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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
   FORM 10-KSB/A Amendment No. 1
 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
(State or other jurisdiction of
Incorporation or organization)
    
    04-3175156
(I.R.S. Employer
Identification No.)
 10 OCEANA WAY, NORWOOD, MASSACHUSETTS
(Address of principal executive offices)
    
    02062
(Zip Code)
 Issuers telephone number (781) 440-3333 Securities Registered pursuant to Section 12(b) of the Exchange Act:
NoneSecurities Registered pursuant to Section 12(g) of the Exchange Act: Common Stock, $.01 par value
(Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the past 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ Noo Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB.þ The
issuers revenues for the year ended December 31,
2004      $3,807,000 The aggregate market value of voting and non-voting common equity held by
non-affiliates of the registrant computed by reference to the closing sale price of such common
equity on the Over The Counter Bulletin Board on April 8, 2005, was approximately $4,529,000. For
purposes of this disclosure only, the issuer has assumed that its directors, executive officers,
and beneficial owners of 10% or more of the issuers Common Stock are affiliates of the issuer. The registrant had approximately 61,282,000 shares of Common Stock, $.01 par value,
outstanding as of April 8, 2005. Transitional Small Business
Disclosure Format Yeso Noþ.   -1-




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Explanatory Note Elcom International, Inc. (the Company) is filing this Amendment No. 1 to its Annual
Report on Form 10-KSB, filed with the Commission on April 13, 2005 (the 2004 Form 10-KSB), solely
for the purposes of providing the information required by Items 9, 10, 11 and 14 of Form 10-KSB
(Part III Information). The Company intended to incorporate certain of its Part III information
into the 2004 Form 10-KSB by reference from the Companys definitive proxy statement pursuant to
Form 10-KSB General Instruction E. However, the Companys definitive proxy statement will not be
filed with the Commission within 120 days after the end of the fiscal year covered by the 2004 Form
10-KSB. Accordingly, the Part III Information provided herein is filed to amend and replace the
corresponding Part III information contained in the 2004 Form 10-KSB. Unless otherwise expressly
stated, this Amendment No. 1 does not reflect events occurring after the filing of the 2004 Form
10-KSB, or modify or update in any way disclosures contained in the 2004 Form 10-KSB.




TABLE OF CONTENTS  PART IIIItem 9. Directors and Executive Officers of the Company; Compliance With Section 16(a) of the Exchange ActItem 10. Executive CompensationItem 11. Security Ownership of Certain Beneficial Owners and ManagementItem 14. Principal Accounting Fees and ServicesSIGNATURESEX-31.1 CERTIFICATION OF CEOEX-31.2 CERTIFICATION OF CFOEX-32.1 CERTIFICATION OF CEOEX-32.2 CERTIFICATION OF CFO    Table of Contents  
 PART III 
 Item 9. Directors and Executive Officers of the Company; Compliance With Section 16(a) of the
Exchange Act The name, age and position of the Companys Executive Officers and Directors are as follows: NAME
    
    AGE
    
    POSITIONRobert J. Crowell
    
    
    53
    
    
    Class III Director, Chairman of the Board of Directors and Chief Executive OfficerJohn E. Halnen
    
    
    38
    
    
    Class I Director, President and Chief Operating OfficerLaurence F. Mulhern
    
    
    50
    
    
    Chief Financial Officer and SecretaryRichard J. Harries, Jr. (1)(2)(3)
    
    
    67
    
    
    Class II Director of the CompanyJohn Ortiz (1) (2)
    
    
    81
    
    
    Class I Director of the CompanyWilliam W. Smith (1) (2) (3)
    
    
    54
    
    
    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 biography 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. 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. -2-




