity on April
23, 2013. The Company has accrued $104,000 in interest expense for these
Debentures as of March 31, 2004, and currently plans to satisfy the 2004
interest obligations with a payment in-kind of Debentures. The Debentures are collateralized by a security interest in substantially
all of the Companys assets for a two-year period ending April 23, 2005. They
are convertible into common stock of the Company at a conversion price of
$0.1246 per share, subject to anti-dilution clauses. The Debentures are
convertible at the election of the holder at any time commencing on April 23,
2005 through April 23, 2013. However, if the Company has two sequential
quarters of profitability with respect to continuing operations, the Holder may
convert the Debentures at his option. The Holders also have certain
registration rights upon conversion. The Company has the right to convert the Debentures upon the occurrence of
a change of control, as defined in the agreement, or at the Companys option,
as of April 23, 2007, or subsequent thereto upon written notice to the
investors. The Debentures are convertible into 10,146,474 shares of common
stock. The Debentures are not registered under the Securities Act of 1933, as
amended, or applicable state securities laws and may not be offered or sold in
the United States absent registration under the Securities Act of 1933, and
applicable state securities laws or available exemptions from the registration
requirements. This Private Placement has been extended to May 17, 2004 and
will terminate on that date unless otherwise extended or earlier terminated by
the Company. Exemption from registration with respect to the sale of
Debentures is claimed pursuant to Section 4(a) of the Securities Act of 1933,
as amended. - 15 -




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Item 14.Principal Accounting Fees and Services The Audit Committee oversees the Companys financial reporting process on
behalf of the Board of Directors. The Audit Committee is directly responsible
for, among other things, the appointment, compensation, retention and oversight
of the Companys independent auditors. In addition, the Audit Committee must
preapprove all audit and non-audit services performed by the Companys
independent auditors. The Audit Committees activities are governed by a
written charter adopted by the Board of Directors. Fees for services rendered by the Companys Independent Public Accountants for the last two fiscal years were: 2002
    
    2003(in thousands)Audit fees
    
    $
    225
    
    
    $
    79Audit related fees
    
    
    22
    
    
    
    Tax services
    
    
    85
    
    
    
    All Other Fees
    
    
    
    
    
    
    2Total fees
    
    $
    332
    
    
    $
    81
 Audit Fees VCC has billed the Company $79,000 for professional services rendered for
the audit of the Companys annual financial statements for the year ended
December 31, 2003, the reviews of interim financial statements included in the
Companys Forms 10-Q filed during the year ended December 31, 2003, and for
consultation relating to accounting matters. KPMG billed the Company $225,000 for professional services rendered for
the audit of the Companys annual financial statements for the year ended
December 31, 2002, the reviews of interim financial statements included in the
Companys Forms 10-Q filed during the year ended December 31, 2002, and for
consultation relating to accounting matters. KPMG has also billed the Company $32,000 for reviews of interim financial
statements included in the Companys Forms 10-Q filed during the year ended
December 31, 2003 and $59,000 for work related to issuance of their consent to
inclusion of their opinion on the Companys 2001 and 2002 financial statements
in the Companys 2003 Form 10-K. Audit Related Fees KPMG has billed the Company $22,000 for 2002 audit related fees for audits
of employee benefit plans and for certain statutory audits in the United
Kingdom. Tax Fees KPMG has billed the Company $85,000 for 2002 tax planning and preparation
services. All Other Fees Other fees for 2003 of $2,000 were paid to VCC for certain specific
procedures performed by VCC to assist the Company in investigating check fraud
committed by a former employee and designing enhanced internal controls. No other fees were paid to KPMG relative to 2002. - 16 -




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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



| |                          
| | -------------------------
| | ELCOM INTERNATIONAL, INC.
| | (Registrant)             



| |     |                      
| | --- | ---------------------
| | By: | /s/ ROBERT J. CROWELL

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

Date: April 26, 2004

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the date indicated.

|                                                 |  |                                                                                                      |  |                |  | 
|------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|                                                 |  |                                                                                                      |  |               
|Signatures                                       |  | Title                                                                                                |  | Date          
|                                                 |  |                                                                                                      |  |               
|                                                
|/s/ ROBERT J. CROWELLRobert J. Crowell           |  | Chairman of the Board of Directors and Chief
    Executive Officer
    (Principal Executive Officer) |  | April 26, 2004
|                                                
|/s/ KATHRYN A. MONACOKathryn A. Monaco           |  | Chief Accounting Officer
    (Principal Financial Officer)                                           |  | April 26, 2004
|                                                
|/s/ JOHN E. HALNENJohn E. Halnen                 |  | President, Chief Operating Officer
    and Director                                                  |  | April 26, 2004
|                                                
|/s/ WILLIAM W. SMITHWilliam W. Smith             |  | Vice Chairman and Director                                                                           |  | April 26, 2004
|                                                
|/s/ RICHARD J. HARRIES JR.Richard J. Harries Jr. |  | Director                                                                                             |  | April 26, 2004
|                                                
|/s/ JOHN W. ORTIZJohn W. Ortiz                   |  | Director                                                                                             |  | April 26, 2004