================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

        FOR ANNUAL AND TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)

[X]      Annual Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934.

         For the fiscal year ended December 31, 2004.

                                       or

[_]      Transition Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934.

         For the transition period from _____________ to _____________.


                           COMMISSION FILE NO. 0-27996

                         WIRELESS XCESSORIES GROUP, INC.
                         -------------------------------
             (Exact name of registrant as specified in its charter)

           DELAWARE                                          13-3835420
           --------                                          ----------
State or other jurisdiction of                             I.R.S. Employer
 incorporation or organization                          Identification Number)

               1840 County Line Road, Huntingdon Valley, PA 19006
               --------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including Area Code: (215) 322-4600

        Securities registered pursuant to section 12(b) of the Act: None

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

                     Common Stock, Par Value $.001 Per Share

                                 Title of Class
                                Over the Counter
                                 Bulletin Board
                              ---------------------
Indicate by check mark whether the Registrant (1) has filed all reports 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 |X|  No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-KSB is not contained herein, and will not be contained, to the
best of 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. |_|

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the act). Yes |_|  No |X|

The number of issued and outstanding shares of the Registrant's Common Stock net
of Treasury Stock , par value $.001 per share, on February 15, 2005 was
4,458,195. The aggregate market value of the voting stock held by non-affiliates
of the Registrant (computed by reference to the closing price of such stock on
Over the Counter Market on February 15, 2005 of $ 3.00 was approximately
$8,953,884.
================================================================================
<PAGE>

                                     PART I

ITEM 1. BUSINESS

ITEM 1 - NARRATIVE
------------------

OVERVIEW & HISTORY
------------------

Wireless Xcessories Group is a leading provider of accessories to dealers,
distributors, retailers, agents and airtime carriers throughout the United
States and Canada. We have created a variety of product lines, totaling over
4,000 items designed to appeal to the widest possible spectrum of wholesale
buyers.

In addition to our products, we support our customers with a wide assortment of
Value Added services, including customized retail packaging, displays, posters,
marketing, and sales training materials, and free e-commerce websites.

Our corporation was formed in 1988, as Advanced Fox Antenna, and our product
line increased steadily as handheld cell phones grew in popularity. As part of
an IPO in April 1996, Advanced Fox Antenna, along with two battery related
companies were acquired by the parent company Batteries Batteries, Inc. Between
1997 and 2001 we sold off or otherwise divested ourselves of the battery
companies' businesses, merged a similar cell phone accessory company into our
main operation and changed our name to Wireless Xcessories Group. We have, since
then, focused on our core strengths. We consider ourselves to be the largest
distributor of accessories to independent wireless dealers in the Unites States.
Our website address is Wirexgroup.com

PRODUCTS & SERVICES
-------------------

We source, design, create, market and sell a series of accessory product lines
that appeal to all categories of wireless resellers. The bulk of our lines are
aftermarket accessories that our customers offer in lieu of OEM accessories sold
by the cell phone manufacturers.

Our current product lines are called "Standard," "Platinum," and "Industrial
Strength(R)."

In 2004 we created a product design and development division and produced a
series of cases, vehicle power adapters, hands free headsets, and a line of
accessories for popular PDA'S such as Treo and Blackberry. Our current projects
involve a series of Blue Tooth hands free accessories. The mission of our
product development department is to design and create accessories with
exclusive styling and functionality. We offer these items to phone manufacturers
and major distributors under our name or as a private labeled product.

The close working relationship with our Chinese factories also allows us to
replicate the most popular accessories appearing on the world market at costs
30-40% below their current wholesale pricing.

In the fourth quarter of 2004 and in early 2005 we added new product lines such
as Apple-IPod Accessories, Entertainment Accessories such as headsets and
chargers for MP3 Players, and became a National Distributor for a new line of
phones manufactured by Hop-on MP3.

                                        2
<PAGE>

The majority of our products are manufactured in China, Hong Kong and Taiwan. In
addition, we also act as a master distributor for well-known brand name products
such as Plantronics, Body Glove, and Nextel.

Our product lines are sold along with comprehensive sales and marketing
programs, and a series of value added products designed to separate and
distinguish us in the minds of wireless resellers.

These Services Are Offered Free of Charge:
------------------------------------------

    o     Airtime carrier phone and accessories compatible charts
    o     E-Mail blast management programs
    o     Customized retail packaging
    o     Sales training materials
    o     In store displays and posters
    o     Private Label E-commerce websites that allow customers to offer our
          full product line to their end users

Also in 2004, we introduced an on-line ordering option to our customers which
permits them to view our current inventory along with our next receive date if
an item is out of stock.

CUSTOMERS
---------

Our customer base consists of more than 2,500 independent dealers from a
one-location mall kiosk to multi-store retail franchisers covering 250 locations
and more. In addition, we sell to some of the largest distributors of cell
phones, computers, and infrastructure products. These distributors in turn
resell to airtime carriers, mass retailers, and prepaid phone distributors. We
have one customer who accounted for 18.4% of our 2004 sales and no other
customer accounted for 5% or more of our sales.

About 25% of our customers either repackage our products for resale through
their resale channels or ask us to provide custom packaging as part of our value
added services.

BUSINESS MODEL
--------------

With our recent introduction of entertainment accessories, Blackberry and
smartphone accessories plus a new line of phones, we have the widest product
line in America and are truly a "One stop shopping source" for all types of
wireless resellers.

We believe we are virtually the only organization that offers resellers three
full product lines to provide a "good, better, best" choice for end users to
purchase.

The wireless phone industry is characterized by the continuous introduction of
new model handsets with design changes, new operating features, and enhancements
that limit the ability of all but a few of our competitors to compete with
aftermarket accessories, especially by having them available for purchase soon
after the phone manufacturers introduces their new models.

In addition to being quick to market on new accessories, it is necessary to have
inventory for some handsets for 1-2 years because of their continuing popularity
in certain parts of the country that do not follow the latest fashion trends.

                                        3
<PAGE>

Our customers have come to expect same day shipping on orders placed before 3pm,
and we meet this commitment on more then 99% of our orders.
We encourage customers to try selected new products by offering a no risk,
60-day opportunity to stock balance and return products that do not sell up to
their expectations. This "guaranteed sale" option has proven very popular with
our customers. We encourage customers to place orders on line 24/7 which ensures
them same day shipment and reduces our order processing costs. Because of the
rapid pace of new handset introductions, retail sales people find it hard to
keep current on which accessories are compatible among various brands and
models. We help solve this problem by publishing a monthly chart of phone and
accessory compatibilities for our customers who are agents of Verizon, Cingular,
Nextel, T-Mobile, AT&T, and Sprint.

MANAGEMENT DISCUSSION OF FACTORS THAT HAVE AFFECTED OUR SALES GROWTH:
---------------------------------------------------------------------

     A)   During the fourth quarter of 2003 we introduced a new line of rugged
          accessories, which we named Industrial Strength. This line has
          received an enthusiastic reception and is an important factor in our
          sales growth.

     B)   Early in 2004 we introduced a value-added catalog that shows our
          customers and prospects all of the free services that are available to
          grow their business. To our knowledge, we are the only organization
          that offers this variety and depth of market and sales assistance.

     C)   In the third quarter of 2004, we introduced The Platinum Collection of
          accessories which have features and benefits equal or superior to
          higher priced OEM accessories.

     D)   In 2004 we realigned our sales force and our sales compensation plan
          to incentivize and reward the sales people who grow their business.

     E)   In early, 2005 we have introduced handsets to supplement our numerous
          product offerings. Also, in 2005, we introduced an extensive line of
          accessories for Apple IPods, Mp3 players, as well as a 300 item line
          of OEM Accessories.

     F)   We continue to introduce new products and product lines so that there
          is always something new to offer customers and prospects.

EMPLOYEES
---------

Wireless Xcessories Group employs approximately 80 full time workers divided
into accounting, sales, customer services, marketing, purchasing/product
development, MIS, quality control, and warehouse picking and packing. Our
8-person management team has been with the company from 2-15 years, with most
managers having 5-10 years experience.

Most members of our management team receive restricted stock grants tied to an
agreement not to compete and have incentive to remain with the company for at
least 5 years as a result of the vesting provisions of the stock grants.

No employee is covered by collective bargaining and we consider our employee
relations to be excellent.

                                        4
<PAGE>

COMPETITION
-----------

The aftermarket wireless accessory industry is both competitive and fragmented.
There are a number of local and regional distributors who import their products
from the Far East, and there are 15 or more national distributors.

Barriers to entry are low assuming one wants to market a limited product line.
We believe that it would require a large investment in inventory, quality
assurance, packaging capabilities, sales training, purchasing, and marketing to
duplicate the total program we have developed.

The continual introduction of new phone models combined with popularity changes
that can be measured in weeks and months have caused some of the larger
distributors to seek out accessory specialists like Wireless Xcessories Group,
Inc. to manage the selection, packaging and sourcing of their accessory
programs.

INTELLECTUAL PROPERTY
---------------------

We seek to protect our intellectual property through a combination of
trademarks, service marks, and confidentiality agreements, non-compete
agreements, and patent protection when appropriate.

We maintain a number of registered trade names and registered trademarks,
including Industrial Strength(R), IndustrialStrength.com(R),
Platinumaccessories.com and WireXGroup.com.

As our product development initiatives bear fruit we intend to seek protection
for the patentable technology we create.

PROPERTIES AND FACILITIES
-------------------------

We lease a total of close to 65,100 square feet of warehouse space in Huntingdon
Valley, Pa., which we have occupied since 2001.

Our facility is divided into 13,100 square feet of office and administrative
space and 52,000 square feet of warehouse pick, pack, and quality control
facilities.

Earlier this year we signed a new 5-year lease, expiring in 2009, with no
increase in costs. Our rent is approximately $450,000 annually.

LEGAL PROCEEDINGS
-----------------

Lawsuits and claims are filed against us from time to time in the ordinary
course of business. We do not believe that any lawsuits or claims currently
pending against our company are material or will have a material adverse affect
on our financial condition.

INDUSTRY RISK FACTORS THAT COULD AFFECT OUR PERFORMANCE
-------------------------------------------------------

     A)   General economic conditions deteriorate, thereby reducing the demand
          for phones and accessories.

     B)   Manufacturers reduce the number of new phone introductions, thereby
          reducing our competitive advantage of speed to market new accessories.