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Laurence F. Mulhern,was appointed Chief Financial Officer and Secretary of the Company in
June 2004. Mr. Mulhern also held those or similar positions from July 1993 until his resignation
as Chief Financial Officer in October 1999, and his resignation as Secretary in March 2000. From
March 2000 until June 2004 Mr. Mulhern worked as a financial consultant to various entities,
including the Company. Mr. Mulhern holds a Bachelor of Science degree in Accounting from Villanova
University and is a Certified Public Accountant. 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. Audit Committee The Board of Directors has a standing Audit Committee, which is directly responsible for,
among other things, the appointment, compensation, retention and oversight of the Companys
auditors, with whom the Audit Committee reviews the scope of audit and non-audit assignments and
related fees, the accounting principles used by the Company in financial reporting, internal
financial control procedures and the adequacy of such internal control procedures. The Audit
Committee is also responsible for pre-approving all audit and non-audit services performed by the
Companys independent auditors. Messrs. Smith (Chairman), Ortiz and Harries serve as the members of
the Audit Committee. Each of the members of the Audit Committee is an independent director, as
defined under NASDAQ listing standards. The Board of Directors has determined that one of the
members of the Audit Committee, Mr. Smith, qualifies as an audit committee financial expert, as
defined under Securities and Exchange Commission regulations. Code of Ethics On March 31, 2004, the Company adopted a Code of Ethics for Senior Executives and Financial
Officers (the Code) which applies to the Companys CEO, President, COO, CFO, controller, or
treasurer or persons performing similar functions. Upon written request to the Company at 10
Oceana Way, Norwood, Massachusetts 02062, the Company will provide to any person, without charge, a
copy of the Code. 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 2004, and written representations from certain reporting persons, the Company believes
that no Officer, Director or greater-than-ten-percent beneficial owner failed to file on a timely
basis during the year ended December 31, 2004 any report required by Section 16(a) of the
Securities Exchange Act of 1934. -3-




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Item 10. Executive
Compensation The table below sets forth information concerning 2004 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, 2004. Summary Compensation Table Long-TermCompensationAwardsShares ofAnnual
    
    
    
    
    
    
    Common StockCompensation(1)
    
    
    Underlying
    
    
    All OtherName and Principal Position (1)
    
    Year
    
    
    Salary
    
    
    Bonus
    
    
    Option Grants
    
    
    CompensationRobert J. Crowell
    
    
    2004
    
    
    $
    164,000
    
    
    $
    34,000
    
    
    
    850,000
    
    
    $
    350Chairman of the Board of Directors and
    
    
    2003
    
    
    $
    487,000
    
    
    
    
    
    
    
    400,000
    
    
    $
    250Chief Executive Officer (2)
    
    
    2002
    
    
    $
    390,000
    
    
    
    
    
    
    
    790,000
    
    
    $
    500John E. Halnen
    
    
    2004
    
    
    $
    204,000
    
    
    $
    8,000
    
    
    
    600,000
    
    
    
    President and Chief Operating Officer (3)
    
    
    2003
    
    
    $
    281,000
    
    
    $
    11,000
    
    
    
    275,000
    
    
    
    2002
    
    
    $
    184,000
    
    
    $
    66,000
    
    
    
    505,000
    
    
    $
    22,500Laurence F. Mulhern
    
    
    2004
    
    
    $
    94,000
    
    
    
    
    
    
    
    600,000
    
    
    
    Chief Financial Officer and
    
    
    2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Secretary (4)
    
    
    2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   (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 2004. In order to assist the Company in conserving cash, Mr. Crowell voluntarily reduced
his cash compensation at various times since 2001, including 2004 and 2005. Such reductions
amounted to approximately $246,000 in 2004, $257,000 in 2003 and $135,000 in 2002. The Company
reinstated Mr. Crowells cash compensation to $364,000 per annum in accordance with the 2002
Crowell Agreement, effective April 19, 2004. Mr. Crowell voluntarily reduced his cash
compensation again in September 2004, in order to assist the Company in conserving cash. 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 above in the 2003
line. Mr. Crowell also invested an additional $263,000 of cash in the Companys Debentures
(see Transactions With Management). During the first quarter of 2005, Mr. Crowell loaned the
Company $100,000 pursuant to a 12% Secured Promissory Note (see Transactions with
Management). As of December 31, 2004, Mr. Crowell has a net aggregate of base compensation
reductions of $432,000, which may be paid to Mr. Crowell depending upon the success of future
operations, which are not included in the Summary Compensation Table above. In March of 2004,
Mr. Crowell received 150,000 shares of the Companys Common Stock as a bonus in lieu of a
grant of a stock option covering 150,000 shares of Common Stock, which options were not
available to be granted in March as required under the 2002 Crowell Agreement. Through April
18, 2005, Mr. Crowell has received no cash compensation in calendar 2005. 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 ($350 for 2004), 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
2004. 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 since 2001, including 2004 and 2005. Such reductions were approximately 88,000 in 2004, -4-




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$107,000 in 2003 and $50,000 in 2002. Mr. Halnen voluntarily reduced his cash
compensation again in September 2004, in order to assist the Company in conserving cash. 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 above in the 2003 line.
As of December 31, 2004, Mr. Halnen has a net aggregate of base and bonus compensation
reductions of $151,000, which may be paid to Mr. Halnen depending on the success of future
operations, which is not included in the Summary Compensation Table for 2004. All other
compensation represents premiums paid by the Company for term life insurance ($22,500 for
2002), see Employment Contracts.(4)
    
