##### 



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended September 30, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from to
 Commission File Number 0-23212
 Telular Corporation
 (Exact name of registrant as specified in its charter)
 Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    36-3885440
(I.R.S. employer
identification no.)
 311 South Wacker Drive, Suite 4300, Chicago, Illinois 60606-6622
(Address of principal executive offices and zip code)
 (312) 379-8397
(Registrants telephone number, including area code)
 Securities registered pursuant to 12(b) of the Act:
 Title of Each Class
    
    Name of each exchange on which registeredCommon Stock, $.01 Par Value
    
    The NASDAQ Stock Market LLC
 Securities registered pursuant to Section 12(g) of the Act:
 o þ
 o þ
 þ o
 o
  o þ o
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



PART I
 ITEM 1. BUSINESS
 OVERVIEW
   COMPANY STRATEGY
       2




---



##### 



TARGET MARKETS AND PRODUCT APPLICATIONS
  
    
    Wireless Security
    
    Voice, Data, Fax and Internet Connectivity for Remote or Mobile Communications
    
    Event Monitoring
    
    Least Cost Routing (LCR)
 Wireless Security
  Voice, Data, Fax, and Internet Connectivity for Remote or Mobile Communications
  Event Monitoring
  Least Cost Routing
  TECHNOLOGY
   3




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##### 



RESEARCH AND DEVELOPMENT AND PRODUCT LINES
      TELGUARD TERMINALS
  OTHER TERMINALS ®
 SALES, MARKETING SERVICE AND SUPPORT
 Domestic Sales
   4




---



##### 



International Sales
  Service and Support
  MAJOR CUSTOMERS
  MANUFACTURING
  EXECUTIVE OFFICERS
  Name
    
    Age
    
    PositionMichael J. Boyle
    
    63
    
    President, Chief Executive Officer and DirectorJoseph A. Beatty
    
    44
    
    Chief Financial Officer and SecretaryGeorge S. Brody
    
    53
    
    Senior Vice President, TelguardRobert L. Deering
    
    49
    
    Controller, Treasurer and Chief Accounting Officer
 Michael J. Boyle
 Joseph A. Beatty
  5




---



##### 



George S. Brody
 Robert L. Deering
 EMPLOYEES
  COMPETITION
    Better focus/commitment
 More experience
 Broader product line
 Service and support
    6




---



##### 



PATENTS, LICENSES AND OTHER INTELLECTUAL PROPERTY
  Principal Patent
   Continuation Patents
   Other Patents
    7




---



##### 



Applicability of Telulars Patents to Emerging Wireless Technologies
  Licensing of Technology
    Trademarks and Other Proprietary Information
   8




---



##### 



AVAILABLE INFORMATION
 Internet Address
 www.telular.com
 Filings with the Securities and Exchange Commission
  ITEM 1A. RISK FACTORS
  ITEM 1B. UNRESOLVED STAFF COMMENTS
  ITEM 2. PROPERTIES
  Lease Dates
    
    Square
    
    RenewalFunctions
    
    Location
    
    Commencement
    
    Termination
    
    Footage
    
    OptionsCorporate Headquarters
    
    Sales, marketing, operations administration,
finance and general administrations
    
    Chicago, Illinois
    
    February 2007
    
    February 2014
    
    
    11,700
    
    
    NoEngineering Center
    
    Deskphone, terminals and Telguard
product research and development
    
    Hauppauge, New York
    
    October 2002
    
    October 2007
    
    
    20,000
    
    
    YesTerminal and Security
Products Operations
    
    Sales, marketing, operations and general
administration for the FCT segment
    
    Atlanta, Georgia
    
    March 2004
    
    February 2008
    
    
    7,700
    
    
    NoTerminal and Security
Products Operations and
Engineering
    
    Sales, marketing, operations and general
administration for terminal products and
product research and development
    
    Atlanta, Georgia
    
    November 2007
    
    December 2015
    
    
    15,154
    
    
    NoInternational Sales Office
    
    Sales
    
    Weston, Florida
    
    October 1999
    
    December 2009
    
    
    1,700
    
    
    Yes
  ITEM 3. LEGAL PROCEEDINGS
   9




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##### 



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  PART II
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK
  QUARTER ENDED DURING FISCAL YEAR 2007December 31
    