                                        5
<PAGE>

FACTORS AFFECTING FUTURE OPERATING RESULTS
------------------------------------------

The provisions of the Private Securities Litigation Reform Act of 1995 (the
"Act") provide companies with a "safe harbor" when making forward-looking
statements. This "safe harbor" encourages companies to provide prospective
information.

We wish to take advantage of the "safe harbor" provisions of the Act and are
including this section in our Annual Report on Form 10-KSB in order to do so.
Forward-looking statements also appear in other sections of this report.
Statements that are not historical facts, including statements about
management's expectations for fiscal year 2005 and beyond, are forward-looking
statements and involve various risks and uncertainties. Factors that could cause
the actual results to differ materially from management's projections,
forecasts, estimates and expectations include, but are not limited to, the
following:

WE MAY NOT SUCCESSFULLY OFFER ATTRACTIVE MERCHANDISE TO OUR CUSTOMERS.
----------------------------------------------------------------------

In order to meet our strategic goals, we must successfully locate and offer our
customers new, innovative and high quality products. Our product offerings must
be affordable, useful to the customer, well made, distinctive in design, and not
widely available from other sources. We cannot predict with certainty that we
will successfully offer products that meet these requirements in the future.

WE DEPEND ON OUR VENDORS.
-------------------------

Our performance depends on our ability to purchase our products in sufficient
quantities at competitive prices and on our vendors' ability to make and deliver
high quality products in a cost effective, timely manner. Some of our smaller
vendors have limited resources, production capacities and limited operating
histories. We have no long-term purchase contracts or other contracts that
provide continued supply, pricing or access to new products and any vendor or
distributor could discontinue selling to us at any time. There can be no
assurance that we will be able to acquire the products that we desire in
sufficient quantities or on terms that are acceptable to us in the future. In
addition, there can be no assurance that our vendors will make and deliver high
quality products in a cost effective, timely manner. We may also be unable to
develop relationships with new vendors. Also, all products we purchase from
vendors in the Far East must be shipped to our warehouse by freight carriers and
there can be no assurance that we will be able to obtain sufficient capacity at
favorable rates. Our inability to acquire suitable products in a cost effective,
timely manner or the loss of one or more key vendors or freight carriers could
have a negative impact on our business.

WE FACE CERTAIN RISKS RELATING TO CUSTOMER SERVICE.
---------------------------------------------------

Any material disruption or slowdown in our order processing systems resulting
from labor disputes, telephone down times, electrical outages, mechanical
problems, human error or accidents, fire, natural disasters, or comparable
events could cause delays in our ability to receive and distribute orders and
may cause orders to be lost or to be shipped or delivered late. As a result,
customers may cancel orders or refuse to receive goods on account of late
shipments, which would result in a reduction of net sales and could mean
increased administrative and shipping costs.

                                        6
<PAGE>

WE EXPERIENCE INTENSE COMPETITION IN OUR MARKETS.
------------------------------------------------

We operate in a highly competitive environment. We principally compete with a
variety of small distributors of cellular phone accessories that focus on a
particular segment of the market, as well as a few single large distributors
that offer a broad range of such products.

WE ARE DEPENDENT ON CERTAIN KEY PERSONNEL.
-----------------------------------------

Our success depends to a significant extent upon the abilities of our senior
management. The loss of the services of any of the members of our senior
management or of certain other key employees could have a significant adverse
effect on our business. In addition, our performance will depend upon our
ability to attract and retain qualified management, merchandising and sales
personnel. There can be no assurance that the members of our existing management
team will be able to manage the Company or our growth or that we will be able to
attract and hire additional qualified personnel as needed in the future.

ITEM 2. PROPERTIES

All of our real properties are held under leases. The following table provides
certain information concerning our leased properties:

                                                       APPROXIMATE      LEASE
                                                           AREA       EXPIRATION
OPERATION        NATURE          LOCATION                (SQ.FT.)        DATE
---------        ------          --------                --------        ----
Main Facility    Warehouse and   Huntingdon Valley, PA     52,000       3/31/09
                 Office                                    13,100       3/31/09

In March 2004 the above lease for both office and warehouse was extended to
March 31,2009. As part of the lease extension the Company has the right to
relinquish approximately 15,000 feet of warehouse space without further
obligation to the Company upon giving the landlord six months prior notice of
its intention to vacate.

ITEM 3.  LEGAL PROCEEDINGS

We, from time to time, are a party to other litigation arising in the normal
course of our business, most of which involves claims for amounts due from
merchandise or services purchased or merchandise sold to third parties We
believe that none of these actions will have a material adverse effect on our
financial condition or our results of operations.

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

Our annual meeting of stockholders was held on June 23, 2004. The following are
results of the voting on the proposals submitted to the stockholders at the
annual meeting:

Proposal No. 1: Election of Directors.

                                        7
<PAGE>

The following individuals were elected as directors:

          NAME                          FOR         AGAINST
          ----                          ---         -------
Christopher F. McConnell             4,515,059      390,500
Stephen Rade                         4,274,636      630,923
Bradley T. MacDonald                 4,274,636      630,923
Allan Kalish                         4,515,059      390,500
Christopher C. Cole                  4,274,636      630,923

There were no broker non-votes or abstentions or votes withheld with respect to
this proposal.

Proposal No.2: Proposal to ratify the appointment by our Board of Directors of
Bagell, Josephs & Company LLC as the Company's independent auditors for the
fiscal year ending December 31, 2004.

FOR:            4,716,577
AGAINST:          185,082
ABSTAIN:            3,900

The proposal passed by a majority of the vote's casts as dictated by our
by-laws. There were no broker non-votes or votes withheld with respect to this
proposal.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
        STOCKHOLDER MATTERS

The Company trades its Common Stock under the symbol "WIRX" on the Over the
Counter Bulletin Board ("OTC").
The following tables set forth the range of high and low closing prices for the
quarters indicated for the Common Stock on the NMS as reported by NMS for
calendar year 2004 and 2003 on the OTC.

                             COMMON STOCK

2003                       HIGH          LOW
----                       ----          ---
FIRST QUARTER              0.30         0.12
SECOND QUARTER             0.35         0.22
THIRD QUARTER              0.40         0.15
FOURTH QUARTER             0.44         0.22


2004

FIRST QUARTER              0.53         0.37
SECOND QUARTER             0.65         0.35
THIRD QUARTER              1.75         0.54
FOURTH QUARTER             2.40         1.40




                                        8
<PAGE>

The OTC prices reflect inter-dealer quotations, without retail mark-ups,
markdowns or other fees or commissions, and may not necessarily represent actual
transactions.

There were 75 record holders of the Company's Common Stock as of February 15,
2005. A substantially larger number of beneficial owners hold such shares of
Common Stock in depository or nominee form. No dividends have been paid on the
outstanding shares of Common Stock.

ITEM 6. SELECTED FINANCIAL DATA

INTRODUCTION

The following table sets forth the selected financial data for Wireless
Xcessories Group, Inc. This information should be read in conjunction with the
Consolidated Financial Statements and Notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that appear elsewhere
in this document.

The Selected Financial Data have been derived from the consolidated financial
results for the year ended December 31, 2004 and 2003 audited by Bagell, Josephs
& Company, L.L.C, respectively, appear only in this section.

                             SELECTED FINANCIAL DATA
                         FISCAL YEAR ENDED DECEMBER 31,

                                              2004               2003
                                           ----------         ----------
                                         ($ IN THOUSANDS, EXCEPT SHARE AND
                                                  PER SHARE DATA)

INCOME STATEMENT DATA:

NET SALES                                  $   15,307         $   11,469
COST OF SALES                                   8,478              6,204
                                           ----------         ----------

GROSS PROFIT                                    6,829              5,265
                                           ----------         ----------

SELLING, GENERAL &
ADMINISTRATIVE EXPENSES                         5,920              5,436
(OTHER INCOME) EXPENSE
(GAIN) FROM DISPOSITION OF PROPERTY               (32)              --
(GAIN) ON SALE OF INVESTMENTS                     (50)
(INTEREST INCOME)                                 (23)               (22)
INTEREST EXPENSE                                    5                 15
                                           ----------         ----------
NET INCOME (LOSS) BEFORE INCOME
TAXES                                           1,009               (164)
INCOME TAX EXPENSE (BENEFIT)                        0                  0
                                           ----------         ----------

NET INCOME (LOSS)                               1,009               (164)
                                           ==========         ==========

NET EARNINGS (LOSS) PER SHARE OF
COMMON STOCK (BASIC AND DILUTED)           $     0.21         $    (0.03)
                                           ==========         ==========


                                        9

<PAGE>

BALANCE SHEET DATA:
                                                 AS OF DECEMBER 31,
                                                 ------------------
                                              2004               2003
                                           ----------         ----------
WORKING CAPITAL                            $    3,568         $    2,791
TOTAL ASSETS                                    5,299              4,342
LONG TERM DEBT                                   --                    2
STOCKHOLDERS' EQUITY                            4,052              3,358


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

Year Ended December 31, 2004 ("2004") Compared to Year Ended December 31, 2003
("2003")

Net sales increased by 33% or $3.8 million from $11.5 million in 2003 to $15.3
million in 2004. The increase in sales is mainly attributable to the major
expansion of our products and product lines which was triggered by the
introduction of our highly successful industrial strength line in the fall of
2003 and to the development of a few higher volume customers, and the overall
general improvement in handset sales throughout the Industry. Additionally, we
expanded our branded and OEM product offerings during the year and introduced
our platinum line in September of 2004. The Company feels that it has
significantly improved its competitive position through these new product
introductions, expanded value added services offered to its Customers,
professional web site offered free of charge to our customers, on line ordering,
and comprehensive marketing and mailing packages including 3 separate catalogs
bolstered by a 26 person well trained and incentivised sales representative and
Customer Service department.

Gross profit increased by $1.5 million or 29.7% from $5.3 million in 2003 to
$6.8 million in 2004, but as a percentage of sales decreased from 45.9% to
44.6%. The fall off in gross profit percentage resulted from the growth of lower
margin branded and OEM product sales used as an inducement to bring in new
customers and added fright cost needed to bring in newer product timely and to
fill the continued increase in customer order demand. Offsetting these factors
at least in part are the following factors:

     o    Reductions in charges to earnings to provide for obsolete and slower
          moving inventory due primarily to enhanced controls over quantities of
          new product purchased, and faster identification and promotion of
          overstocked and slow moving product

     o    Our Core Industrial Strength product Line, which carries higher
          margins and is subject to less competitive pricing pressures than our
          standard product lines.

     o    Closer monitoring and scrutinization of Customer pricing and other
          incentives.