    Mr. Mulhern re-joined the Company in June 2004 as Chief Financial Officer and Secretary. Mr.
Mulhern also held those or similar positions with the Company from July 1993 until his
resignation as Chief Financial Officer in October 1999, and his resignation as Secretary in
March 2000. Mr. Mulherns current arrangement with the Company provides for base compensation
of $120,000 per year. Mr. Mulhern currently works three days per week. Prior to re-joining
the Company, Mr. Mulhern worked as an independent consultant to the Company from December 2003
through May 2004 and was paid fees totaling $52,000, which are not included in the Summary
Compensation Table above. Stock Option Plans As of December 31, 2004, 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), The 2002 Stock Option Plan (the 2002 Stock Option Plan), and The 2004 Stock
Option Plan (the 2004 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, 1,800,000 and
6,000,000 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). As of April 18, 2004, The 1993
Stock Option Plan and the Computerware Stock Option Plan have 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 the 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. -5-




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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, the 2002 Stock Option Plan and the 2004 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 unless an option agreement contains differing terms. Under the
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, 250,000 under the 2002 Stock Option Plan, and 800,000 under the 2004 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, 2004, options covering 10,000 shares of Common Stock have
been exercised, and options to acquire an aggregate of 239,999 shares of Common Stock (95,000 of
which were exercisable at December 31, 2004) were outstanding at exercise prices ranging from
$0.095 to $6.7813 per share, and accordingly, as of December 31, 2004 an option covering 1 share of
Common Stock could be granted under such option plan. The Director Plan terminates on October 9,
2005. -6-




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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, 2004, options covering 2,817,497 shares of Common Stock have been exercised, options covering
547,744 shares of Common Stock have expired, and options to acquire an aggregate of 1,634,759
shares of Common Stock (1,633,009 of which were exercisable at December 31, 2004) 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 terminated
on February 5, 2005. Of the 1,000,000 shares of Common Stock reserved for issuance under the
Computerware Stock Option Plan, options covering 1,000,000 shares of Common Stock have been granted
at an exercise price of $4.00 per share, 414,000 of which have been exercised as of December 31,
2004, and 586,000 of which were exercisable as of December 31, 2004. All 586,000 options
outstanding as of December 31, 2004, expired without being exercised on February 5, 2005. 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, 2004, options covering 774,040 shares of Common Stock have been exercised,
and options to acquire an aggregate of 1,619,968 shares of Common Stock (1,048,568 of which were
exercisable at December 31, 2004) were outstanding as of December 31, 2004, at exercise prices
ranging from $0.08 to $22.50 per share, and accordingly, options covering 5,992 shares of Common
Stock were available to be granted under such option plan as of December 31, 2004. 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. The 1997 Stock Option Plan terminates on April 29, 2007.
Of the 3,000,000 shares reserved for issuance thereunder, as of December 31, 2004, options covering
479,504 shares of Common Stock have been exercised and options to acquire an aggregate of 2,511,766
shares of Common Stock (1,760,963 of which were exercisable at December 31, 2004) were outstanding
at exercise prices ranging from $0.08 to $5.75 per share, and accordingly, options covering 8,730
shares of Common Stock were available to be granted under such option plan as of December 31, 2004. 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,
2004, options covering 10,000 shares of
Common Stock have been exercised, options to acquire an aggregate of 2,716,860 shares of
Common Stock were outstanding (1,851,463 of which were exercisable at December 31, 2004) at
exercise prices ranging from $0.08 to $6.1563 per share, and accordingly, options covering 23,140
shares of Common Stock were available to be granted under such option plan as of December 31, 2004. 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, 2004,
options covering 69,950 shares of Common Stock have been exercised, options to acquire an aggregate
of 2,264,400 shares of Common Stock (1,474,400 of which were exercisable at December 31, 2004) were
outstanding at exercise prices ranging from $0.08 to $1.68 per share, and accordingly, options
covering 65,650 shares of Common Stock were available to be granted under such option plan as of
December 31, 2004. 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, 2004, options covering 2,450 shares of Common Stock
have been exercised, options to acquire an aggregate of 1,745,750 shares of Common Stock (801,900
of which were exercisable at December 31, 2004) were outstanding at exercise prices ranging from
$0.08 to $1.68 per share, and accordingly, options covering 51,800 shares of Common Stock were
available to be granted under such option plan as of December 31, 2004. The 2004 Stock Option Plan. The 2004 Stock Option Plan was adopted by the Board of
Directors in April 2004 and was approved by the Companys stockholders on June 25, 2004. The 2004
Stock Option Plan terminates on April 16, 2014. Of the 6,000,000 shares of Common Stock reserved
for issuance thereunder, as of December 31, 2004, options to acquire an aggregate of 3,775,000
shares of Common Stock (none of which were exercisable at December 31, 2004) were outstanding at
exercise prices ranging from $0.095 to $0.16 per share, and accordingly, options covering 2,225,000
shares of Common Stock were available to be granted under such option plan as of December 31, 2004. -7-