    
    March 31
    
    
    June 30
    
    
    September 30High
    
    $
    4.22
    
    
    $
    4.37
    
    
    $
    5.10
    
    
    $
    7.50Low
    
    $
    2.00
    
    
    $
    3.23
    
    
    $
    3.07
    
    
    $
    4.55
 QUARTER ENDED DURING FISCAL YEAR 2006December 31
    
    
    March 31
    
    
    June 30
    
    
    September 30High
    
    $
    4.15
    
    
    $
    3.74
    
    
    $
    3.30
    
    
    $
    2.48Low
    
    $
    2.94
    
    
    $
    2.96
    
    
    $
    1.71
    
    
    $
    1.73
  TELULAR CORPORATION COMMON STOCK PERFORMANCE GRAPH
 The following Performance Graph and related information shall not be deemed soliciting material
or to be filed with the Securities and Exchange commission, nor shall such information be
incorporated by reference into any future filing under the Securities Act of 1933 or Securities
Exchange Act of 1934, each as amended, except to the extent that the Company specifically
incorporates it by reference into such filing.
   10




---



##### 



COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
 
 *
    
    $ 100 invested on 9/30/02 in stock or index-including reinvestment of dividends.Fiscal year ending September 30.  11




---



##### 



ITEM 6. SELECTED FINANCIAL DATA
  Year ended September 30,(In thousands, except share data)2007 (a)
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Results of Operations:Total revenue
    
    $
    74,507
    
    
    $
    45,706
    
    
    $
    33,489
    
    
    $
    49,578
    
    
    $
    30,520Income (loss) from continuing operations
    
    
    5,625
    
    
    
    (644
    )
    
    
    (4,507
    )
    
    
    2,105
    
    
    
    (4,489
    )Income (loss) from discontinued operations
    
    
    (7,571
    )
    
    
    (11,174
    )
    
    
    (6,375
    )
    
    
    (2,808
    )
    
    
    584Net loss
    
    $
    (1,946
    )
    
    $
    (11,818
    )
    
    $
    (10,882
    )
    
    $
    (703
    )
    
    $
    (3,905
    )Per Share Data:Basic and dilutive:Income (loss) from continuing operations
    
    $
    0.31
    
    
    $
    (0.04
    )
    
    $
    (0.34
    )
    
    $
    0.16
    
    
    $
    (0.35
    )Income (loss) from discontinued operations
    
    $
    (0.42
    )
    
    $
    (0.66
    )
    
    $
    (0.47
    )
    
    $
    (0.21
    )
    
    $
    0.05Net loss
    
    $
    (0.11
    )
    
    $
    (0.70
    )
    
    $
    (0.81
    )
    
    $
    (0.05
    )
    
    $
    (0.30
    )As of September 30 - balance sheet data:Total assets
    
    $
    55,608
    
    
    $
    57,937
    
    
    $
    53,499
    
    
    $
    54,366
    
    
    $
    52,861Current loans payable
    
    
    
    
    
    
    3,313
    
    
    
    
    
    
    
    
    
    
    
    Stockholders equity
    
    
    38,366
    
    
    
    38,812
    
    
    
    43,792
    
    
    
    44,801
    
    
    
    43,510
 (a)
    
    In 2007, the Company formulated a plan to sell the net assets of its FCP segment and exit the
cellular phone market. As a result, the FCP segment has been segregated and classified as
discontinued operations and amounts for all periods presented have been restated to reflect this
classification. ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 INTRODUCTION
    12




---



##### 



13




---



##### 



RESULTS OF OPERATIONS
 Fiscal Year 2007 Compared to Fiscal Year 2006
 Revenues and Costs of Sales
 Change2007
    
    
    2006
    
    
    Amount
    
    
    PercentageNet product salesTelguard
    
    $
    40,694
    
    
    $
    21,630
    
    
    $
    19,064
    
    
    
    88
    %Terminal
    
    
    16,442
    
    
    
    12,932
    
    
    
    3,510
    
    
    
    27
    %Total product revenues
    
    
    57,136
    
    
    
    34,562
    
    
    
    22,574
    
    
    
    65
    %Service revenues
    
    
    17,371
    
    
    
    11,144
    
    
    
    6,227
    
    
    
    56
    %Total revenues
    
    
    74,507
    
    
    
    45,706
    
    
    
    28,801
    
    
    
    63
    %Cost of salesProducts
    
    
    39,807
    
    
    
    25,395
    
    
    
    14,412
    
    
    
    57
    %Services
    
    
    9,169
    
    
    
    5,937
    
    
    
    3,232
    
    
    
    54
    %48,976
    
    
    
    31,332
    
    
    
    17,644
    
    
    
    56
    %Gross margin
    
    $
    25,531
    
    
    $
    14,374
    
    
    $
    11,157
 Revenues
   Cost of Sales
  Operating Expenses
 Change
    
    
    % of Revenues2007
    
    
    2006
    
    
    Amount
    
    
    Percentage
    
    
    2007
    
    
    2006Engineering and development
    
    $
    6,930
    
    
    $
    3,935
    
    
    $
    2,995
    
    
    
    76
    %
    
    
    9
    %
    
    
    9
    %Selling and marketing
    
    
    7,406
    
    
    
    5,686
    
    
    
    1,720
    
    
    
