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                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    Form 10-Q

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2001

                         Commission File Number 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)

                                 (215) 322-4600
                                 --------------
              (Registrant's telephone number, including area code)

                                       N/A
                                       ---
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

As of October 31, 2001, there were 5,153,830 shares of the registrant's Common
Stock, par value $.001 per share, outstanding.
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                                        1
<PAGE>
                         WIRELESS XCESSORIES GROUP, INC.
                FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2001

                                      INDEX

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

              Consolidated Condensed Balance Sheet September 30,
              2001 (unaudited) and December 31, 2000..........................3

              Consolidated Condensed Statements of Operations for
              the three and nine months ended September 30, 2001
              and 2000.(unaudited)............................................4

              Consolidated Statements of Cash Flows for the nine months
              ended September 30, 2001 and 2000(unaudited)....................5

              Notes to Consolidated Condensed Financial Statements............6

ITEM 2.       Management's Discussion and Analysis of Financial Condition
              and Results of Operations.......................................9

ITEM 3.       Quantitative and Qualitative Disclosures about Market
              Risk...........................................................12

PART II. OTHER INFORMATION

ITEM 6.       Exhibits and Reports on Form 8-K...............................13

                                        2
<PAGE>
                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                         WIRELESS XCESSORIES GROUP, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEET
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE><CAPTION>
                                                                               December 31,    September 30,
                                                                                   2000            2001
                   ASSETS                                                      ------------    ------------
                                                                                               (unaudited)
<S>                                                                            <C>             <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                    $        501    $        408
  Accounts receivable (net of allowance of                                            4,355           2,482
  $263 and $317, respectively)
  Inventories                                                                         4,896           2,594
  Prepaid expenses and other current assets                                           1,104           1,022
                                                                               ------------    ------------
                   Total Current Assets                                              10,856           6,506

  PROPERTY AND EQUIPMENT - Net                                                        1,721           1,408
  EXCESS OF COST OVER NET ASSETS
  ACQUIRED (Net of accumulated amortization of
    $153 and $0, respectively)                                                          908               -
  OTHER ASSETS                                                                          787             697
                                                                               ------------    ------------
  TOTAL ASSETS                                                                 $     14,272    $      8,611
                                                                               ============    ============
                   LIABILITIES AND STOCKHOLDERS' EQUITY

  CURRENT LIABILITIES:
  Current portion of long-term debt                                            $        330    $         55
  Bank overdraft                                                                        398             305
  Accounts payable                                                                    1,107             420
  Net liabilities on disposal of discontinued
    operations                                                                          464              79
  Accrued payroll and related benefits                                                  428             151
  Amounts due to officer                                                                367             299
  Other accrued expense                                                               1,227             830
                                                                               ------------    ------------
                   Total Current Liabilities                                          4,321           2,139
                                                                               ------------    ------------
   LONG-TERM DEBT                                                                     2,859           1,027
                                                                               ------------    ------------
 STOCKHOLDERS' EQUITY
  Preferred stock, par value $0.001, 1,000,000
    shares authorized, no shares issued or
    outstanding Common Stock, par value $.001,
    10,000,000 shares authorized, 5,222,080 issued                                        5               5
  Treasury Stock at cost 58,500 shares as of
   September 30, 2001                                                                     -             (24)
  Additional paid - in capital                                                       11,331          11,331
  Accumulated deficit                                                                (4,244)         (5,867)
                                                                               ------------    ------------
                    Total Stockholders' Equity                                        7,092           5,445
                                                                               ------------    ------------
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $     14,272    $      8,611
                                                                               ============    ============
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                        3
<PAGE>
                         WIRELESS XCESSORIES GROUP, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE><CAPTION>
                                                                       Three Months Ended               Nine Months Ended
                                                                           September 30                    September 30
                                                                   ----------------------------    ----------------------------
                                                                       2000            2001            2000            2001
                                                                   ------------    ------------    ------------    ------------
<S>                                                               <C>             <C>             <C>             <C>
NET SALES                                                          $      7,692    $      4,867    $     21,849    $     15,619
COST OF SALES                                                             3,958           2,931          11,002           8,879
                                                                   ------------    ------------    ------------    ------------
           Gross profit                                                   3,734           1,936          10,847           6,740

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                              3,198           3,315           9,683           8,675
INTEREST EXPENSE, net                                                        69              21             243             100
                                                                   ------------    ------------    ------------    ------------
Income (Loss) from operations before income taxes                           467          (1,400)            921          (2,035)