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##### Table of Contents



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. Option Grants In 2004 Shown below is information relating to grants of stock options pursuant to the Stock Option
Plans during the year ended December 31, 2004 to the Named Executive Officers. Such grants also
are reflected in the Summary Compensation Table above. Potential Realizable Value Individual Grants
    
    
    Potential Realizable Value% of Total
    
    
    Exercise
    
    
    
    
    
    
    
    
    
    
    At Assumed AnnualNo. of
    
    
    Granted To
    
    
    or Base
    
    
    
    
    
    
    
    
    
    
    Rates of Stock PriceSecurities
    
    
    Employees
    
    
    Price
    
    
    
    
    
    
    
    
    
    
    Appreciation for theUnderlying
    
    
    In Fiscal
    
    
    ($ per
    
    
    Grant
    
    
    Expiration
    
    
    Option Term (3)Name
    
    Options
    
    
    Year
    
    
    share)(1)
    
    
    Date
    
    
    Date
    
    
    5%
    
    
    10%Robert J. Crowell (4)
    
    
    250,000
    
    
    
    3.82
    
    
    $
    0.237
    (2)
    
    
    01/27/04
    
    
    
    01/27/09
    
    
    $
    75,000
    
    
    $
    95,000486,800
    
    
    
    7.43
    
    
    $
    0.105
    (2)
    
    
    11/17/04
    
    
    
    11/17/09
    
    
    $
    65,000
    
    
    $
    82,000113,200
    
    
    
    1.73
    
    
    $
    0.95
    
    
    
    11/17/04
    
    
    
    11/17/14
    
    
    $
    18,000
    
    
    $
    28,000John E. Halnen (4)
    
    
    200,000
    
    
    
    3.05
    
    
    $
    0.215
    
    
    
    01/27/04
    
    
    
    01/27/14
    
    
    $
    70,000
    
    
    $
    112,000400,000
    
    
    
    6.11
    
    
    $
    0.095
    
    
    
    11/17/04
    
    
    
    11/17/14
    
    
    $
    62,000
    
    
    $
    99,000Laurence F. Mulhern(5)
    
    
    400,000
    
    
    
    6.11
    
    
    $
    0.155
    
    
    
    06/07/04
    
    
    
    06/07/14
    
    
    $
    101,000
    
    
    $
    161,000200,000
    
    
    
    3.05
    
    
    $
    0.095
    
    
    
    11/17/04
    
    
    
    11/17/14
    
    
    $
    31,000
    
    
    $
    49,000
   (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 the first anniversary of
grant.(5)
    
    The options granted to Mr. Mulhern on June 7, 2004 vest as follows: 300,000 on June 7, 2005
and 100,000 on June 7, 2006. The options granted to Mr. Mulhern on November 17, 2004 vest in
full on the first anniversary of grant -8-




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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 2004 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, 2004. The value of unexercised in-the-money options at December 31, 2004 is
calculated using the $0.066 per share closing price of such shares on that date. See note (2)
below. Number of Securities
    
    Value of UnexercisedUnderlying
        
    In The MoneyShares
    
    
    
    Unexercised Options at
    
    Options AtAcquired on
    
    Value
    
    December 31, 2004
    

December 31, 2004(1)(2)Exercise
    
    Realized
    
    Exercisable
    Unexercisable
    
    Exercisable
    UnexercisableRobert J. Crowell
    
    
    
    
    
    3,129,837
    
    850,000
    
    
    
    John E. Halnen
    
    
    
    
    
    1,425,499
    
    600,000
    
    
    
    Laurence F. Mulhern
    
    
    
    
    


    
    600,000
    
    
    