    30
    %
    
    
    10
    %
    
    
    12
    %General and administrative
    
    
    5,597
    
    
    
    5,770
    
    
    
    (173
    )
    
    
    (3
    %)
    
    
    8
    %
    
    
    13
    %$
    19,933
    
    
    $
    15,391
    
    
    $
    4,542
    
    
    
    
    
    
    
    27
    %
    
    
    34
    %
 Engineering and Development
   14




---



##### 



Selling and Marketing
  General and Administrative (G&A)
  Other Income
  Income Taxes
  Discontinued Operations
  Net Loss
   15




---



##### 



Fiscal Year 2006 Compared to Fiscal Year 2005
 Revenues and Cost of Sales
 Change2006
    
    
    2005
    
    
    Amount
    
    
    PercentageNet product salesTelguard
    
    $
    21,630
    
    
    $
    6,520
    
    
    $
    15,110
    
    
    
    232
    %Terminal
    
    
    12,932
    
    
    
    17,874
    
    
    
    (4,942
    )
    
    
    (28
    %)Total product revenues
    
    
    34,562
    
    
    
    24,394
    
    
    
    10,168
    
    
    
    42
    %Service revenues
    
    
    11,144
    
    
    
    9,095
    
    
    
    2,049
    
    
    
    23
    %Total revenues
    
    
    45,706
    
    
    
    33,489
    
    
    
    12,217
    
    
    
    36
    %Cost of salesProducts
    
    
    25,395
    
    
    
    19,254
    
    
    
    6,141
    
    
    
    32
    %Services
    
    
    5,937
    
    
    
    5,132
    
    
    
    805
    
    
    
    16
    %31,332
    
    
    
    24,386
    
    
    
    6,946
    
    
    
    28
    %Gross margin
    
    $
    14,374
    
    
    $
    9,103
    
    
    $
    5,271
 Revenues
   Cost of Sales
  Operating Expenses
 Change
    
    
    % of Revenues2006
    
    
    2005
    
    
    Amount
    
    
    Percentage
    
    
    2006
    
    
    2005Engineering and development
    
    $
    3,935
    
    
    $
    3,245
    
    
    $
    690
    
    
    
    21
    %
    
    
    9
    %
    
    
    10
    %Selling and marketing
    
    
    5,686
    
    
    
    5,755
    
    
    
    (69
    )
    
    
    (1
    %)
    
    
    12
    %
    
    
    17
    %General and administrative
    
    
    5,770
    
    
    
    4,894
    
    
    
    876
    
    
    
    18
    %
    
    
    13
    %
    
    
    15
    %$
    15,391
    
    
    $
    13,894
    
    
    $
    1,497
    
    
    
    
    
    
    
    34
    %
    
    
    42
    %
 Engineering and Development
  Selling and Marketing
   16




---



##### 



General and Administrative Expenses (G&A)
  Other Income
  Income Taxes
  Discontinued Operations
  Net Loss
  LIQUIDITY AND CAPITAL RESOURCES
      17




---



##### 



Payments Due by PeriodLess thanContractual Cash Obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    After 5 yearsOperating leases
    
    $
    3,050
    
    
    $
    497
    
    
    $
    1,338
    
    
    $
    1,026
    
    
    $
    189Purchase Commitments
    
    
    17,715
    
    
    
    17,715
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    20,765
    
    
    $
    18,212
    
    
    $
    1,338
    
    
    $
    1,026
    
    
    $
    189
  CRITICAL ACCOUNTING POLICIES
   Reserve for Obsolescence
   18




---



##### 



Goodwill
  Income Taxes
  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
  OUTLOOK
    FORWARD-LOOKING INFORMATION
    19




---



##### 



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
     20




---



##### 



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  Reports of Independent Registered Public Accounting Firm
    
    
    22Consolidated Balance Sheets as of September 30, 2007 and 2006
    
    
    24Consolidated Statements of Operations for the years ended
September 30, 2007, 2006 and 2005
    
    
    25Consolidated Statements of Stockholders Equity for the years ended
September 30, 2007, 2006 and 2005
    
    
    26Consolidated Statements of Cash Flows for the years ended
September 30, 2007, 2006 and 2005
    
    
    27Notes to Consolidated Financial Statements
    
    
    28
  21




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Internal Control 
Integrated Framework
 
 
  22




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       
 
  23




---



##### 



TELULAR CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands, except share data)
 September 30,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    10,254
    
    
    $
    6,799Restricted cash
    
    
    340
    
    
    
    Trade accounts receivable, net
    
    
    19,723
    
    
    
    11,320Inventories, net
    
    
    3,500
    
    
    
    2,477Prepaid expenses and other current assets
    
    
    108
    
    
    
    153Assets of discontinued operations
    
    
    17,959
    
    
    
    33,383Total current assets
    
    
    51,884
    
    
    