INCOME TAX EXPENSE (BENEFIT)                                                220            (174)            415            (412)
                                                                   ------------    ------------    ------------    ------------
Income (loss) from continuing operations                                    247          (1,226)            506          (1,623)
Loss from discontinued operations (net of
   tax benefit of $272, $0 and $342, $0
   for three months and six months of 2000
   and 2001, respectively)                                                 (373)              0            (455)              0
                                                                   ------------    ------------    ------------    ------------
NET INCOME (LOSS)                                                          (126)   $     (1,226)   $         51    $     (1,623)
                                                                   ============    ============    ============    ============
Basic and diluted earnings (loss) per common share

Basic and diluted income (loss) per share from
  continuing operations                                            $       0.05    $      (0.24)   $       0.10    $      (0.31)

Basic and diluted loss per share from
  discontinued operations                                                 (0.07)              0           (0.09)              0
                                                                   ------------    ------------    ------------    ------------
Basic and diluted net income (loss) per
  common share                                                     $      (0.02)   $      (0.24)   $       0.01    $      (0.31)
                                                                   ============    ============    ============    ============
Basic weighted average common shares outstanding                      5,222,080       5,175,005       5,184,213       5,196,430
                                                                   ============    ============    ============    ============
Diluted weighted average common shares outstanding                    5,222,080       5,175,005       5,240,921       5,196,430
                                                                   ============    ============    ============    ============
</TABLE>
              The accompanying notes are an integral part of these
                        consolidated financial statements

                                        4
<PAGE>
                         WIRELESS XCESSORIES GROUP, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)
<TABLE><CAPTION>
                                                                        Nine Months Ended September 30
                                                                             2000             2001
                                                                         ------------    ------------
<S>                                                                      <C>             <C>
OPERATING ACTIVITIES:
Net Income (loss)                                                        $         51    $     (1,623)
Adjustments to reconcile net income (loss)
  to cash provided by operating activities-
    Depreciation and amortization                                                 545             466
    Provision for doubtful accounts                                               433              77
    Impairment of excess cost over net assets
      acquired                                                                      0             876

Changes in assets and liabilities, net of effects
  from dispositions:
    Income tax refund                                                             567            (137)
    Accounts receivable                                                         1,447           1,842
    Inventories                                                                   741           2,302
    Prepaid expenses and other assets                                            (334)            247
    Accounts payable and accrued expenses                                        (208)         (1,952)
                                                                         ------------    ------------
Net cash provided by operating activities                                       3,242           2,098

INVESTING ACTIVITIES:
Purchase of property and equipment                                             (1,057)           (115)
Net cash proceeds from sale of subsidiary assets                                1,006               0
Principal payments on notes receivables                                             0              55
                                                                         ------------    ------------
Net cash (used in) by investing activities                                        (51)            (60)
                                                                         ------------    ------------
FINANCING ACTIVITIES:
Net payment on borrowings                                                      (3,029)         (2,107)
Repurchase of company stock                                                         0             (24)
Issuance of common stock for options                                              127               0
                                                                         ------------    ------------
Net cash (used in) financing activities                                        (2,902)         (2,131)
                                                                         ------------    ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              289             (93)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                    366             501
                                                                         ------------    ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                          655             408
                                                                         ------------    ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for-
    Interest                                                             $        288    $        154
                                                                         ------------    ------------
    Income taxes net of refunds                                          $        (41)   $        108
                                                                         ------------    ------------
</TABLE>
              The accompanying notes are an integral part of these
                        consolidated financial statements

                                        5
<PAGE>
                         WIRELESS XCESSORIES GROUP, INC.

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

1. BASIS OF PRESENTATION

The consolidated condensed financial statements included herein have been
prepared by the management of Wireless Xcessories Group, Inc. ("Wireless
Xcessories" or the "Company") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. These statements include all
adjustments that, in the opinion of management, are necessary to provide a fair
statement of the results for the periods covered. All such adjustments are of a
normal recurring nature. These financial statements should be read in
conjunction with the audited financial statements and footnotes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2000. The results of operations for the interim periods presented are not
necessarily indicative of the results for the full year. Prior year amounts have
been reclassified to conform the current period presentations.

2. DISCONTINUED OPERATIONS

On January 27, 2000, the Company sold substantially all of the assets and
transferred certain liabilities of its wholly owned subsidiary, Tauber
Electronics, Inc. ("Tauber"). As consideration for the sale, the Company
received a cash payment of $1,005,854 on February 1, 2000 and a note in the
amount of $519,708 due in 2005 with interest payments beginning upon the closing
of the transaction and principal payments commencing during the first quarter of
2002. The principal amount of this note was subsequently reduced to $483,573,
effective on March 15, 2000, to reflect the final valuation of transferred
assets.