Selling, general and administrative ("SG&A") expenses increased by 8.9% or $.5
million, from $5.4 million in 2003 to $5.9 million in 2004, and as a percentage
of sales decreased from 47.4% in 2003 to 38.7% in 2004. The reduction in expense
was a mainly a result of the Company's continuous cost cutting program and
emphasis on improved employee productivity. This resulted in significant
improvement in our overall salary and salary related expense during the year as
a percentage of sales and major cuts in other general and administrative
expenses such as corporate related

                                       10
<PAGE>

expenses, professional fees, bank fees, telephone, and etc as almost every
expense lines were scrutinized. In particular, warehouse labor and related
expense reduced at a rate substantially in excess of the sales decline
percentage for the year due to continuing pre-packaging of product by our Far
East vendors at lower overall costs, introduction of Radio Frequency Guns and
Bar Code technology and an overall upgrade over the year in management worker
stability and capabilities.

Interest income increased from $22,094 in 2003 to a net interest income of
$22,803 in 2004 due primarily to changing interest rates and constant between
different instruments..

The Company's effective income tax rate in calculating an expense on the net
income on 2004 would have been 38% or a total expense of $280,774. As of
December 31, 2004, the Company has a tax allowance of $1,148,058 inclusive of
$280,774 of tax expense attributable to 2004 that was applied against the
allowance. Our effective income tax rate in both 2004 and 2003 is 38%.

NEW ACCOUNTING STANDARDS

In December 2002, the FASB issued Statement No. 148 "Accounting for Stock-Based
Compensation- Transition and Disclosure, an amendment of FASB Statement No. 123,
Accounting for Stock-Based Compensation" ("SFAS 148"), to provide alternative
methods of transition for an entity that voluntarily changes to the fair value
based method of accounting for stock-based employee compensation. Finally, this
statement amends Accounting Principles Board ("APB") Opinion No. 28, "Interim
Financial Reporting", to require disclosure about those effects in interim
financial information. SFAS 148 is effective for financial statements for fiscal
years ending after December 15, 2002. The Company will continue to account for
stock-based employee compensation using the intrinsic value method of APB
Opinion No. 25, "Accounting for Stock Issued to Employees," but has adopted the
enhanced disclosure requirements of SFAS 148.

SIGNIFICANT ACCOUNTING POLICIES

Financial Reporting Release No. 60, which was recently released by the
Securities And Exchange Commission, requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Our significant accounting policies are described in Note
1 of the Notes to the Consolidated Financial Statements. The significant
accounting policies that we believe are most critical to aid in fully
understanding our reported financial results are the following:

Critical Accounting Estimates -- We have made a number of estimates and
assumptions related to the reporting of assets and liabilities in preparation of
the consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America. The most significant
estimates relate to the allowance for doubtful accounts, the reserve for
Inventory obsolescence and the Deferred tax valuation allowance. In determining
the adequacy of the allowance for doubtful accounts, we consider a number of
factors including the aging of the receivable portfolio, customer payment
trends, financial condition of the customer, industry conditions and overall
credibility of the customer. Actual amounts could differ significantly from our
estimates.

In determining the adequacy of the reserve for inventory obsolescence, we
consider a number of factors including the aging of the inventory, individual
product weeks on hand and reaction to promotions and markdowns, recent sales

                                       11
<PAGE>

trends, availability of the product in the market, industry market conditions
and overall economic conditions. Actual amounts could differ significantly from
our estimates. In assessing the realizability of deferred income tax assets, we
consider whether it is more likely than not that the deferred income assets will
be realized through the future generation of taxable income. Inventories --
Inventories, which consist solely of finished goods, are carried at the lower of
cost, determined on a first-in, first-out basis (FIFO), or market value.

Revenue Recognition -- Revenue is recognized at the time of shipment. Revenue
related to the web site vendor agreements at AccessorySolutions.com, Inc. are
recognized ratably over the related contract period.

LIQUIDITY AND CAPITAL RESOURCES

Our requirement for capital is to fund (i) sales growth and (ii) financing for
possible acquisitions (iii) Re purchase of the Company's Common Stock, and (iv)
capital expenditures mainly related to business system upgrades. Our primary
sources of financing during 2004 and 2003 were cash flow from operations,
reduction in net assets (particularly inventory and accounts receivable and
principal payments of Notes Receivable related to the disposition of its
discontinued operations (Battery Network and Tauber).

Our working capital as of December 31, 2004 and 2003 was $3,567,918 and
$2,790,859, respectively. Net cash provided by operating activities for the
years ended December 31, 2004 and 2003 was $ 1,065,732 and $487,490,
respectively. In 2004, we showed cash from operations of $1,516,329 from our net
income of $1,008,416 as adjusted for non-cash items of depreciation and
amortization of $336,914, bad debt provision of $110,368 and Common Stock issued
to directors, officers and employees of $60,631.

Changes in assets and liabilities in 2004 resulted in a net use of $450,596 from
increases in Accounts Receivable, Inventory and Prepaid expenses and other
Assets of $511,094, $121,459 and $85,082, respectively, offset in part by a
decrease in Accounts payable and accrued expenses of $267,039. In 2003, we
showed cash from operations of $572,740 from our net loss of $164,043 as
adjusted for non-cash items of depreciation and amortization of $485,363, bad
debt provision of $231,820 and $19,000 of Common Stock issued to directors,
Changes in assets and liabilities in 2003 resulted in a net use of $85,250 from
a decrease in Accounts payable and accrued expenses of $191,389 and an increase
in Inventory of $56,703 offset in part, by deceases in Accounts Receivable and
Prepaid expenses and other Assets of $46,696 and $116,146, respectively.

Our overall combined reduction in accounts receivable covering 2003 and 2004 was
mostly attributable to tighter credit policies including the increased use of
Cash on Delivery and immediate customer credit payments on selected newer and
less credit worthy accounts, coupled with more stringent collection procedures.

Net cash used in investing activities in 2004 of $95,639 resulted from capital
expenditures of $256,829 offset in part by the collection of $161,190 of
principal payments related to the sale of discontinued operations. The bulk of

                                       12
<PAGE>

Capital Expenditures in 2004 was for a new telephone system, completion of Radio
Frequency technology in the warehouse, upgrades to our business system including
continued improvements to our website and on-line ordering capabilities and
warehouse efficiency improvements including automating cardboard compacting
systems and facility improvements,

Net cash used in investing activities in 2003 of $85,462 resulted from capital
expenditures of $228,608 offset in part by principal payments of $143,146
relating to the sale of discontinued operations. The bulk of Capital
Expenditures in 2003 was for the purchase and installation of a new business
system, upgrades to the Company website and on-line ordering capabilities,
introduction of Radio frequency technology in our warehousing operation, and
upgrades to selected user hardware (Computers and printers).

Cash used in financing activities in 2004 of $379,327 was due to the cost of
reacquiring Company Stock of $375,053 and net payments of capital lease
obligations of $4,274.

Cash used in financing activities for the twelve months ended December 31, 2003
totaling $70,951 was due to the cost of reacquiring Company Stock of $37,135 and
net payments of capital lease obligations of $33,816.

Based upon its present plans, management believes that operating cash flow, and
available cash will be adequate to finance the stock repurchase program, to meet
the working capital cash needs of the Company and to meet anticipated capital
expenditure needs during the 12 months ending December 31, 2005. Although we
would like to issue shares of Common Stock as our primary method of financing
acquisitions, we anticipate that additional funds may be required to
successfully implement any acquisition program, and will use various methods to
finance acquisitions, including raising new equity capital. There is no
guarantee that such equity or debt financing will be available to us in the
future.

COMMITMENT:

We lease warehouse and administrative office space and copy machines with
non-cancelable operating lease agreements, which expire at various dates.
Certain leases for warehouse and other space contain rental escalation clauses
based on the Consumer Price Index. Future minimum lease payments including base
rent, common area charges, and lease required real estate tax charges
non-cancelable operating leases for the year ending December 31, 2004 are as
follows:

      2005                    $    448,911
      2006                         436,411
      2007                         444,062
      2008                         480,618
      thereafter                   161,494
                              ------------
      Total                   $  1,971,496
                              ============

During 2000, we entered into certain capital leases for warehouse equipment.
Total future remaining lease payments under these lease obligations are $1,979
due in 2005.

                                       13
<PAGE>

SEASONALITY AND INFLATION:

In fiscal years 2004 and 2003 the Company did approximately 54% and 55%,
respectively, of its sales in the second half of the year. This reflected the
more traditional pick up of additional business in the months preceding the
December Holiday season.

The impact of inflation on our operations has not been significant to date.
However, there can be no assurance that a high rate of inflation in the future
would not have an adverse effect on our operating results.

GRAPHS

Total Revenue - Quarterly
Dollars in Millions

          2.378   2.809   3.279   3.003   3.151   3.905   4.075   4.176
         --------------------------------------------------------------
QTR         1       2       3       4       1       2       3       4
 FY        03      03      03      03      04      04      04      04


Gross Profit - Quarterly
Dollars in Millions

          1.109   1.290   1.538   1.419   1.461   1.765   1.746   1.846
         --------------------------------------------------------------
QTR         1       2       3       4       1       2       3       4
 FY        03      03      03      03      04      04      04      04


Operating Cash Flow - Quarterly
Dollars in Thousands

          368     319    -231      31     263     473     619    -290
         --------------------------------------------------------------
QTR         1       2       3       4       1       2       3       4
 FY        03      03      03      03      04      04      04      04

Earnings Per Share - Quarterly
Dollars

         -.08       0     .03     .02     .01     .07     .06     .07
         --------------------------------------------------------------
QTR         1       2       3       4       1       2       3       4
 FY        03      03      03      03      04      04      04      04

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk - The Company did not have any interest rate risk at December
31, 2004, as there was no outstanding debt owed by the Company other fixed
interest capital lease obligations.