    54,132Property and equipment, net
    
    
    1,391
    
    
    
    1,334Goodwill
    
    
    2,043
    
    
    
    2,043Other
    
    
    290
    
    
    
    428Total assets
    
    $
    55,608
    
    
    $
    57,937LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade accounts payable
    
    $
    9,614
    
    
    $
    7,117Accrued liabilities
    
    
    4,366
    
    
    
    2,583Working capital line of credit
    
    
    
    
    
    
    3,313Liabilities of discontinued operations
    
    
    3,262
    
    
    
    6,112Total current liabilities
    
    
    17,242
    
    
    
    19,125Stockholders equity:Common stock: $.01 par value; 75,000,000 shares
authorized; 18,524,039 and 18,066,411shares outstanding
at September 30, 2007 and 2006, respectively
    
    
    185
    
    
    
    181Additional paid-in capital
    
    
    171,158
    
    
    
    168,852Deficit
    
    
    (132,977
    )
    
    
    (130,221
    )Total stockholders equity
    
    
    38,366
    
    
    
    38,812Total liabilities and stockholders equity
    
    $
    55,608
    
    
    $
    57,937
 See accompanying notes
  24




---



##### 



TELULAR CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Dollars in thousands, except share data)
 
 Year ended September 30,2007
    
    
    2006
    
    
    2005RevenueNet product sales
    
    $
    57,136
    
    
    $
    34,562
    
    
    $
    24,394Service revenue
    
    
    17,371
    
    
    
    11,144
    
    
    
    9,095Total revenue
    
    
    74,507
    
    
    
    45,706
    
    
    
    33,489Cost of salesNet product cost of sales
    
    
    39,807
    
    
    
    25,395
    
    
    
    19,254Service cost of sales
    
    
    9,169
    
    
    
    5,937
    
    
    
    5,132Total cost of sales
    
    
    48,976
    
    
    
    31,332
    
    
    
    24,386Gross margin
    
    
    25,531
    
    
    
    14,374
    
    
    
    9,103Operating ExpensesEngineering and development expenses
    
    
    6,930
    
    
    
    3,935
    
    
    
    3,245Selling and marketing expenses
    
    
    7,406
    
    
    
    5,686
    
    
    
    5,755General and administrative expenses
    
    
    5,597
    
    
    
    5,770
    
    
    
    4,894Total operating expenses
    
    
    19,933
    
    
    
    15,391
    
    
    
    13,894Income (loss) from operations
    
    
    5,598
    
    
    
    (1,017
    )
    
    
    (4,791
    )Other income, net
    
    
    27
    
    
    
    373
    
    
    
    284Income (loss) from continuing operations before income taxes
    
    
    5,625
    
    
    
    (644
    )
    
    
    (4,507
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    Income (loss) from continuing operations
    
    
    5,625
    
    
    
    (644
    )
    
    
    (4,507
    )Loss from discontinued operations, net of income taxes
    
    
    (7,571
    )
    
    
    (11,174
    )
    
    
    (6,375
    )Net loss
    
    $
    (1,946
    )
    
    $
    (11,818
    )
    
    $
    (10,882
    )Net income (loss) per common share:BasicContinuing operations
    
    $
    0.31
    
    
    $
    (0.04
    )
    
    $
    (0.34
    )Discontinued operations
    
    $
    (0.42
    )
    
    $
    (0.66
    )
    
    $
    (0.47
    )Net loss
    
    $
    (0.11
    )
    
    $
    (0.70
    )
    
    $
    (0.81
    )DilutedContinuing operations
    
    $
    0.31
    
    
    $
    (0.04
    )
    
    $
    (0.34
    )Discontinued operations
    
    $
    (0.42
    )
    
    $
    (0.66
    )
    
    $
    (0.47
    )Net loss
    
    $
    (0.11
    )
    
    $
    (0.70
    )
    
    $
    (0.81
    )Weighted-average number of common shares outstanding:Basic
    
    
    18,211,553
    
    
    
    16,903,487
    
    
    
    13,517,314Diluted
    
    
    18,211,553
    
    
    
    16,903,487
    
    
    
    13,517,314
 See accompanying notes
  25




---



##### 



TELULAR CORPORATION
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 (In Thousands)
 Additional
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-In
    
    
    
    
    
    
    StockholdersStock
    
    
    Capital
    
    
    Deficit
    
    
    EquityBalance at September 30, 2004
    
    $
    133
    
    
    $
    152,189
    
    
    $
    (107,521
    )
    
    $
    44,801Comprehensive income:Net loss for the year ended September 30, 2005
    
    
    
    
    
    
    
    
    
    
    (10,882
    )
    
    
    (10,882
    )Sale of common stock in a private placement
    
    
    26
    
    
    
    3,886
    
    
    
    
    
    
    