On November 6, 2000, effective October 31, 2000, Battery Network sold selective
inventory and substantially all of its machinery and equipment, trade names and
customer lists to Ohlin Sales Corp. for $200,000 in cash and a note totaling
$125,000. The note provides for twenty-four consecutive equal monthly payments
of $5,655, including interest at 8% and principal starting on December 1, 2000
and ending November 1, 2002. On December 16, 2000 the Company sold selected
remaining inventory and trade names related to Absolute Battery (a division
trade name of Battery Network principally involved in laptop battery and
accessories business) to Battery Universe for $40,000 in cash and a $10,000
note. The note was due on June 1, 2001 and provided for interest at 8% to be
paid monthly along with equal monthly principal payments commencing on January
1, 2001 and ending on June 1, 2001 (note principal paid in full effective July,
2001).

Battery Network retained accounts receivables, inventory and all outstanding
liabilities as of October 31, 2000. The Company physically shut down the
remaining Battery Network operation in January 2001 and effected an early
termination of its existing lease obligation in June 2001, which was scheduled
to expire in January 2002 by its original lease term. The Company is currently
winding down any remaining administrative and financial affairs including the
collection of remaining accounts receivable and the liquidation of remaining
liabilities, if any.

                                       6
<PAGE>

As these two companies represented all of the Company's remaining businesses
within its battery assembly and distribution segment (the "Battery Segment"),
the Company has accounted for this segment as discontinued operations.

The results of operations for the Battery Segment have been classified as
discontinued operations for all periods presented in the consolidated condensed
statements of operations and balance sheets. The assets and liabilities of the
discontinued operations have been classified in the accompanying consolidated
balance sheets as "Net liabilities on disposal of discontinued operations".
Discontinued operations have not been segregated in the accompanying
consolidated statements of cash flows, and, therefore, amounts under certain
captions will not agree with the respective consolidated statements of
operations. Net sales for the Battery Segment were $0 and $730,715 for the three
months ended September 30, 2001 and 2000, respectively and $0 and $ 2,747,328
the nine months ended September 30, 2001 and 2000, respectively.

The Company allocated interest not specifically associated with any segment
based upon a ratio of net tangible assets. Interest expense allocated to
discontinued operations was $0 and $12,000 for the three months ended September
30, 2001 and 2000, respectively and $0 and $55,000 for the nine months ended
September 30, 2001 and 2000, respectively.

3. COMPANY OPERATIONS

On March 13, 2001, effective March 1, 2001, Advanced Fox Antenna, Inc. (Advanced
Fox), Cliffco of Tampa Bay, Inc. (Cliffco), and AccessorySolutions.Com, Inc.
(Accessory Solutions) together (the "Wireless Product Segment") entered into an
agreement to combine and merge with and into Wireless Xcessories Group, Inc.
with Wireless Xcessories Group, Inc. being the surviving Company. In October,
2001 the Company decided to shut down its Tampa Bay, Inc facility (former
headquarters of Cliffco of Tampa Bay, Inc ) and merge its remaining operations
into the corporate headquarters in Huntingdon Valley , Pennsylvania by mid
November, 2001. In accordance with the decision to close the Cliffco operation
and merge its operation into Wireless Xcessories Group the Company evaluated the
net realizable value of net assets of the Cliffco business and in particular its
trade name. In connection, with this evaluation the Company determined that the
unamortized excess of cost over net assets acquired at September 30, 2001 is not
realizable and therefore, recognized a related impairment of $876,508 In
addition, the Company recorded reserves of approximately $90,000 to cover the
estimated costs of disposing of the remaining fixed assets of the operation and
to effect a reduction of its existing lease obligation in Tampa Bay which
expires in mid 2004 by either sub-leasing the facility and/or coming to terms
with the landlord on an early termination.

4. LOAN FACILITY

The Company entered into a Revolving Credit, Term Loan and Security Agreement,
dated January 6, 1997, as subsequently amended March 30, 2001, (the "Loan
Facility"), with IBJ Whitehall-Financial Group (formerly known as IBJ Schroder
Bank and Trust Company), as agent ("IBJ"). The Loan Facility consists of a
$3,000,000 Term Loan (the "Term Loan") payable in 35 monthly installments of
$50,000 each with the balance to be paid at maturity and a Revolving Credit
Facility (the "Revolver Loan") of up to $10,000,000 to be advanced at the rate