    
   (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, 2004 were exercised, determined by multiplying the number of shares
underlying the options by the difference between the per share option exercise price and
$0.066, the closing sale price per share of the Companys Common Stock on the OTCBB Market on
December 31, 2004. 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. The Executive Performance Plan provides for
an aggregate bonus pool equal to 20% of 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 loss decreased (i.e.
operating income improved) from 2003 to 2004, no payments were made to Executive Officers for 2004
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 2004. For fiscal year 2005, Mr. Crowell, Mr. Halnen
and Mr. Mulhern each will participate in the Executive Performance Plan with a 50%, 25% and 10%
participation interest, respectively. -9-




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##### Table of Contents



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.
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 2004 approximately 25% 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 2004. 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. 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. -10-




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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 2004 and discusses the
determinations concerning the compensation for the Chief Executive Officer for 2004. 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 -11-




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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 2004 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 $246,000 in 2004, $257,000 in 2003 and $135,000 in 2002. 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 above in the 2003 line. Mr. Crowell also invested an additional
$263,000 of cash in the Companys Debentures (see Transactions With Management). During the first
quarter of 2005, Mr. Crowell loaned the Company $100,000 pursuant to a 12% Secured Promissory Note
(see Transactions with Management). As of December 31, 2004, Mr. Crowell has deferred a net
aggregate of $432,000 in base compensation, which may
be paid to Mr. Crowell depending upon the success of future operations. 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. Mr. Crowell voluntarily reduced his cash compensation again in
September 2004, in order to assist the Company in conserving cash. 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 2004 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. In March 2004 the Committee elected to award Mr.
Crowell 150,000 in addition to granting Mr. Crowell stock options covering 250,000 shares of Common
Stock, in lieu of the required grant of stock options covering 400,000 shares of Common Stock. In
recognition of Mr. Crowells ongoing commitment to the Company and considering his voluntary
reduction of pay (to zero) in September 2004, the Committee awarded Mr. Crowell stock options
covering 600,000 shares of Common Stock in November 2004. -12-




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##### Table of Contents



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 2004 to the Companys executive officers. COMPENSATION COMMITTEE William W. Smith, Chairman
Richard J. Harries, Jr.
John W. Ortiz 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 the first quarter of 2005, Mr. Smith loaned the Company $100,000
pursuant to a 12% Secured Promissory Note. During 2003, Mr. Smith invested $350,000 in the
Companys Convertible Debentures. See Transactions with Management. 
 Item 11. Security
Ownership of Certain Beneficial Owners and Management EQUITY COMPENSATION PLAN INFORMATION The following table provides information as of December 31, 2004 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
    
    
    17,094,502
    (1)(2)
    
    $
    1.24
    
    
    
    2,380,313
    (2)(3)Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    17,094,502
    
    
    $
    1.24
    
    
    
    2,380,313
   (1)
    
    Includes shares of Common Stock to be issued upon the exercise of options outstanding as of
December 31, 2004 under the following Company Stock Option Plans: The Director Plan, 239,999;
The 1993 Stock Option Plan, 1,634,759; The Computerware Stock Option Plan, 586,000; The 1996
Stock Option Plan, 1,619,968; The 1997 Stock Option Plan, 2,511,766; The 2000 Stock Option
Plan, 2,716,860; The 2001 Stock Option Plan, 2,264,400; The 2002 Stock Option Plan, 1,745,750;
and The 2004 Stock Option Plan, 3,775,000.(2)
    
    All outstanding options are subject to adjustments for stock splits, stock dividends,
recapitalizations, and other similar transactions or events. -13-




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##### Table of Contents



(3)
    
    Reflects options covering shares of Common Stock which may be issued, under the following
Company Stock Option Plans: The Director Plan, 1; The 1996 Stock Option Plan, 5,992; The 1997
Stock Option Plan, 8,730; The 2000 Stock Option Plan, 23,140; The 2001 Stock Option Plan,
65,650; The 2002 Stock Option Plan, 51,800; and The 2004 Stock Option Plan, 2,225,000. PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP The following table sets forth the beneficial ownership of Common Stock as of April 18,
2005 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,
2004, (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)
    
    
    2,211,668
    
    
    3.5%John W. Ortiz (4)
    
    
    74,000
    
    
    *Class II Director  Term expires at the 2006 Annual MeetingRichard J. Harries, Jr. (4)
    
    
    74,000
    
    
    *Class III Directors  Term expires at the 2007 Annual MeetingRobert J. Crowell (5)
    