    3,912Issuance of warrants in a private placement
    
    
    
    
    
    
    5,311
    
    
    
    
    
    
    
    5,311Stock options exercised
    
    
    2
    
    
    
    631
    
    
    
    
    
    
    
    633Stock issued in connection with services received
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    17Balance at September 30, 2005
    
    
    161
    
    
    
    162,034
    
    
    
    (118,403
    )
    
    
    43,792Comprehensive income:Net loss for the year ended September 30, 2006
    
    
    
    
    
    
    
    
    
    
    (11,818
    )
    
    
    (11,818
    )Stock issued in connection with purchase of
business unit
    
    
    20
    
    
    
    5,485
    
    
    
    
    
    
    
    5,505Cost associated with the sale of
common stock in a private placement
    
    
    
    
    
    
    (21
    )
    
    
    
    
    
    
    (21
    )Warrants issued to secure working capital loan
    
    
    
    
    
    
    356
    
    
    
    
    
    
    
    356Stock based compensation expense
    
    
    
    
    
    
    937
    
    
    
    
    
    
    
    937Stock options exercised
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    51Stock issued in connection with services received
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10Balance at September 30, 2006
    
    
    181
    
    
    
    168,852
    
    
    
    (130,221
    )
    
    
    38,812Cumulative effect of adjustments resulting from
the adoption of SAB No. 108
    
    
    
    
    
    
    
    
    
    
    (810
    )
    
    
    (810
    )Adjusted balance at October 1, 2006
    
    
    181
    
    
    
    168,852
    
    
    
    (131,031
    )
    
    
    38,002Comprehensive income:Net loss for the year ended September 30, 2007
    
    
    
    
    
    
    
    
    
    
    (1,946
    )
    
    
    (1,946
    )Stock issued in connection with purchase of
business unit
    
    
    1
    
    
    
    562
    
    
    
    
    
    
    
    563Stock based compensation expense
    
    
    
    
    
    
    877
    
    
    
    
    
    
    
    877Stock options exercised
    
    
    3
    
    
    
    820
    
    
    
    
    
    
    
    823Stock issued in connection with services received
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    47Balance at September 30, 2007
    
    $
    185
    
    
    $
    171,158
    
    
    $
    (132,977
    )
    
    $
    38,366
 See accompanying notes
  26




---



##### 



TELULAR CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 Year ended September 30,2007
    
    
    2006
    
    
    2005Operating Activities:Net loss
    
    $
    (1,946
    )
    
    $
    (11,818
    )
    
    $
    (10,882
    )Less loss from discontinued operations
    
    
    (7,571
    )
    
    
    (11,174
    )
    
    
    (6,375
    )Income (loss) from continuing operations
    
    
    5,625
    
    
    
    (644
    )
    
    
    (4,507
    )Adjustments to reconcile income (loss) from
continuing operations to net cash
provided by (used in) operating activitiesDepreciation
    
    
    732
    
    
    
    1,106
    
    
    
    1,166Loss on disposal of operating assets
    
    
    60
    
    
    
    37
    
    
    
    Stock based compensation expense
    
    
    877
    
    
    
    937
    
    
    
    Common stock issued for services
    
    
    47
    
    
    
    10
    
    
    
    17Changes in assets and liabilities, net of effects of acquisition:Trade accounts receivable
    
    
    (8,403
    )
    
    
    (6,830
    )
    
    
    1,190Inventories
    
    
    (1,023
    )
    
    
    1,661
    
    
    
    3,490Prepaid expenses and other assets
    
    
    181
    
    
    
    182
    
    
    
    (91
    )Trade accounts payable
    
    
    2,497
    
    
    
    3,344
    
    
    
    1,058Accrued liabilities
    
    
    973
    
    
    
    (689
    )
    
    
    (522
    )Net cash provided by
(used in) operating
activities of
continuing operations
    
    
    1,566
    
    
    
    (886
    )
    
    
    1,801Investing Activities:Acquisition of property and equipment
    
    
    (845
    )
    
    
    (478
    )
    
    
    (531
    )Proceeds from sale of marketable securities
    
    
    
    
    
    
    12,075
    
    
    
    875Purchase of marketable securities
    
    
    
    
    
    
    
    
    
    
    (500
    )Net cash provided by
(used in) investing
activities of
continuing operations
    
    
    (845
    )
    
    
    11,597
    
    
    
    (156
    )Financing Activities:Proceeds from working capital line of credit
    
    
    5,737
    
    
    
    10,065
    
    
    
    Payments on working capital line of credit
    
    
    (9,050
    )
    
    
    (6,752
    )
    
    
    Expenditures related to the issuance of common stock
    
    
    
    
    
    
    (21
    )
    
    
    Proceeds from the issuance of common stock
    
    
    
    
    
    
    
    
    