                                       7
<PAGE>

of 80% of eligible accounts receivable and 50% of inventories. The Revolver Loan
bears interest at the rate of 1/4 of 1% plus the higher of (i) the base
commercial lending rate of IBJ, or (ii) the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers plus 1/4 of 1%, or (iii) at the option of the
Company, at the Eurodollar rate plus 2%. The Eurodollar rate is defined as LIBOR
for a designated period divided by one less the aggregate reserve requirements.
The interest on the Term Loan is 1/2% higher than the interest rate on the
Revolver Loan. The Loan Facility is secured by a pledge of the assets of the
borrowers and a pledge of the outstanding capital stock of the subsidiaries of
the Company. As of June 30, 2001 the Term Loan was paid in full (last payment
made in early June, 2001) and the principal amount outstanding of the Revolver
Loan was approximately $1,139,279. The Loan Facility contains covenants that
include maintenance of certain financial ratios, amounts of earnings before
interest, taxes and depreciation (EBITDA) as defined, and net worth as well as
other affirmative and negative covenants. At December 31, 2000, the Company was
not in compliance with certain of these covenants. On March 30, 2001, the
Company entered into an amended credit agreement whereby the non-compliance at

December 31, 2000 was waived, the Loan Facility was extended for an additional
one year period to January 7, 2003, and new financial covenants were negotiated
through December 31, 2002, which reflected the Company's projections at that
time. As of June 30, 2001, the Company was not in compliance with two of these
covenants. On August 14, 2001, the Company entered into an amended credit
agreement whereby the lender waived the events of default at June 30, 2001 and
at management's request, the loan agreement was also amended to reduce the
revolving credit facility to $5,000,000 (less an undrawn availability of
$800,000 to be maintained at all times). Financial covenants, measured each
quarter, were revised to reflect the Company's financial projections at the
time. The interest rate was increased to the sum of the alternate base rate (as
defined) plus .75% with respect to domestic rate loans or the sum of the
Eurodollar rate plus 2-1/2% with respect to Eurodollar rate loans.

As of September 30, 2001, the Company was not in compliance with three of these
covenants. On November 14, 2001, the Company entered into an amended credit
agreement whereby the non-compliance at September 30, 2001 was waived and new
financial covenants were negotiated through December 31,2002. Amounts
outstanding under credit facility were $972,139 as of September 30, 2001.

5. MANAGEMENT AGREEMENT

In February 1998, the Management Agreement with Founders Management Services,
Inc. ("Founders") was revised by mutual consent to, among other things,
eliminate the origination and incentive fee provisions of the original
agreement. On May 5, 1998, both active principals of Founders resigned as
officers and directors of the Company, effectively terminating the relationship
between the Company and Founders. In December 1999, Founders filed a lawsuit in
the United States District Court for the Southern District of New York against
the Company alleging the Company owed Founders approximately $493,000 for a
purportedly improper termination of the Management Agreement. On October 18,
2001, the Company and Founders settled the lawsuit and all counterclaims along
with mutual releases to all involved parties for a total of $228,000. The amount
of settlement included in selling, general and administrative expenses as of
September 30, 2001.

                                       8
<PAGE>

6. STOCK REPURCHASE PROGRAM

On January 11, 2001, the Board of Directors approved a stock buy back plan
whereby the Company will repurchase a total of up to 500,000 shares of common
stock at a total cost not to exceed $250,000 through July 20, 2001. The Company
has extended the buyback period to January 21, 2002. As of September 30, 2001,
the Company had repurchased 58,500 shares at an average price of $.44 per share,
recorded at cost as Treasury Stock in the accompanying balance sheet as at
September 30, 2001.

7. SEGMENT DISCLOSURE

As a result of its decision to exit the Battery Segment, the Company effectively
operates in one business segment, referred to as the Wireless Products Segment,
which distributes cellular telephone accessory products including batteries,
chargers and antennas principally in North America. The Wireless Products
Segment is headquartered in Huntingdon Valley, Pennsylvania and consists of
Advanced Fox, Cliffco and AccessorySolutions. All revenue and essentially all
long-lived assets were related to operations in the United States as of
September 30, 2001 and for the nine-month periods ended September 30, 2000 and
September 30, 2001.

Export sales for the three and nine months ended September 30, 2000 and 2001
were as follows:
                                                  (In Thousands)

                                    Three Months Ended       Nine Months Ended
                                       September 30             September 30
                                    2000          2001       2000          2001
                                   ------        ------     ------        ------
Europe, Middle East and Africa        23            39         71            77
Asia and Pacific                       3            16          6            93
Americas excluding United States      74            91        394           228
                                   ------        ------     ------        ------
Total Export Sales                   100           146        471           398
                                   ======        ======     ======        ======

Receivables from export sales at September 30, 2000 and 2001 were $193,321 and
$80,070 respectively.