    
    14,758,835
    
    
    20.5%William W. Smith (6)
    
    
    3,472,193
    
    
    5.4%Named Executive OfficerLaurence F. Mulhern (7)
    
    
    303,000
    
    
    *All Directors And Executive Officers as a Group (6 Persons)(8)
    
    
    20,893,697
    
    
    26.7%
   *
    
    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 18, 2005, 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, 1,625,499 shares, which he has the right to acquire at various prices within 60 days
of April 18, 2005 through the exercise of stock options, and 585,369 shares which he has the
right to acquire through conversion of his Company Convertible Debentures (including accrued
interest through June 18, 2005). See Transactions with Management, Executive Compensation 
Option Grants in 2004, and Fiscal Year End Option Value 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 18, 2005.(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, 3,379,837 shares which he has the right to
acquire at various prices within 60 days of April 18, 2005 through the exercise of stock
options , and 7,432,239 shares which he has the right to acquire through conversion of his
Company Convertible Debentures (including accrued interest through June 18, 2005). See
Transactions with Management, Executive Compensation  Option Grants in 2004, and Fiscal Year
End Option Value Table.(6)
    
    Mr. Smiths Common Stock ownership is comprised of 77,000 shares, which he has the right to
acquire at various prices within 60 days of April 18, 2005 through the exercise of stock
options, and 3,395,193 shares which he has the right to acquire through conversion of his
Company Convertible Debentures (including accrued interest through June 18, 2005). See
Transactions with Management. -14-




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(7)
    
    Mr. Mulherns Common Stock ownership is comprised of 300,000 shares, which he has the right
to acquire at various prices within 60 days of April 18, 2005 through the exercise of stock
options, and 3,000 shares which he owns directly.(8)
    
    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 18, 2005 through the exercise of
stock options and 11,412,802 shares which the Directors and executive officers of the Company
have the right to acquire through conversion of their Company Convertible Debentures
(including accrued interest through June 18, 2005). 
 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 pre-approve 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: 2004
    
    
    2003(in thousands)Audit fees
    
    $
    66
    
    
    $
    70Audit related fees
    
    
    10
    
    
    
    12Tax services
    
    
    4
    
    
    
    All Other Fees
    
    
    2
    
    
    
    2Total fees
    
    $
    82
    
    
    $
    84
 Audit Fees VCC has billed the Company $66,000 for professional services rendered for the audit of the
Companys annual financial statements for the year ended December 31, 2004, the reviews of interim
financial statements included in the Companys Forms 10-QSB filed during the year ended December
31, 2004, and for consultation relating to accounting matters. VCC has billed the Company $70,000 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, the Companys previous auditors, 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 During 2004, VCC billed the Company $10,000 in audit related fees for the audit of the
Companys benefit plan. Audit related fees for 2003 relate to VCC work performed in connection with the Companys
issuance of Common Stock in April 2004 on the AIM Exchange in the U.K. Tax Fees During 2004, VCC billed the Company approximately $4,000 in tax fees for review of the
Companys 2003 tax returns. All Other Fees Other fees for 2004 of $2,000 were paid to VCC for certain specific procedures performed by
VCC to assist the Company in documenting its security management and policy document. -15-




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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. Before VCC is engaged by the Company to render audit or non-audit services, the engagement is
approved by the Companys Audit Committee. None of the services described above was approved by
the Audit Committee under the de minimus exception to pre-approval provided in Commission rules. 
 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized. Elcom International, Inc.
(Registrant)Date: April 22, 2005
    
    By:
    
    /s/ Robert J. CrowellRobert J. Crowell
Chairman and Chief Executive Officer
 In accordance with the Exchange Act, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated. Signatures
    
    Title
    
    Date/s/ Robert J. Crowell
    
    Chairman of the
    
    April 22, 2005Robert J. Crowell
    
    Board of Directorsand Chief Executive Officer(Principal Executive Officer)/s/ Laurence F. Mulhern
    
    Chief Financial Officer
    
    April 22, 2005Laurence F. Mulhern
    
    (Principal Financial Officer)/s/ John E. Halnen
    
    President, Chief
    
    April 22, 2005John E. Halnen
    
    Operating Officerand Director/s/ William W. Smith
    
    Vice Chairman and Director
    
    April 22, 2005William W. Smith/s/ Richard J. Harries Jr.
    
    Director
    
    April 22,2005Richard J. Harries, Jr./s/ John W. Ortiz
    
    Director
    
    April 22, 2005John W. Ortiz
 -16-