Foreign Currency Risk - We do not use foreign currency forward exchange
contracts or purchased currency options to hedge local currency cash flows or
for trading purposes. All sales arrangements with international customers and
suppliers are denominated in U.S. dollars. We purchase approximately 70% of our
products from manufacturers located overseas, principally in the Far East. The
depreciation of the U.S. dollar against the major Asian currencies could,
therefore, cause an increase in the cost of our products and adversely affect
our results of operations or financial condition.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
        ACCOUNTING AND FINANCIAL DISCLOSURE

As of December 31, 2004 and 2003 there are no changes in or disagreements with
Bagell, Josephs & Company LLC on accounting or financial disclosures.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The following table sets forth as of February 15, 2005, the name of each of our
directors and executive officers, his principal occupation and the nature of all
positions and offices with us held by him. Our directors will hold office until
the next Annual Meeting of Stockholders.

                                                                         FIRST
                                                                         BECAME
NAME                        AGE  OFFICE                                 DIRECTOR
-----                       ---  -------                                --------

Stephen Rade                67   President, Chief Executive               1996
                                 Officer and Chairman of the Board
Christopher F. McConnell    51   Director                                 1998
Ronald E. Badke             59   Chief Financial Officer and Secretary    1995
Allan Kalish                79   Director                                 1998
Christopher C. Cole         49   Director                                 2000
Bradley T. MacDonald        57   Director                                 1999

Each executive officer serves at the discretion of the Board of Directors.

                                       14
<PAGE>

Mr. Rade has been our Chairman of the Board since June 2002 and President and
Chief Executive Officer since June 1998. From 1996 until June 1998, he was
Executive Vice President of the Company. He has been a director since April
1996. He has been the President, Chief Executive Officer and a director of
Advanced Fox Antenna, Inc. since he founded that company in 1990.

Mr. McConnell has been a director of the Company since December 1998 while
holding the title of Chairman of the Board through June 2002. In addition, he is
principal of The Founders Group, an organization dedicated to helping launch
new, technology-based companies. Mr. McConnell also co-founded CFM Technologies,
Inc., a semiconductor capital equipment company and until it merged into Matson
technologies in March 2001. He currently serves as a director of Mi8
Corporation, a leading application software provider (ASP), where he had
previously been Chairman of the Board.

Mr. Badke has been our Chief Financial Officer since November 1995 and Secretary
since March 1999. He was a Senior Vice President and the Chief Financial Officer
of Shoe Town Inc. from 1984 through September 1994, positions he later held
(September to November 1995) with Natures Elements. Mr. Badke, a certified
public accountant, had been a consultant from October 1994 through August 1995.

Mr. Kalish has been a director since 1998. He is the owner of Kalish &
Associates, a consulting firm specializing in marketing, advertising and public
relations, which he founded in 1986. Kalish & Associates serves advertisers,
marketers and advertising agencies throughout the country, including three New
York Stock Exchange companies. Prior to founding Kalish & Associates, Mr. Kalish
managed Kalish & Rice, Inc., one of the largest advertising agencies in
Philadelphia. Mr. Kalish served as a member of the Board of Directors of
Checkpoint Systems, Inc., a New York stock exchange company, from 1993 to 1997.

Mr. MacDonald was elected a director in March 1999. He is also Chairman of the
Board and Chief Executive Officer of Medifast, Inc (MDFT.OB), a position he has
held since January 1998. Prior thereto, he was appointed as Program Director of
the U.S. Olympic Coin Program of the Atlanta Centennial Olympic Games. From 1991
through 1994, Mr. MacDonald returned to active duty to be Deputy Director and
Chief Financial Officer of the Retail, Food and Hospitality and Recreation
Business for the United States Marine Corps. Prior thereto, Mr. MacDonald served
as Chief Operating Officer of the Bonnie Sunglass Company, President of
Pennsylvania Optical Co., Chairman and CEO of Mac Donald and Associates' which
had major financial interests in a retail drug, consumer candy, and pilot
sunglass companies. Mr. Mac Donald was national president of the Marine Corps
Reserve Officer Association and retired from the United States Marine Corps as a
Colonel in 1997, after 27 years of service.

Mr. Cole was elected as a director in February 2000. He is currently the CEO of
Intelligrated, Inc., a position he has held since June of 2001. From April 2000
to June 2001 Mr. Cole served as President of Cole Consulting. Until the
acquisition of Pinnacle Automation by FKI, Plc. in early 2000, Mr. Cole was
employed by Pinnacle Automation as its Chief Operating Officer and served as a
director of Pinnacle Automation since June 1997 and as Executive Vice President
from March 1994 to June 1997. Mr. Cole served as Vice President of Cincinnati
Milacron, from 1987 through March of 1994.

                                       15
<PAGE>

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACTS OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers and persons who own more than ten
percent of its Common Stock to file with the Securities and Exchange Commission
and The Nasdaq Stock Market initial reports of ownership and reports of changes
in ownership of Common Stock and other equity securities of the Company.

To the best of our knowledge, based solely on a review of the copies of such
reports furnished to us and written representations with respect to the year
ended December 31, 2004, our officers, directors and greater than ten percent
shareholders were in compliance with all applicable Section 16(a) filing
requirements.

ITEM 11.  EXECUTIVE COMPENSATION

The following table sets forth for the years ended December 31, 2004, 2003, and
2002;
the compensation for services rendered in all capacities to the Company and
subsidiaries by the Chief Executive Officer, the Company's other executive
officer and key management personnel for the year ended December 31, 2004.

                           SUMMARY COMPENSATION TABLE
                           --------------------------
NAME AND PRINCIPAL POSITION                YEAR         SALARY
---------------------------                ----         ------
Stephen Rade                               2004        $240,692
Chief Executive Officer                    2003         192,808
President and Chairman of the Board        2002         198,000

Ronald E. Badke                            2004        $128,308
Chief Financial Officer and                2003         133,212
Secretary                                  2002         146,000

Susan Rade                                 2004        $185,870
Vice President                             2003         192,657
Sales Account manager                      2002         229,047

Dawn Kenderdine                            2004        $123,023
New Business Development Manager           2003         103,897
Purchasing Director                        2002         113,260

EMPLOYMENT AGREEMENTS

In January, 2005, the Company entered into an employment agreement with its
Chairman of the Board and Chief Executive Officer, Stephen Rade commencing on
January 1, 2005 and expiring on December 31, 2006. The agreement calls for an
annual salary of $250,000 and an annual bonus of $50,000 predicated on Mr. Rade
achieving certain financial targets. The agreement also provides that Mr. Rade
can receive 5% of the value of any acquisitions under conditions stipulated in
the contract. Prior employment agreements with each of Messrs. Rade, and Badke
terminated on April 1998 and March 1999, respectively.

                                       16
<PAGE>

COMPENSATION OF DIRECTORS:

We instituted the payment of fees for attendance at Board and related committee
meetings in late 2003. Each director will be paid $1,000 for each regular Board
Meeting and $500 for each Committee meeting attended. We also reimburse those
directors who are not employees of the Company for their expenses incurred, if
any, in attending meetings.

In 2005, the Directors will be paid a flat $2,500 for attendance at Board
meetings and committee meetings for the year. In addition, in 2005, each
Director will receive a grant of shares of the Company's Common Stock totaling a
fair market value at grant date not to exceed $5,000.

The Company previously had approved the annual grant of stock options to
purchase the Company's common stock to certain directors in accordance with the
1995 Stock Option Plan. Specifically, the board approved the following grants:

     o    to the chairperson of the board (if not also an employee of the
          Company): 15,000 options to purchase shares of common Stock (the
          "Chairperson Options");

     o    to every other director (if not also an employee of the Company):
          8,000 options to purchase shares of common stock (The "Director
          Options"); and

     o    to each director who is a member of the board committee: 3,000 options
          to purchase shares of common stock multiplied by the number of
          committees on which the director sits ("Committee Options").

A director who receives Chairperson Options may not also receive Director
Options, unless the board determines otherwise.

Half of any options granted vest on the date they are granted, with the
remaining half vesting one year later; provided that these options will
terminate and never vest if the director receiving them does not attend at least
75% of the meetings of the board (or meetings of the applicable board committee,
in the case of Committee Options) held during the one year period following the
date the options are granted.

No option shares were granted to any Director under this plan in either 2003 or
2004.

In June 2002, the Board approved the issuance of 40,000 shares of the Company's
Common Stock to its non-employee directors for service on the Board and it's
various committees. The stock was issued in late April 2003 and includes a total
of 10,000 shares each to Christopher McConnell, Christopher Cole, Bradley
MacDonald and Alan Kalish, respectively.
In June 2004, the Board approved the issuance of 40,000 shares of the Company's
Common Stock to its non-employee directors for service on the Board and its
various committees. The stock was issued in the third quarter of 2004 with a
total of 10,000 shares each going to Christopher McConnell, Christopher Cole,
Bradley MacDonald and Alan Kalish, respectively.

                                       17
<PAGE>

STOCK OPTIONS

Under the Company's 1995 Stock Option Plan (the "Plan"), the Company's board of
directors or a stock option committee appointed by the board may grant stock
options to officers, key employees, directors, and independent consultants of
the Company. Currently, 1,000,000 shares of the Company's common stock are
reserved for issuance under the Plan.

The following table sets forth the details of the options held at the end of the
year December 31, 2004 by the executive officers set forth in the Summary
Compensation Table. Mr. Rade and Mr. Badke were not granted options under the
Plan during the year 2004.

                          FISCAL YEAR END OPTION VALUES

                           NUMBER OF SHARES UNDERLYING
                          UNEXERCISED OPTIONS AT FISCAL
                                  YEAR END (1)
                        ---------------------------------
NAME                             EXERCISABLE        UNEXERCISABLE
----                             -----------        -------------
Ronald E. Badke                       20,000                   --

(1) The exercise price of all outstanding options at December 31, 2004 was no
greater than the market value of the shares covered by those options.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

The following table sets forth certain information as of February 15, 2005, as
supplied to the Company, regarding the beneficial ownership of the Common Stock
by all persons known to the Company who own more than 5% of the outstanding
shares of the Company's Common Stock, each director of the Company, each
executive officer of the Company named in the Summary Compensation Table
included elsewhere in this report and all executive officers and directors as a
group. Unless otherwise indicated, based on information provided to the Company
by the directors, executive officers and principal shareholders, the persons
named in the table below have sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by them.