                                       9
<PAGE>

8. EARNINGS PER SHARE

The Company follows the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share." The calculation of basic and diluted
earnings per share ("EPS") is as follows:
<TABLE><CAPTION>
                                         Three Months Ended             Six Months Ended
                                            September 30                  September 30
                                        2000            2001          2000            2001
                                     ---------       ---------     ---------       ---------
<S>                                 <C>             <C>           <C>             <C>
Shares: Weighted average number of
         common shares outstanding
         used in basic earnings per
         share calculation           5,222,080       5,175,005     5,184,213       5,196,430

        Dilutive effect of stock
         options and warrants                0               -        56,708               -
                                     ---------       ---------     ---------       ---------
        Total shares used in
         diluted earnings per
         share calculation           5,222,080       5,175,005     5,240,921       5,196,430
                                     =========       =========     =========       =========
</TABLE>

Options to purchase 312,323 and 330,612 shares with the exercise prices ranging
$1.38 to $5.00 and $.375 to $4.50 were outstanding at September 30, 2000 and
September 30, 2001, respectively. Warrants to purchase 2,400,000 and 100,000
shares with exercise prices ranging from $4.125 to $5.00 were outstanding as of
September 30, 2000 and warrants to purchase 100,000 shares at $4.125 were
outstanding as of September 30, 2001, but were not included in the computation
of diluted EPS at September 30, 2001 because the exercise price of the options
and warrants were greater than the average market price of the common shares.
Because of losses incurred during the three and nine months ended September 30,
2001 the impact of outstanding warrants and options were not considered because
the effect is anti dilutive.

On March 14, 2001, the Board of Directors granted 65,000 stock options to
certain directors of the Company at an option price equal to the fair market
price on the date of the grant.

9. CONTINGENCY

The Company was notified in the fall of 2000 that certain of its products might
have infringed the patents of an original equipment manufacturer. The Company
responded by discontinuing the sale of such products and in early 2001 developed
alternative products to meet its customers needs that it believes do not
infringe.

The Company hired outside counsel to help assist in resolving any financial
issues relating to any sales prior to the discontinuance of the alleged patent
infringement. At this point the amount of any claim is unknown and management
cannot reasonably assess the Company's liability exposure.

                                       10
<PAGE>

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

RESULTS OF OPERATIONS:

The following table represents the Company's statement of operations data
expressed as a percentage of net sales for the respective periods:
<TABLE><CAPTION>
                                              Three Months Ended       Nine Months Ended
                                                 September 30            September 30
                                               2000        2001        2000        2001
                                              ------      ------      ------      ------
<S>                                          <C>         <C>         <C>         <C>
Net Sales                                     100.0%      100.0%      100.0%      100.0%
Cost of Sales                                  51.5        60.2        50.4        56.9
                                              ------      ------      ------      ------
Gross Profit                                   48.5        39.8        49.6        43.1
Selling, General and administrative Expenses   41.6        68.1        44.3        55.6
Interest Expense, net                           0.8         0.5         1.1         0.6
                                              ------      ------      ------      ------
Income (loss) from continuing operations
  before income taxes                           6.1       (28.8)        4.2       (13.1)
Income Tax Expense (Benefit)                    2.9        (3.6)        1.9        (2.7)
                                              ------      ------      ------      ------
Net income (loss) from continuing operations    3.2       (25.2)        2.3       (10.4)

(Loss) from discontinued operations net of
  tax benefits                                 (4.8)        0.0        (2.1)        0.0
                                              ------      ------      ------      ------
Net Income (Loss)                              (1.6)%     (25.2)%       0.2%      (10.4)%
                                              ======      ======      ======      ======
</TABLE>

Three Months Ended September 30, 2001 ("2001") Compared to Three Months ended
September 30, 2000 ("2000").

Net sales decreased by $ 2.8 million or 37%, from $7.7 million in 2000 to $4.9
million in 2001. Sales were negatively effected by the sluggish overall economy
and, in particular, by the reduced market demand for new cellular phones and its
resultant effect on after market accessory sales, coupled with a continuing
industry trend toward significantly lower pricing per accessory unit sold. These
market factors, along with the loss of two major customers (one of which filed
for Chapter 7 bankruptcy in late 2000) and reduced sales to other key customers,
combined to more than offset Company efforts to replace the lost volume and
expand its customer base through aggressive selling and marketing strategies.

Gross profit decreased by $1.8 million from $3.7 million in 2000 to $1.9 million
in 2001 and gross profit as a percentage of sales decreased from 48.5% to 39.8%.
The decline in gross margin percentage was due to changes in customer and
product mix, price reductions and incentives given to customers due to
increasingly competitive conditions and markdowns to improve turns on slower
moving inventory, partially offset by reductions in freight costs to customers.