    
    9,223Proceeds from the exercise of stock options
    
    
    823
    
    
    
    51
    
    
    
    633Net cash provided by
(used in) financing
activities of
continuing operations
    
    
    (2,490
    )
    
    
    3,343
    
    
    
    9,856Cash Flows of Discontinued Operations:Net cash
provided by (used in) operating activities of discontinued operations
    
    
    5,596
    
    
    
    (16,781
    )
    
    
    (6,862
    )Net cash used in investing activities of discontinued operations
    
    
    (372
    )
    
    
    (497
    )
    
    
    (4,843
    )Net increase (decrease) in cash and cash equivalents
    
    
    3,455
    
    
    
    (3,224
    )
    
    
    (204
    )Cash and cash equivalents, beginning of period
    
    
    6,799
    
    
    
    10,023
    
    
    
    10,227Cash and cash equivalents, end of period
    
    $
    10,254
    
    
    $
    6,799
    
    
    $
    10,023
 See accompanying notes
  27




---



##### 



TELULAR CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1. Description of Business
  2. Summary of Significant Accounting Policies
 Consolidation
  Revenue Recognition
  Cash Equivalents
  Restricted Cash
  Financial Instruments
  Inventories and Reserve for Obsolescence
    28




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Goodwill
    
    
    Significant underperformance relative to expected historical or projected future
operating results;
    
    Significant changes in the manner of use of the acquired assets or the strategy for the
overall business;
    
    Significant negative industry or economic trends; and,
    
    Significant decline in Telulars stock price for a substantial period.
    Intangible Assets
  Property and Equipment
   29




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Income Taxes
  Loss Per Share of Common Stock
   Stock-Based Compensation
 Accounting for Stock Issued to Employees
  30




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Twelve Months Ended September 30,2007
    
    2006
    
    2005Volatility
    
    
    69% - 73
    %
    
    
    73% - 75
    %
    
    
    60
    %Expected term
    
    4.0 yrs
    
    5.8 yrs
    
    5.3 yrsRisk free interest rate
    
    
    4.61% - 4.96
    %
    
    
    4.32% - 5.01
    %
    
    
    3.8
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
   Loss from continuing operations as reported
    
    $
    (4,507
    )Less: stock based employee compensation expense
determined under the fair value based method for all awards,
net of related tax effects
    
    
    (863
    )Pro forma loss from continuing operations
    
    $
    (5,370
    )Loss per share from continuing operations:Basic  as reported
    
    $
    (0.34
    )Basic  pro forma
    
    $
    (0.40
    )Diluted  as reported
    
    $
    (0.34
    )Diluted  pro forma
    
    $
    (0.40
    )
 Fair Value of Financial Instruments
  Research and Development Costs
   31




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Shipping and Handling Costs
  Warranty
  September 30,2007
    
    
    2006Balance at the beginning of the period
    
    $
    90
    
    
    $
    64Warranty expense during the period
    
    
    439
    
    
    
    193Warranty payments made during the period
    
    
    (446
    )
    
    
    (167
    )Balance at the end of the period
    
    $
    83
    
    
    $
    90
 Use of Estimates
  Reclassifications
  Recently Issued Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 Accounting for Income Taxes
 Fair Value Measurements.
  32




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3. Discontinued Operations
 Accounting for Impairment or Disposal
of Long-Lived Assets
  2007
    
    
    2006
    
    
    2005Revenues
    
    $
    20,931
    
    
    $
    47,394
    
    
    $
    18,946Cost of sales
    
    
    20,357
    
    
    
    43,312
    
    
    
    17,268Total operating expenses
    
    
    8,145
    
    
    
    15,256
    
    
    
    8,053Loss from discontinued operations
    
    $
    (7,571
    )
    
    $
    (11,174
    )
    
    $
    (6,375
    )
  2007
    
    
    2006
    
    
    2005Operating
Activities:Loss from discontinued operations
    
    $
    (7,571
    )
    
    $
    (11,174
    )
    
    $
    (6,375
    )Adjustments to reconcile loss to
net cash provided by (used in) operating activities:Depreciation
    
    
    718
    
    
    
    690
    
    
    
    309Amortization
    
    
    3,149
    
    
    
    1,606
    
    
    
    600Goodwill impairment loss
    
    
    563
    
    
    
    4,045
    
    
    
    Loss on disposal of assets
    
    
    256
    
    
    
    
    
    
    
    Changes in assets and liabilities:Assets of discontinued operations
    
    
    11,331
    
    
    
    (14,529
    )
    
    
    (1,002
    )Liabilities of discontinued operations
    
    
    (2,850
    )
    
    
    2,581
    
    
    
    (394
    )Net cash
provided by (used in) operating activities
    
    
    5,596
    
    
    
    (16,781
    )
    