NAME*                                  NUMBER OF SHARES
                                      BENEFICIALLY OWED (1)       PERCENTAGE (2)
                                      ---------------------       --------------
Christopher F. McConnell (3)                 221,067                  5.0%
Stephen Rade                               1,198,000                 26.9%
Ronald E. Badke (4)                           24,800                   -- **
Christopher C. Cole (5)                       95,000                  2.1%
Allan Kalish (6)                              66,500                  1.2%
Bradley T. MacDonald (7)                      53,000                   -- **
Directors and Officers as a group          1,658,367                 37.2%
(6 persons)(7)

                                       18
<PAGE>

*The business address of each shareholder named in this table, is Wireless
Xcessories Group, Inc., 1840 County Line Road, Huntingdon Valley, PA 19006.
**Less than 1%.

(1) For purposes of this table, a person or group is deemed to have "beneficial
    ownership" of any shares, which such person has the right to acquire within
    60 days.

(2) Percentage ownership is based on 4,458,195 shares of Common Stock
    outstanding net of Treasury Stock on February 15, 2005. For purposes of
    computing the percentage of outstanding shares held by each such person or
    group of persons named above, any security which such person or group of
    persons has the right to acquire within 60 days is deemed to be outstanding,
    but is not deemed to be outstanding for the purpose of computing the
    percentage ownership of any other person.

(3) Includes exercisable options to purchase 45,000 shares.

(4) Includes exercisable options to purchase 20,000 shares and 4,800 vested
    common stock shares under the Company's restricted stock program.

(5) Includes exercisable options to purchase 42,000 shares.

(6) Includes exercisable options to purchase 39,000 shares.

(7) Includes exercisable options to purchase 146,000 shares .

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We employ Susan Rade, wife of Stephen Rade, current CEO, as the highest volume
sales person with certain administrative functions. In this role, Mrs. Rade
earns the bulk of her compensation as part of our sales incentive commission
programs earning $185,869 and $192,657 in the twelve months December 31, 2004
and 2003, respectively, including draws, commission and a $36,000 salary for
administrative duties.

PITEM 14.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our chief executive officer and chief financial
officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.

                                       19
<PAGE>

As of February 15, 2005 we completed an evaluation, under the supervision and
with the participation of our management, including our chief executive officer
and chief financial officer, of the effectiveness of the design and operation of
our disclosure controls and procedures. Based on the foregoing, our chief
executive officer and chief financial officer concluded that the Company's
disclosure controls and procedures were effective.

Changes in Internal Controls:

There have not been any significant changes in the Company's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation.























                                       20
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-KSB

         (a) The following documents are filed as a part of this Report.

         SCHEDULE F- and 2. FINANCIAL STATEMENTS - The financial statements and
         schedules required by this item begin on page F-1 of this report. The
         Reports of Independent Certified Public Accountants appear on pages
         F-2, F-3 and F-4 of this report.

         3. EXHIBITS - The following is a list of exhibits. Where so indicated
         by footnote, exhibits, which were previously filed, are incorporated by
         reference.

         (b) REPORTS ON FORM 8-K
         On December 26, 2002, we filed a Current Form 8-K with respect to the
         fact that on December 26, 2002 we replaced BDO Seidman LLP as the
         Company's independent auditors and appointed Bagell, Josephs & Company,
         L.L.C. to audit the Company's consolidated financial statements for the
         year ended December 31, 2002.



ITEM 16. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Audit and Non-Audit Fees:

         For the years ended December 31, 2003 and 2004, fees billed for
         services performed by Bagell, Josephs & Company, L.L.C., the Company's
         independent auditor, charged to the Company for the annual certified
         audits, for 10Q filings for the quarters ended March 31, June 30 and
         September 30, 2003 and 2004 and miscellaneous services, were as
         follows:



                                     FISCAL              FISCAL
                                    YEAR 2003           YEAR 2004
                                    ---------           ---------
         Annual certified audit        30,000              31,500
         10Q reviews                   15,000              15,000
         Other charges                  2,000               2,000
                                    ---------           ---------
             TOTAL                     47,000              48,500
                                    =========           =========



         All above charges were included as an expense to the Company in the
         respective years listed above.



                                       21
<PAGE>


                      WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS







                                                                           PAGE
                                                                           ----


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                    F-2


CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2003               F-3


CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED
DECEMBER 31, 2004 AND 2003                                                 F-5


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS
ENDED DECEMBER 31, 2004 AND 2003                                           F-6


CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 2004 AND 2003                                                 F-7


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                 F-9














                                       F-1
<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of Wireless Xcessories Group, Inc.
Huntingdon Valley, PA

We have audited the accompanying consolidated balance sheets of Wireless
Xcessories Group, Inc. and Subsidiaries as of December 31, 2004 and 2003 the
related consolidated statements of income, stockholders' equity and cash flows
for the year then ended. These consolidated financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements and schedules. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Wireless Xcessories
Group, Inc. and Subsidiaries as of December 31, 2004 and 2003 and the
consolidated results of its operations and changes in stockholders' equity and
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.


BAGELL, JOSEPHS & COMPANY, L.L.C.

Gibbsboro, New Jersey
February 23, 2005





                                       F-2
<PAGE>

                 WIRELESS XCESSORIES GROUP, INC AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2004 AND 2003

                                     ASSETS





<TABLE><CAPTION>
                                                             2004           2003
                                                         ------------   ------------
<S>                                                      <C>            <C>
CURRENT ASSETS
   Cash and cash equivalents                             $  1,907,282   $  1,316,515
   Accounts receivable (net of allowance for doubtful
      accounts of $157,142 and $536,345, respectively)      1,130,568        729,842
   Inventories                                              1,559,063      1,437,604
   Prepaid expenses and other assets                          204,390        127,822
   Current maturities of notes receivable                      13,433        161,191
                                                         ------------   ------------

          Total current assets                              4,814,736      3,772,974

PROPERTY AND EQUIPMENT - Net                                  448,555        520,126

NOTES RECEIVABLE-NET OF CURRENT PORTION                            --         13,433

OTHER ASSETS                                                   35,751         35,751
                                                         ------------   ------------

Total assets                                             $  5,299,042   $  4,342,284
                                                         ============   ============
</TABLE>









                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       F-3
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

                      LIABILITIES AND STOCKHOLDERS' EQUITY





<TABLE><CAPTION>
                                                             2004           2003
                                                         ------------   ------------
<S>                                                      <C>            <C>
CURRENT LIABILITIES
   Current portion of long-term debt                     $      1,999   $      4,335
   Accounts payable                                           972,581        652,616
   Net liabilities of discontinued operations                  35,757         35,757
   Accrued payroll and related benefits                       191,607         92,771
   Amounts due to officer                                          --        102,857
   Other accrued expenses                                      44,874         93,779
                                                         ------------   ------------

          Total current liabilities                         1,246,818        982,115
                                                         ------------   ------------

LONG-TERM DEBT                                                     --          1,938



STOCKHOLDERS' EQUITY
   Preferred stock, par value $.001, 1,000,000 shares
        authorized, no shares issued or outstanding                --             --
   Common stock, par value $.001, 10,000,000 shares
        authorized, 5,327,080 and 5,262,080 issued in
        2004 and 2003, respectively                             5,327          5,262
   Additional paid-in capital                              11,363,939     11,341,466
   Accumulated deficit                                     (6,863,620)    (7,872,036)
   Treasury stock, at cost, 868,885 and 448,110
        shares, respectively                                 (453,422)      (116,461)
                                                         ------------   ------------

          Total stockholders' equity                        4,052,224      3,358,231
                                                         ------------   ------------

Total liabilities and stockholders' equity               $  5,299,042   $  4,342,284
                                                         ============   ============
</TABLE>







                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       F-4
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003





<TABLE><CAPTION>
                                                             2004           2003
                                                         ------------   ------------
<S>                                                      <C>            <C>
Net sales                                                $ 15,307,452   $ 11,469,069
Cost of sales                                               8,479,276      6,203,437
                                                         ------------   ------------

Gross profit                                                6,828,176      5,265,632

Selling, general and administrative expenses               (5,919,663)    (5,436,222)
                                                         ------------   ------------

Income (Loss) from operations                                 908,513       (170,590)

Other Income (Expense):
   Gains from disposition of Property                          31,500             --
   Gains on sale of Investments                                50,276             --
   Interest income                                             22,803         22,094
   (Interest expense)                                          (4,676)       (15,547)
                                                         ------------   ------------
Net Income (Loss) before Income taxes                       1,008,416       (164,043)

Income tax expense                                                 --             --
                                                         ------------   ------------

Net Income (loss)                                        $  1,008,416   $   (164,043)
                                                         ============   ============

Earnings (Loss) per common share
 - Basic and Diluted:
   Net Income (loss)                                     $       0.21   $      (0.03)
                                                         ============   ============


Weighted average number of common
shares outstanding - Basic                                  4,692,093      4,829,406
                                                         ============   ============

Weighted average number of common
shares outstanding - Diluted                                4,759,335      4,829,406
                                                         ============   ============
</TABLE>











                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       F-5
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003





<TABLE><CAPTION>
                                   COMMON STOCK                                             TREASURY STOCK
                             -------------------------     PAID-IN     ACCUMULATED    --------------------------
                                SHARES        AMOUNT       CAPITAL       DEFICIT         SHARES         AMOUNT          TOTAL
                             -----------   -----------   -----------   -----------    -----------    -----------    -------------
<S>                          <C>           <C>           <C>           <C>            <C>            <C>            <C>
BALANCE, DECEMBER 31, 2002     5,222,080   $     5,222   $11,331,106   $(7,707,993)      (344,810)   $   (88,527)   $3,539,808.00
Stock Issued                      40,000   $        40   $    10,360                       40,000    $     9,200    $   19,600.00
Stock repurchased                     --            --            --            --       (143,300)       (37,134)         (37,134)
Net (loss)                            --            --            --      (164,043)            --             --         (164,043)
                             -----------   -----------   -----------   -----------    -----------    -----------    -------------

BALANCE, DECEMBER 31, 2003     5,262,080         5,262    11,341,466    (7,872,036)      (448,110)      (116,461)       3,358,231
Stock Issued                      65,000            65        22,473                       73,000         38,092           60,630
Stock repurchased                     --            --            --            --       (493,775)      (375,053)        (375,053)
Net (loss)                            --            --            --     1,008,416             --             --        1,008,416
                             -----------   -----------   -----------   -----------    -----------    -----------    -------------