                                       11
<PAGE>

Selling, general and administrative (SG&A) expenses increased from $3.2 million
in 2000 to $3.3 million in 2001, or 3.7%, and as a percentage of sales,
increased from 41.6% in 2000 to 68.1% in 2001. The Company took an impairment
loss of its excess of cost over assets acquired related to the Cliffco operation
during the quarter of approximately 876,000. This one time charge to earnings
more than offset a $759,000 reduction in all other categories of SG&A expenses
resulting from the Company's continuous cost cutting program, aided by the
consolidation of the Company's warehouse and accounting functions and most of
its administrative functions, resulting in reductions in areas such as selling
commissions, professional fees, telephone expenses and warehouse and accounting
personnel. The increase in the percentage of net sales is a result of the
one-time impairment loss and the Company not being able to reduce certain of its
more fixed expenses, such as occupancy, at anywhere close to the 37% drop in
sales combined with approximately 20% reduction in warehousing, and shipping
labor expenses. Continuing lower average prices per unit shipped and increased
customized packaging and labeling to accommodate changes in the Company's
customer needs and product mix resulted in less overall average dollars shipped
per warehouse employee.

Net interest expense decreased from $69,000 in 2000 to $21,000 in 2001 due
primarily to decreased borrowings under the Company's Loan Facility resulting
from the disposition of Battery Network during 2000, cash provided from
operations, and significantly lower effective interest rates on borrowings.

The Company's effective income tax rate in calculating the benefit based on the
loss for the quarter in 2001 was 12% as compared to an effective rate of 47% in
2000. The difference in rates is primarily attributable to a valuation allowance
related to the tax benefit of certain tax loss carryforwards and to the effect
of state net operating losses in the various states in which the entity
operates.

Nine Months Ended September 30 ("2001") Compared to Nine Months ended September
30, 2000 ("2000").

Net sales decreased by $ 6.2 million or 28.5 %, from $21.8 million in 2000 to
$15.6 million in 2001. Sales were negatively effected by sluggish market demand
for new cellular phones and its resultant effect on after market accessory
sales, coupled with a continuing industry trend toward significantly lower
pricing per accessory unit sold. These market factors, along with the loss of
two major customers (one of which filed for Chapter 7 bankruptcy in late 2000),
more than offset Company efforts to replace the lost volume and expand its
customer base through aggressive selling and marketing strategies, which takes
time to build up.

Gross profit decreased by $4.1 million from $10.8 million in 2000 to $6.7
million in 2001 and gross profit as a percentage of sales decreased from 49.6%
to 43.1%. The decline in gross margin percentage was due to changes in customer
and product mix, price reductions and markdowns to improve turns on slower
moving inventory and to meet competition partially offset by reductions in
freight costs to customers.

Selling, general and administrative (SG&A) expenses decreased from $9.7 million
in 2000 to $8.7 million in 2001 or 10.4% but as a percentage of sales, increased
from 44.3% in 2000 to 55.6% in 2001. The reduction of SG&A expenses was a result
of the Company's cost cutting program, aided by a consolidation of its
warehousing, accounting and most administrative functions, resulting in

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reductions in areas such as selling commissions, professional fees, telephone
expenses and administrative and warehouse personnel offset by a one-time
impairment loss of approximately $876,000 of excess of cost over assets acquired
relating to the Cliffco operation. In 2000, the Company took an additional
$250,000 bad debt charge resulting from a Chapter 11 by a major customer during
June, 2000. The increase in the percentage of net sales is primarily due to the
impairment loss and to occupancy expense coming in flat compared to 2000, and
warehousing, and shipping labor expenses showing an approximate decrease of 6%,
though our sales were off by 28.5%. Continuing lower average prices per unit
shipped and increased customized packaging and labeling to accommodate changes
in the Company's customer needs and product mix resulted in less overall average
dollars shipped per warehouse employee.

Net interest expenses decreased from $243,000 in 2000 to $100,000 in 2001 due
primarily to decreased borrowings under the Company's Loan Facility resulting
from the disposition of Battery Network during 2000, the sale of Tauber in late
January 2000, cash provided from operations, and lower effective interest rates
on borrowings particularly, in the second and third quarters of 2001.

The Company's effective income tax rate in calculating the benefit based on the
loss for the nine months in 2001 was 20% as compared to an effective rate of 45%
in 2000. The difference in rate is primarily attributable to a valuation
allowance related to the tax benefit of certain tax loss carryforwards and to
the effect of state net operating losses in the various states in which the
entity operates.