    
    (6,862
    )Investing
Activities:Acquisition of property and equipment
    
    
    (32
    )
    
    
    (602
    )
    
    
    (843
    )Purchase of business
    
    
    
    
    
    
    (3,895
    )
    
    
    Decrease (increase) in restricted cash
    
    
    (340
    )
    
    
    4,000
    
    
    
    (4,000
    )Net cash used in investing activities
    
    
    (372
    )
    
    
    (497
    )
    
    
    (4,843
    )Cash provided by (used in) discontinued operations
    
    $
    5,224
    
    
    $
    (17,278
    )
    
    $
    (11,705
    )
  33




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2007
    
    
    2006Trade
accounts receivable, net
    
    $
    9,962
    
    
    $
    14,175Inventories, net
    
    
    4,359
    
    
    
    9,928Prepaid expenses
    
    
    101
    
    
    
    1,734Property and equipment, net
    
    
    2,348
    
    
    
    3,291Intangible assets, net
    
    
    1,098
    
    
    
    4,247Other assets
    
    
    91
    
    
    
    8Total assets
    
    $
    17,959
    
    
    $
    33,383Trade accounts payable
    
    $
    1,696
    
    
    
    2,371Accrued liabilities
    
    
    1,566
    
    
    
    3,741Total
liabilities
    
    $
    3,262
    
    
    $
    6,112
  4. Trade Accounts Receivable and Allowance for Doubtful Accounts
  September 30,2007
    
    
    2006Trade receivables
    
    $
    19,763
    
    
    $
    11,505Less: allowance for doubtful accounts
    
    
    (40
    )
    
    
    (185
    )$
    19,723
    
    
    $
    11,320
  34




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 5. Inventories
  September 30,2007
    
    
    2006Raw materials
    
    $
    915
    
    
    $
    1,890Finished goods
    
    
    3,136
    
    
    
    1,5094,051
    
    
    
    3,399Less: reserve for obsolescence
    
    
    (551
    )
    
    
    (922
    )$
    3,500
    
    
    $
    2,477
 6. Property and Equipment
  September 30,2007
    
    
    2006Furniture and fixtures
    
    $
    488
    
    
    $
    1,057Computer equipment
    
    
    2,426
    
    
    
    4,440Machinery and equipment
    
    
    4,497
    
    
    
    4,031Leasehold improvements
    
    
    324
    
    
    
    1,522Construction in progress
    
    
    11
    
    
    
    7,746
    
    
    
    11,050Less accumulated depreciation
    
    
    (6,355
    )
    
    
    (9,716
    )Property and equipment, net
    
    $
    1,391
    
    
    $
    1,334
 7. Goodwill and Intangible Assets
  Balance at September 30, 2005
    
    $
    2,5542006 activity:Additional goodwill    FCP
    
    
    3,534Impairment of goodwill    FCP
    
    
    (4,045
    )Balance at September 30, 2006
    
    
    2,0432007 activity:Additional goodwill    FCP
    
    
    563Impairment of goodwill    FCP
    
    
    (563
    )Balance at September 30, 2007
    
    $
    2,043
  35




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2007
    
    
    2006Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedCost
    
    
    Amortization
    
    
    Net
    
    
    Cost
    
    
    Amortization
    
    
    NetCapitalized technology
    
    $
    3,840
    
    
    $
    (3,240
    )
    
    $
    600
    
    
    $
    3,840
    
    
    $
    (2,250
    )
    
    $
    1,590Customer relationships
    
    
    3,070
    
    
    
    (2,671
    )
    
    
    399
    
    
    
    3,070
    
    
    
    (637
    )
    
    
    2,433Other
    
    
    293
    
    
    
    (194
    )
    
    
    99
    
    
    
    293
    
    
    
    (69
    )
    
    
    224Total intangible assets
    
    $
    7,203
    
    
    $
    (6,105
    )
    
    $
    1,098
    
    
    $
    7,203
    
    
    $
    (2,956
    )
    
    $
    4,247
  8. Accrued Liabilities
  September 30,2007
    
    
    2006Payroll and benefits expense
    
    $
    1,621
    
    
    $
    737Other
    
    
    2,745
    
    
    
    1,846$
    4,366
    
    
    $
    2,583
 9. Line of Credit
  2007
    
    
    2006Amount
    
    
    Interest Rate
    
    
    Amount
    
    
    Interest RateNon-recourse accounts receivable
purchase facility
    
    $
    
    
    
    
    0
    %
    
    $
    
    
    
    
    0
    %Working capital line of credit facility
    
    $
    
    
    
    
    0
    %
    
    $
    3,313
    
    
    
    10.25
    %
  36




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  10. Income Taxes
    September 30,2007
    
    
    2006Deferred tax assets:Reserve for inventory obsolescence
    
    $
    552
    
    
    $
    689Allowance for doubtful accounts
    
    
    18
    
    
    