BALANCE, DECEMBER 31, 2004     5,327,080   $     5,327   $11,363,939   $(6,863,620)      (868,885)   $  (453,422)   $   4,052,224
                             ===========   ===========   ===========   ===========    ===========    ===========    =============
</TABLE>











                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       F-6
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003





<TABLE><CAPTION>
                                                                           2004            2003
                                                                       ------------    ------------
<S>                                                                    <C>             <C>
OPERATING ACTIVITIES:
   Net Income (loss)                                                   $  1,008,416    $   (164,043)

Adjustments to reconcile net income (loss) to net Cash provided by
operating activities:
   Depreciation and amortization                                            336,914         485,363
   Provision for doubtful accounts                                          110,368         231,820
   Common Stock issued to Directors, Officer and employees                   60,630          19,600
Changes in assets and liabilities, net of effects from dispositions:
   Accounts receivable                                                     (511,094)         46,696
   Inventories                                                             (121,459)        (56,703)
   Income tax refund receivable                                                  --              --
   Prepaid expenses and other assets                                        (85,082)        116,146
   Accounts payable and accrued expenses                                    267,039        (191,389)
                                                                       ------------    ------------

          Net cash provided by operating activities                       1,065,732         487,490
                                                                       ------------    ------------

INVESTING ACTIVITIES:
   Purchases of property and equipment, net                                (256,829)       (228,608)
   from sale of subsidiaries
   Principal payment received on note receivables                           161,190         143,146
                                                                       ------------    ------------

          Net cash (used in)  investing activities                          (95,639)        (85,462)
                                                                       ------------    ------------
</TABLE>




                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       F-7
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003





<TABLE><CAPTION>
                                                                    2004            2003
                                                                ------------    ------------
<S>                                                             <C>             <C>
FINANCING ACTIVITIES:
   Payments on capital lease obligation                         $     (4,274)   $    (33,816)
   Repurchase of common stock                                       (375,053)        (37,135)
                                                                ------------    ------------

          Net cash (used) in financing activities                   (379,327)        (70,951)
                                                                ------------    ------------

NET INCREASE IN CASH AND
CASH EQUIVALENTS                                                     590,767         331,077

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                      1,316,515         985,438
                                                                ------------    ------------

CASH AND CASH EQUIVALENTS - END OF YEAR                         $  1,907,282    $  1,316,515
                                                                ============    ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

   Cash paid during year for:
       Interest                                                 $      4,676    $     15,547
                                                                ============    ============

       Income taxes                                                       --              --
                                                                ============    ============


Supplemental Disclosure of Non-Cash Activity:
       Common Stock issued to Directors, Officer and Employee   $     60,630    $     19,600
                                                                ============    ============
</TABLE>





                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       F-8
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Business description- Wireless Xcessories Group, Inc. and subsidiaries
          (collectively, the "Company") are engaged in the distribution of
          cellular accessories and components principally in the United States.

          Principles of Consolidation- The consolidated financial statements
          include the accounts of the Wireless Xcessories Group, Inc. and it's
          wholly owned subsidiaries. All material intercompany transactions have
          been eliminated.

          Cash equivalents- The Company considers all highly liquid investments
          with a maturity date of three months or less from the date of purchase
          to be cash equivalents.

          Concentration of Risk- The Company has not experienced any losses on
          its cash accounts or short-term investments. The Company sells its
          products to commercial businesses. Through its continuing
          relationships with these customers, the Company performs credit
          evaluations and generally does not require collateral. The Company
          maintains a reserve for potential credit losses. One customer
          accounted for 18.4% of sales in 2004 and no other Customer accounted
          for greater than 5% of consolidated net sales during any of the years
          presented.

          In 2004, the Company purchased approximately 61% of its products from
          two Far East and one Domestic supplier accounting for approximately
          32%, 19% and 10% respectively, of total purchases. No other vendor
          accounted for 10% or more of our purchases. In 2003, the Company
          purchased approximately 64% of its products from three Far East
          suppliers accounting for approximately 33%, 20% and 11%, respectively,
          of total purchases. No other vendor accounted for 10% or more of our
          purchases.

          Inventories- Inventories, which consist solely of finished goods, are
          carried at the lower of cost, determined on a first-in, first-out
          basis (FIFO), or market value.

                                       F-9
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003


          Property and Equipment- Property and equipment are stated at cost.
          Additions and improvements are capitalized. Maintenance and repairs
          are expensed as incurred. Depreciation and amortization of property
          and equipment is calculated under the straight-line method over the
          estimated useful lives of the respective assets. Estimated useful
          lives are five to seven years for furniture and fixtures and three to
          ten years for machinery and equipment. Leasehold improvements are
          amortized over the shorter of their estimated useful lives or the
          terms of their leases. Depreciation and amortization expense was
          $336,914 and $485,363 in 2004 and 2003, respectively, and is included
          in selling, general and administrative expense in the consolidated
          statements of operations.

          Revenue Recognition- Revenue is recognized at the time of shipment.

          Shipping and Handling Fees- The Company records revenues derived from
          shipping and handling in net sales and the costs associated with
          shipping and handling in cost of sales.

          Income Taxes- The Company accounts for income taxes in accordance with
          Statement of Financial Accounting Standards ("SFAS") No. 109,
          "Accounting for Income Taxes." Under the liability method specified by
          SFAS No. 109, a deferred tax asset or liability is determined based on
          the difference between the financial reporting basis and tax basis of
          assets and liabilities, measured using enacted tax rates. The impact
          of changes in tax rates is reflected in income in the period in which
          the change is enacted

                                      F-10
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          Earnings (Loss) per share- Basic earning (Loss) per share (EPS) is
          computed using the weighted average number of common shares
          outstanding for the period while diluted EPS is computed assuming
          conversion of all dilutive securities such as options. Included below
          is a reconciliation of shares for the basic and diluted EPS
          computations.

                                                    2004          2003
                                                 ---------     ---------
          Basic EPS Shares                       4,692,093     4,829,406


          Dilutive effect of stock options
            and warrants                            67,242             0
                                                 ---------     ---------

          Diluted EPS shares                     4,759,335     4,829,406
                                                 =========     =========

          Options to purchase 183,500 shares with exercise prices ranging from
          $.28 to $4.44 were outstanding at December 31, 2004 of which shares
          were included in the computation of diluted EPS. Options to purchase
          216,500 shares with exercise prices ranging from $.28 to $4.44 were
          outstanding at December 31, 2003, but were not included in the
          computation if diluted EPS because inclusion would be anti-dilutive.

          Disclosures About Fair Value of Financial Instruments- The carrying
          values of cash, and cash equivalents, and long-term debt approximate
          their respective fair values.

          Employee Stock Options-The Company applies Accounting Principles Board
          Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued to
          Employees," which recognizes compensation costs based on the intrinsic
          value of an equity instrument. The Company has applied APB No. 25 to
          its stock compensation awards to employees and has disclosed the
          required pro forma effect on net income (loss) income per share in
          accordance with the provisions of SFAS No. 123, "Accounting for
          Stock-Based Compensation" and has adopted the enhanced disclosure
          provisions of

          SFAS No. 148 "Accounting for Stock-Based Compensation- Transition and
          Disclosure, an amendment of SFAS No. 123" (See Note 5).

                                      F-11
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

          Reclassifications- Certain prior year amounts may have been
          reclassified to conform to current year presentation.

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

          RECENT ACCOUNTING PRONOUNCEMENTS-

          In August 2001, the Financial Accounting Standards Board ("FASB")
          issued SFAS No. 144, "Accounting for the Impairment or Disposal of
          Long-Lived Assets" ("SFAS 144"). This statement addresses financial
          accounting and reporting for the impairment or disposal of long-lived
          assets. The new guidance resolves significant implementation issues
          related to SFAS 121, "Accounting for the Impairment of Long-Lived
          Assets to be Disposed Of." SFAS 144 is affected for fiscal years
          beginning after December 21, 2001 and interim periods within those
          fiscal years. Adoption of SFAS 144 on January 1, 2002 did not have any
          impact on the Company's financial position, cash flows, or results of
          operations for the years ended December 31, 2004 and 2003.

          In December 2002, the FASB issued Statement No. 148, "Accounting for
          Stock-Based Compensation-Transition and Disclosure, an amendment of
          FASB Statement No. 123"("SFAS 148"). SFAS 148 amends FASB Statement
          No. 123, "Accounting for Stock-Based Compensation," to provide
          alternative methods of transition for an entity that voluntarily
          changes to the fair value based method of accounting for stock-based
          employee compensation. It also amends the disclosure provisions of
          that Statement to require prominent disclosure about the effects on
          reported net income of an entity's accounting policy decisions with
          respect to stock- based employee compensation. Finally, this Statement
          amends Accounting Principles Board ("APB") Opinion No. 28, "Interim
          Financial Reporting", to require disclosure about those effects in
          interim financial information. SFAS 148 is effective for financial
          statements for fiscal years ending after December 15, 2002. The
          Company will continue to account for stock-based employee compensation
          using the intrinsic value method of APB Opinion No. 25, "Accounting
          for Stock Issued to Employees," but has adopted the enhanced
          disclosure requirements of SFAS 148

                                      F-12
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003


NOTE 2 - PROPERTY AND EQUIPMENT - NET

          Property and equipment consists of the following:

                                                          DECEMBER 31,
                                                      2004           2003
                                                  -----------    -----------
          Machinery and equipment                 $ 2,919,515    $ 2,669,243
          Furniture and fixtures                      416,153        416,153
          Vehicles                                     38,463         38,463
          Leasehold improvements                      253,482        246,926
                                                  -----------    -----------
                                                    3,627,613      3,370,785

          Less accumulated depreciation
            and amortization                       (3,179,058)    (2,850,659)
                                                  -----------    -----------
          Property and equipment, net             $   448,555    $   520,126
                                                  ===========    ===========


NOTE 3 - LONG-TERM DEBT

          Long-term debt consists of the following:

                                                          DECEMBER 31,
                                                      2004           2003
                                                  -----------    -----------
          Revolving Credit Facility               $       --     $       --
          Capital Leases                                  --           6,273
                                                  -----------    -----------
                                                        1,999          6,273
          Less current portion                         (1,999)        (4,335)
                                                  -----------    -----------
          Long-term debt, net of current portion  $       --     $     1,938
                                                  ===========    ===========


                                      F-13
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003


NOTE 4 - STOCKHOLDERS' EQUITY

          PREFERRED STOCK- The Board of Directors of the Company, without action
          by the stockholders, is authorized to issue shares of Preferred Stock
          in one or more series and, within certain limitations, to determine
          the voting rights (including the right to vote as a series on
          particular matters), preferences as to dividends and in liquidation,
          conversion, redemption, and other rights of each such series. The
          Board of Directors could issue series with rights more favorable with
          respect to dividends, liquidation and voting than those held by the
          holders of any class of Common Stock.