                        LIQUIDITY AND CAPITAL RESOURCES:

The Company's requirements for capital are to fund (i) sales growth, (ii)
financing for acquisitions, (iii) repurchase of stock, and (iv) capital
expenditures mainly related to (a) business system upgrades and (b) the purchase
of machinery and equipment in order to streamline receiving, shipping, and
packaging operations. The Company's primary sources of financing during the
twelve months ended September 30, 2001 were cash flow from operations, the sale
of substantially all of Battery Network's assets in November-December 2000 and
bank borrowings.

The Company's working capital as of September 30, 2001 was $4,367,000. Net cash
provided by operating activities for the nine months ended September 30, 2001
and 2000 were $2,098,000 and $3,242,000, respectively. In 2001, the Company lost
cash from operations of $204,000 from its net loss of $1,623,000 as adjusted for
non-cash items of depreciation and amortization of $466,000 and bad debt
provision of $77,000 an impairment of excess cost over net assets of $876,000.
Cash provided from changes in assets and liabilities of $2,302,000 resulted from
net decreases in accounts receivable of $1,842,000, inventory of $2,302,000, and
prepaid expenses and other assets of $247,000 less income taxes refund
receivable of 137,000 and a decrease in accounts payable and accrued expenses of
$1,952,000.

Net cash used in investing activities for the nine months ended September 30,
2001 was $60,000, resulting from the purchase of property and equipment in the
amount of $115,000, offset by note principal payments received of approximately
$55,000 relating to the sale of Battery Network. Net cash used in investing
activities for the nine months ended September 30, 2000 was $51,000 from
purchase of property and equipment of $1,057,000 offset in part by the gross
cash proceeds of approximately $1,006,000 resulting from the sale of assets of
Tauber in late January, 2000.

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<PAGE>

Cash used in financing activities for the nine months ended September 30, 2001
was $2,131,000 and was principally used for $1,817,000 net payments under the
Revolver Loan, $289,000 to pay off the Term Loans, net reductions in capital
leases of $1,000 and $24,000 for the repurchase of the Company's common stock.
Cash used in financing activities for nine months ended September 30, 2000 of
$2,902,000 was principally for $2,701,000 net payments under the Revolver Loan
and $450,000 under the Term Loan offset by $127,000 for the issuance of common
stock and net increases in Capital Leases of 122,000. The Company had cash and
cash equivalents of approximately $408,000 on September 30, 2001.

The Loan Facility contains covenants, including maintenance of certain financial
ratios, which in turn include maintenance of certain amounts of earnings before
interest, taxes and depreciation (EBITDA) and maintenance of a certain net
worth, as well as other affirmative and negative covenants. At December 31, 2000
the Company was not in compliance with certain of these covenants. On March 30,
2001, the Company entered into an amended credit agreement whereby the
non-compliance at December 31, 2000 was waived, the Loan Facility was extended
for an additional one year period to January 7, 2003, and new financial
covenants were negotiated through December 31, 2002, which reflected the
Company's projections at that time. As of June 30, 2001, the Company was not in
compliance with two of these covenants. On August 14, 2001, the Company entered
into an amended credit agreement whereby the lender waived the events of default
at September 30, 2001 and at management's request, the loan agreement was also
amended to reduce the revolving credit facility to $5,000,000 (less an undrawn
availability of $800,000 to be maintained at all times). The reduction is
reflective of the substantially reduced borrowings by the Company under this
facility and resultant reduction in unused credit facility fees. Financial
covenants, measured each quarter, were revised to reflect the Company's current
financial projections. The interest rate was increased to the sum of the
alternate base rate (as defined) plus .75% with respect to domestic rate loans
or the sum of the Eurodollar rate plus 2-1/2% with respect to Eurodollar rate
loans.

As of September 30, 2001, the Company was not in compliance with three of these
covenants. On November 14, 2001, the Company entered into an amended credit
agreement whereby the non-compliance at September 30, 2001 was waived and new
financial covenants were negotiated through December 31, 2002. Amounts
outstanding under the credit facility was $972,139 as of September 30, 2001.

The Company estimates that it will incur capital expenditures of approximately
$300,000 during the twelve months ended September 30, 2002, principally for
business system upgrades and to purchase machinery and equipment needed to
enhance its warehousing, distribution and assembly operations.

Based upon its present plans, management believes that operating cash flow,
available cash and available credit resources will be adequate to make the
repayments of indebtedness described herein and to meet the working capital,
cash and capital expenditure needs of the Company during the twelve months
ending September 30, 2002.