          COMMON STOCK- The shares of Common Stock have one vote per share. None
          of the shares have preemptive or cumulative voting rights, redemption
          rights, are or will be liable for assessment or further calls. The
          holders of the Common Stock are entitled to dividends when declared
          from funds legally available therefore.

          The Board of Directors have approved a stock buyback program and have
          authorized management to repurchase a total of up to 1,250,000 shares
          of Common Stock at a total cost not to exceed $1,000,000 through July
          5, 2005. As of December 31, 2004 and 2003, the Company has repurchased
          cumulatively 981,775 ( and subsequently reissued approximately 113,000
          shares) and 488,110 shares at an average price of $0.51 and $0.26 per
          share, respectively.

          In April 2003, the Company issued 10,000 shares of the Company's
          Common Stock to each of the four non-employee directors of the Company
          for a total of 40,000 shares. Compensation expense of $9,200 has been
          charged to the financial statements as of December 31, 2003 to
          recognize the fair value of the shares as of the date of grant.

          In August 2004, the Company issued 10,000 shares of the Company's
          Common Stock to each of the four non-employee directors of the Company
          for a total of 40,000 shares. Compensation expense of $24,000 has been
          charged to the financial statements as of December 31, 2004 to
          recognize the fair value of the shares as of the date of grant.

          In August of 2003, the Board approved the adoption by the Company of a
          restricted employee stock plan authorizing the Company to issue up to
          250,000 shares of its Common Stock to an officer and key managers and
          employees of the Company. Each share issuance to a designated employee
          is subject to the following vesting provision:

          20% upon on the issuance of each individual grant.

          20% on each consecutive one year anniversary from the original date of
          issuance.

                                      F-14
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003


          In October 2003 the Company under this plan issued 8,000 shares of
          Common Stock to an officer of the Company and 32,000 to four other key
          Managers with 1,600 and 6,400 shares, respectively, being immediately
          vested.

          Compensation expense of $10,400 has been charged to the financial
          statements as of December 31, 2003 to recognize the fair value of the
          shares as of the date of the plan.

          In August 2004 the Company under this plan issued 10,000 shares of
          Common Stock to one senior manager of the Company with 2,000 shares
          being immediately vested.

          In October 2004 the Company under this plan issued 8,000 shares of
          Common Stock to an officer, 10,000 shares to a senior manager and
          37,000 to six other key managers.

          Compensation expense of $14,300 has been charged to the financial
          statements as of December 31, 2004 to recognize the fair value of the
          shares as of the date of the plan that was issued in 2004.

          STOCK OPTIONS- The Company, on June 6, 1995, adopted the Company's
          Stock Option Plan (the "Plan"), which as amended in December 1995,
          authorizes the Board of Directors or a Stock Option Committee
          appointed by the Board to grant up to 250,000 qualified stock options
          and non-qualified stock options to officers and key employees,
          directors, and independent consultants. Directors who are not
          employees and consultants are eligible only to receive non-qualified
          stock options. The Board of Directors in 1995 granted under the Plan
          options to purchase 20,720 shares of Common Stock to two directors at
          a price of $2.89 per share. In 1996, the Company granted under the
          Plan five-year options to purchase an aggregate of 195,000 shares of
          Common Stock to employees. The options are exercisable at the initial
          offering price per share of $5.00. In 1997, the Company granted, under
          the Plan, five-year options to Purchase an aggregate of 75,000 shares
          of Common Stock to employees of the Company. The options are
          exercisable at prices ranging from $2.80 to $4.50 per share. In 1998,
          the shareholders of the Company approved an amendment to the Plan
          increasing the number of shares granted by 350,000 to an aggregate
          total of 600,000 for the Plan. In addition in 1998, the Company
          granted, under the Plan, five-year options to purchase an aggregate of
          455,000 shares of Common Stock to directors and employees of the
          Company. The options are exercisable at prices ranging from $1.38 to
          $2.69 per share. In 1999, the Company granted, under the Plan,
          one-year options to purchase 85,000 shares of Common Stock to a
          director of the Company. The options are exercisable at prices ranging
          from $1.38 to $1.88 per share. The Company also granted, under the
          Plan, ten-year options to purchase 95,000 shares of Common Stock to
          directors and

                                      F-15
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

NOTE 4 - STOCKHOLDERS' EQUITY (CONTINUED)

          employees of the Company. The options are exercisable at $1.38 per
          share.

          In 2000, the stockholders of the Company approved an amendment to the
          Plan increasing the number of shares reserved for issuance by 400,000
          to an aggregate of 1,000,000 under the Plan. In addition in 2000, the
          Company granted, under the Plan, ten-year options to purchase an
          aggregate of 138,500 shares of Common Stock to directors and employees
          of the Company. In 2001, the Company granted, under the Plan, ten-year
          options to purchase a total of 65,000 shares of Common Stock at $.375
          per share to the directors of the Company. In 2002, the Company
          granted, under the plan, ten-year options to purchase a total of
          51,000 shares of Common Stock at $0.28 per share to the directors of
          the Company. In 2003, the Company did not grant any options under the
          plan. In December, 2004, a Director of the Company exercised a total
          of 33,000 options from three different issuances at their respective
          fair market value's at their respective date of issuance totaling at
          an average price of $.67 per share. At December 31, 2004 and 2003,
          there were a total of 694,152 shares available for grant.

          The following information pertains to the stock options outstanding
          for the two years ending December 31, 2004:


                                              Weighted              Exercisable
                                   Number     Average                Wtd. Avg.
                                     of        Share      Options    Exercise
                                   Shares      Price      Shares      Price
                                  --------     -----     --------     -----
Options outstanding at
  December 31, 2002                302,152      1.18      256,152      1.21
     Granted ..................       --         --

     Forfeited ................    (85,652)    (1.37)
                                  --------     -----     --------     -----
Options outstanding at
  December 31, 2003                216,500     $1.05      207,000     $1.04


     Granted ..................       --         --
     Exercised ................    (33,000)     (.67)
                                  --------     -----     --------     -----
Options outstanding at
  December 31, 2004                183,500     $1.12      183,500     $1.12
                                  ========     =====     ========     =====


                                      F-16
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

NOTE 4 - STOCKHOLDERS' EQUITY (CONTINUED

          The following table summarizes information as of December 31, 2004
          concerning currently outstanding and exercisable options:

          Options outstanding and exercisable

                              Weighted
                              Average
                             Remaining
                            Contractual

                                         Weighted
                                         Average                     Weighted
   Range of        Number       Life     Exercise     Number         Average
Exercise Price   Outstanding  (Years)     Price     Exercisable   Exercise Price
--------------------------------------------------------------------------------
 $0.28-80,000      80,000       7.7      $ 0.33       80,000         $ 0.33
 $1.01-92,500      92,500       5.3      $ 1.41       92,500         $ 1.41
 $4.01-11,000      11,000       5.1      $ 4.44       11,000         $ 4.44



          The outstanding stock options as of December 31, 2004 vest as follows:
          (a) half of the options shares are vested on the date of the grant
          with an additional one-half vesting in the first anniversary therefrom
          (136,000 options outstanding at December 31, 2004) or (b) one-fifth of
          the options shares are vested on the date of grant with an additional
          one-fifth vesting on the first, second, third, and forth anniversaries
          therefrom, respectively (47,500 shares outstanding at December 31,
          2004).

          As provided for in SFAS No. 123, "According for Stock-Based
          Compensation," The Company utilizes the intrinsic value method of
          expense recognition under APB No. 25. Accordingly, no compensation
          cost has been recognized for the stock option plans as all options
          have been issued with exercise prices equal to fair market value. Had
          compensation expense for the stock option plans been determined
          consistent with the provisions of SFAS No. 123 and SFAS No. 148, the
          Company's net income and net income per share would have been the pro
          forma amounts indicated below:

                                      F-17
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

NOTE 4 - STOCKHOLDERS' EQUITY (CONTINUED)

                                                        2004           2003
                                                    -----------    -----------
          As reported income (loss)
            from continuing operations:
          Add: Stock-based compensation             $ 1,008,416    $  (164,043)
            expense included in reported (loss)
            income from continuing operations
            net of related tax effects                      --             --
          Deduct: Total stock-based
            employee compensation expense
            determined under fair value based
            method for all awards, net of related
            tax effects                                  (1,164)        (6,521)
                                                    -----------    -----------
          Pro forma income (loss) from
            continuing operations                   $ 1,007,252    $  (170,564)
                                                    ===========    ===========
          Basic and Diluted income (loss)
            from continuing operations per
            common share:
          As reported                               $      0.21    $     (0.03)
          Pro forma                                 $      0.21          (0.03)


          There were no options granted during the years ended December 31 2003
          and 2004. The fair value of each outstanding option grant was
          estimated on the date of grant using the Black-Scholes option pricing
          model with the following weighted average assumptions: risk-free
          interest rate of 5.7%, for both 2004 and 2003; expected dividend yield
          of 0%; expected life of 6.9 years; and expected volatility of 100% for
          2004 and 2003, respectively.


                                      F-18
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

NOTE 5 - INCOME TAXES

          The provision (benefit) for income taxes on continuing operations
          consists of:

                                                     2004          2003
          Current:
          Federal                                 $  252,420    $ (132,385)
          State                                       28,364       (18,804)
                                                  ----------    ----------
                                                     280,784      (151,189)
                                                  ==========    ==========

          Deferred:
          Federal                                 $  252,420    $ (132,385)
          State                                       28,364       (18,804)
                                                  ----------    ----------
                                                     280,784      (151,189)
                                                  ==========    ==========
          Total provision
          For income taxes                               --            --
                                                  ==========    ==========


          In conformity with SFAS No. 109, deferred tax assets and liabilities
          are classified based on the financial reporting classification of the
          related assets and liabilities, which give rise to temporary book/tax
          differences. Deferred taxes related to the following temporary
          differences:

                                                               DECEMBER 31,
                                                            2004         2003
                                                         ----------   ----------
          Deferred income tax assets:
          Benefit of net operating loss carryforward     $  644,006   $  920,370
          Accrued compensation                               19,000       39,086
          Inventory reserve                                 118,268      106,011
          Bad debts reserve                                  59,714      131,416
          Sales returns and allowances                       45,957       35,254
          Goodwill                                          251,610      278,700
          Other                                              28,500       28,500
                                                         ----------   ----------
                                                          1,167,055    1,539,337
          Deduct:  Deferred income tax liabilities:
          State taxes                                        18,997       22,337
                                                         ----------   ----------
          Valuation allowance                             1,148,058    1,517,000
                                                         ----------   ----------
          Net deferred tax asset                         $      --    $      --
                                                         ==========   ==========


                                      F-19
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003


NOTE 5 - INCOME TAXES (CONTINUED)

          The effective income tax rate varied from the U.S. Federal statutory
          tax rate as follows:

                                                              2004       2003
                                                             ------     ------
          Statutory income tax rate                            34.0%    (34.0%)
          State income (benefit) taxes,
              net of federal tax benefit                        2.7       (3.0)
          Meals and entertainment                               0.4        1.6
          Other                                                (0.1)      (0.5)
          Valuation allowance                                 (37.0)      35.1
                                                             ------     ------
          Effective tax rate                                   0.0%       0.0%
                                                             ======     ======

          As of December 31, 2004 and 2003, the Company has federal and state
          net operating loss carry forward amounts of approximately $1,524,360
          and $3,032,850, respectively. These net operating loss carryforward
          amounts begin to expire in 2011. SFAS No. 109 requires the
          establishment of a deferred tax asset for all deductible temporary
          difference including operating loss carryforwards. The Company has
          provided a valuation allowance for all of its deferred tax assets as a
          result of the uncertainty that the Company will generate sufficient
          income in the future to fully or partially realize the net deferred
          tax asset of approximately $1,148,058. At December 31, 2004, the
          deferred tax asset has been offset by a valuation allowance of the
          same amount.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

          The Company is, from time to time, party to litigation arising in the
          normal course of its business. Based on consultation with legal
          counsel, management of the Company does not believe that any such
          claims or litigation will have a material adverse effect on the
          financial position or results of operations of the Company.

          The Company leases various types of warehouse and other space and
          equipment, furniture, and fixtures under non-cancelable operating
          lease agreements, which expire at various dates. Certain leases for
          warehouse and other space contain rental escalation clauses based on
          the Consumer Price Index. Future minimum lease payments under
          non-cancelable operating leases for the years ending December 31 are
          as follows:

                                      F-20
<PAGE>

                WIRELESS XCESSORIES GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003


NOTE 6 - COMMITMENTS AND CONTINGENCIES (CONTINUED)


              2005                                   $   448,911
              2006                                       436,411
              2007                                       444,062
              2008                                       480,618
          thereafter                                     161,494
                                                     -----------
          Total:                                     $ 1,971,496
                                                     ===========


          Rent expense exclusive of common area maintenance and real estate
          taxes, where applicable for all operating leases for the years ended
          December 31, 2004 and 2003 was $353,919 and $384,118, respectively.

          During 2000, the Company entered into certain capital leases for
          warehouse equipment. Total future lease payments under these lease
          obligations of $1,979 are due in 2005.

NOTE 7 - RELATED PARTY TRANSACTIONS

          The Company employs Susan Rade, wife of Stephen Rade, current Chief
          Executive Officer of the Company, as a sales person with certain
          administrative duties. In this role, Mrs. Rade earns the bulk of her
          compensation as part of the Company's sales incentive commission
          programs earning $185,870 and $192,657 in 2004 and 2003, respectively,
          including draws, commission and a $36,000 salary for administration
          duties.

NOTE 8 - SEGMENT DISCLOSURE

          The Company effectively operates in one business segment, the Wireless
          Products Segment, which distributes cellular telephone accessory
          products including batteries, chargers, and antennas throughout North
          America. The Wireless Products Segment is headquartered in Huntingdon
          Valley, Pennsylvania. All revenue and essentially all long-lived
          assets were related to operations in the United States as of and for
          the years ended December 31, 2004, and 2003.

          Export sales which are limited to the Americas excluding the United
          States were $103,128 and $38,829, respectively, for the years ended
          December 31, 2004 and 2003. Receivables from export sales at December
          31, 2004 and 2003 were $19,162 and $9,173, respectively.


                                      F-21
<PAGE>































                                       S-1
<PAGE>

                                     PART IV

          ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
          8-K

          (a) The following documents are filed as a part of this Report.

          1. and 2. FINANCIAL STATEMENTS -- The financial statements and
          schedules required by this item begin on page F-1 of this report. The
          Reports of Independent Certified Public Accountants appear on pages
          F-2, F-3 and F-4 of this report.

          3. EXHIBITS -- The following is a list of exhibits. Where so indicated
          by footnote, exhibits, which were previously filed, are incorporated
          by reference.

          (b) REPORTS ON FORM 8-K
          On December 26, 2002, we filed a Current Form 8-K with respect to the
          fact that on December 26, 2002 we replaced BDO Seidman LLP as the
          Company's independent auditors and appointed Bagell, Josephs &
          Company, L.L.C. to audit the Company's consolidated financial
          statements for the year ended December 31, 2002.

          On Sept. 1, 2004 we filed a Form 8-K relating to the Board of Director
          approval of an increase in the amount of shares authorized to be
          repurchased under the Company's stock Buy Back program to 1,250,000
          shares at a cost not to exceed $500,000.






                                       31
<PAGE>

EXHIBIT
NUMBER

     3.1  Certificate of Incorporation of Company and amendments thereto*

     3.2  By-Laws*

     4.1  Form of Common Stock Certificate*

     4.2  Form of Warrant*

     10.1 Warrant Agreement related to Redeemable Stock Purchase Warrants*

     10.2 Form of Purchase Option issued to underwriter of initial public
          offering*

     10.3 Form of Preferred Stock, Series A Certificate*

     10.4 1995 Stock Option Plan of Company*

     10.5 Forms of Option Agreement under the Plan

     10.6 Option issued to Mr. Robert W. Tauber*

     10.7 Management Services Agreement between the Company and Founders
          Management Services, Inc., as amended*

     10.8 Lease between Advanced Fox Antenna, Inc. and Rade Limited Partners*


     10.9 Registration Rights Agreement between the Company and Messrs. Tauber
          and Rade*

    10.10 Revolving Credit, Term Loan and Security Agreement, dated January 6,
          1997 among IBJ Schroder Bank & Trust Company as Agent and the Company,
          Advanced Fox Antenna, Inc., Tauber Electronics Inc., Battery
          Acquisition Corp., Specific Energy Corporation, Battery Network, Inc.
          and W.S. Battery & Sales Company, Inc.**

    10.11 Amendment No. 1 and Joinder Agreement dated __________ among the
          Company, certain of its affiliates and IBJ Schroder Bank & Trust
          Company***

    10.12 Waiver and Amendment to Revolving Credit, Term Loan and Security
          Agreement dated __________ by and among the Company, certain of its
          affiliates and IBJ Schroder Bank & Trust Company****

    10.13 Waiver and Amendment to Revolving Credit, Term Loan and Security
          Agreement dated __________ by and among the Company, certain of its
          affiliates and IBJ Schroder Bank & Trust Company*****


                                       32
<PAGE>


    10.14 Asset Purchase Agreement dated Jan 26, 2000 with respect to the sale
          of substantially all of the assets of Tauber Electronics, Inc.******

    10.15 Agreement and Plan of Merger dated February 28, 2001, by and among
          Wireless Xcessories Group, Inc., Accessory Solutions.com Inc.,
          Advanced Fox Antenna, Inc. and Cliffco of Tampa Bay.

    10.16 Waiver and Amendment to Revolving Credit, Term Loan and Security
          Agreement dated March 30, 2001 by and among the Company, certain of
          its affiliates and IBJ Schroder Bank & Trust Company

    10.17 Form of Warrant issued to each of Warren H. Haber and John L.
          Teeger**

     21   List of Subsidiaries

       *  Filed as an exhibit to the Company's Registration Statement on Form
          S-1 (File No. 33-80939) and incorporated by reference thereto.

      **  Filed as an exhibit to the Company's Current Report on Form 8-K for
          January 7, 1997 and incorporated by reference thereto.

     ***  Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
          the three months ended June 30, 1997 and incorporated by reference
          thereto.

    ****  Filed as an exhibit to the Company's Annual Report on Form 10-K for
          the year ended December 31, 1997 and incorporated by reference hereto.

   *****  Filed as an exhibit to the Company's Quarterly Report for the three
          months ended June 30, 1998 and incorporated by reference thereto.

  ******  Filed as an exhibit to the Company's Current Report on Form 8-K for
          January 27, 2000 and incorporated by reference thereto.

     99.1 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant
          to Section 906 of Sarbanes- Oxley Act of 2002

     99.2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant
          to Section 906 of Sarabanes- Oxley Act of 2002


                                       33
<PAGE>

                                   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.

WIRELESS XCESSORIES GROUP, INC.


By: /s/ Stephen Rade
    ---------------------
    Stephen Rade
    Chief Executive Officer and President


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


            NAME                          TITLE                      DATE
            ----                          -----                      ----

/s/ Stephen Rade                Chairman of the Board, Chief   February 28, 2005
----------------------------    Executive Officer, President
Stephen Rade                    and Director (principal
                                executive officer)


/s/ Ronald E. Badke             Chief Financial Officer        February 28, 2005
----------------------------    and Secretary (principal
Ronald E. Badke                 financial officer)


/s/ Christopher F. McConnell    Director                       February 28, 2005
----------------------------
Christopher F. McConnell


/s/ Allan Kalish                Director                       February 28, 2005
----------------------------
Allan Kalish


/s/ Christopher C. Cole         Director                       February 28, 2005
----------------------------
Christopher C. Cole


/s/ Bradley T. MacDonald        Director                       February 28, 2005
----------------------------
Bradley T. MacDonald



                                       34