SEASONALITY AND INFLATION

Our quarterly operating results have fluctuated only to a limited extent in the
past. However, with the discontinuation of the Battery Segment, it is likely
that they will fluctuate significantly in the future with lower product revenues

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<PAGE>

in the first and second quarters as compared with the third and fourth quarters.
This fluctuation is due primarily to the lower demand for wireless accessories
during the winter and spring months and higher demand during the December
holiday season. In addition, our net sales could be affected in the future by
business acquisitions. The impact of inflation on the Company's operations has
not been significant to date. However, a high rate of inflation in the future
poses a risk to the Company and its ability to sustain its operating results.

PREVIOUS BUSINESS COMBINATIONS ACCOUNTED FOR USING THE PURCHASE METHOD

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

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

The Company's previous business combinations were accounted for using the
purchase method. As of September 30,2001, the Company wrote off its net carrying
amount of goodwill is $876,508. . Amortization expense during the nine month
period ended September 30, 2001 was $31,500. The Company is assessing, but has
not yet determined, how the adoption of the Financial Accounting Standards Board
"FASB" Statements No. 141 (SFAS 141), Business Combinations and No.142 (SFAS
142), Goodwill and Other Intangible Assets, will impact its financial position
and results of operations, and cash flow.

The FASB recently issued FASB Statement No. 143, ACCOUNTING FOR RETIREMENT
OBLIGATIONS, to address accounting for asset retirement obligations and
associated retirement costs of long-lived assets. It will apply to costs such as
those incurred to close a nuclear power plant, an offshore oil platform, a mine

                                       15
<PAGE>

(e.g., coal or other natural resources), or a landfill as well as similar costs
incurred in other industries. The Statement amends FASB Statement No. 19,
FINANCIAL ACCOUNTING AND REPORTING BY OIL AND GAS PRODUCING COMPANIES, to
indicate that a company should account for obligations for dismantlement,
restoration, and abandonment costs in accordance with Statement 143. It also
applies to rate-regulated entities that meet the criteria for application of
FASB Statement No. 71, ACCOUNTING FOR THE EFFECTS OF CERTAIN TYPES OF
REGULATION. Statement 143 is effective for years beginning after June 15, 2002.
Management has not determined the potential impact on the financial position,
results of operations and cash flows.

The FASB recently issued FASB Statement No. 144, ACCOUNTING FOR THE IMPAIRMENT
OR DISPOSAL OF LONG-LIVED ASSETS. The new guidance resolves significant
implementation issues related to FASB Statement No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.
Statement 144 is effective for fiscal years beginning after December 15, 2001.
Management has not determined the potential impact on the financial position,
results of operations and cash flows.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk - The Company's only financial instruments with interest rate
risk exposure are revolving credit borrowings, which totaled $972,139 at
September 30, 2001. Based on this balance, a change of one percent in the
interest rate would cause a change in interest expense for the nine months ended
September 30, 2001 of $7,291 or $0.001 per share or $0.0005 per share net of
income tax calculated using the Company's historical statutory rates.

These instruments are not entered into for trading purposes and carry interest
at a pre-agreed upon percentage point spread from one of several designated base
rates. The Company's objective in maintaining variable rate borrowings is the
flexibility obtained regarding early repayment without penalties and lower
overall cost as compared with fixed-rate borrowings.

Foreign Currency Risk - The Company does not use foreign currency forward
exchange contracts or purchase 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. The Company's Wireless
Products Segment purchases over 80% of its 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 the Company's products and adversely affect its results of operations or
financial condition.

FORWARD LOOKING STATEMENTS

Some of the information presented in this quarterly report constitutes
forward-looking statements within the meaning of the private Securities
Litigation Reform Act of 1995. Statements that are not historical facts,
including statements about management's expectations for fiscal year 2001 and
beyond, are forward looking statements and involve various risks and
uncertainties. Although the Company believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge, there can be no
assurance that actual results will not differ materially from the Company's

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expectations. Factors that could cause the actual results to differ materially
from expectations are discussed in the Company's Annual Report on Form 10-K and
in other filings with the Securities and Exchange Commission.

                                     PART II

                                OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

             (a) Exhibits

             10.1 Waiver and Amendment No. 4 to Revolving Credit, Term Loan and
             Security Agreement dated as of November 14, 2001 by and among
             Wireless Xcessories Group, Inc. and certain of its Subsidiaries and
             IBS Whitehall Business Credit Corporation, as Agent for the various
             Lenders.

             None



















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                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                           By: /s/ Stephen Rade
                                           -----------------------------
Date:  November 15, 2001                   Stephen Rade
                                           Chief Executive Officer

                                           By: /s/ Ronald E. Badke
                                           -----------------------------
Date:  November 15, 2001                   Ronald E. Badke
                                           Chief Financial Officer


















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