    133Fixed assets
    
    
    
    
    
    
    577Intangible assets
    
    
    3,284
    
    
    
    2,391Research and development tax credits
    
    
    3,117
    
    
    
    2,514Non-cash compensation
    
    
    440
    
    
    
    364Net operating loss carryforwards
    
    
    49,540
    
    
    
    48,722Accrued liabilities
    
    
    376
    
    
    
    274Other
    
    
    109
    
    
    
    158Total deferred tax assets
    
    
    57,436
    
    
    
    55,822Less valuation allowance
    
    
    57,436
    
    
    
    55,822Net deferred tax assets
    
    $
    
    
    
    $
    
    37




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 11. Commitments
  Fiscal Year2008
    
    $
    4972009
    
    
    4652010
    
    
    4242011
    
    
    4492012
    
    
    568Thereafter
    
    
    647$
    3,050
   12. Redeemable Preferred Stock and Preferred Stock
  13. Capital Stock and Stock Options
   38




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     AvailableReserved
    
    
    to IssueOfficer and Employee Stock Incentive Plan
    
    
    3,450,000
    
    
    
    687,982Non-employee Director Stock Incentive Plan
    
    
    300,000
    
    
    
    70,031
   2007
    
    
    2006
    
    
    2005Weighted-
    
    
    
    
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageOptions
    
    
    Exercise
    
    
    Options
    
    
    Exercise
    
    
    Options
    
    
    Exercise(000s)
    
    
    Price
    
    
    (000s)
    
    
    Price
    
    
    (000s)
    
    
    PriceOutstanding
at beginning of the
year
    
    
    1,765
    
    
    $
    4.52
    
    
    
    1,719
    
    
    $
    7.93
    
    
    
    1,801
    
    
    $
    7.90Granted
    
    
    453
    
    
    
    3.66
    
    
    
    892
    
    
    
    2.72
    
    
    
    619
    
    
    
    4.54Exercised
    
    
    (288
    )
    
    
    2.86
    
    
    
    (21
    )
    
    
    2.47
    
    
    
    (192
    )
    
    
    3.30Canceled
    
    
    (340
    )
    
    
    4.07
    
    
    
    (825
    )
    
    
    9.73
    
    
    
    (509
    )
    
    
    5.45Outstanding at end
of the year
    
    
    1,590
    
    
    $
    4.67
    
    
    
    1,765
    
    
    $
    4.52
    
    
    
    1,719
    
    
    $
    7.93
  39




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Weighted-
    
    
    Outstanding
    
    
    
    
    
    
    ExercisableAverage
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Outstanding as of
    
    
    Remaining
    
    
    Average
    
    
    Exercisable as of
    
    
    AverageRange of
    
    September 30, 2007
    
    
    Contractual
    
    
    Exercise
    
    
    September 30, 2007
    
    
    ExerciseExercise Prices
    
    (000s)
    
    
    Life (in years)
    
    
    Price
    
    
    (000s)
    
    
    Price$1.95 - 3.25
    
    
    524
    
    
    
    4.96
    
    
    $
    2.58
    
    
    
    201
    
    
    $
    2.833.26 - 3.68
    
    
    400
    
    
    
    6.58
    
    
    
    3.52
    
    
    
    69
    
    
    
    3.523.69 - 6.58
    
    
    504
    
    
    
    3.34
    
    
    
    5.90
    
    
    
    407
    
    
    
    6.206.59 - 16.45
    
    
    162
    
    
    
    2.39
    
    
    
    10.42
    
    
    
    141
    
    
    
    10.911,590
    
    
    
    4.59
    
    
    $
    4.67
    
    
    
    818
    
    
    $
    5.96
 14. Major Customers
  15. Export Sales
  Export Sales by RegionCALA
    
    
    EA
    
    
    AME
    
    
    Total
    
    
    Domestic
    
    
    Total SalesFiscal 2007 sales
    
    $
    8,368
    
    
    $
    1,126
    
    
    $
    244
    
    
    $
    9,738
    
    
    $
    64,769
    
    
    $
    74,507Regions sales as % of
total export sales
    
    
    85.92
    %
    
    
    11.57
    %
    
    
    2.51
    %
    
    
    100.00
    %Regions sales as % of
Total Company sales
    
    
    11.23
    %
    
    
    1.51
    %
    
    
    0.33
    %
    
    
    13.07
    %
    
    
    86.93
    %
    
    
    100.00
    %Fiscal 2006 sales
    
    $
    5,201
    
    
    $
    1,728
    
    
    $
    514
    
    
    $
    7,443
    
    
    $
    38,263
    
    
    $
    45,706Regions sales as % of
total export sales
    
    
    69.88
    %
    
    
    23.22
    %
    
    
    6.91
    %
    
    
    100.00
    %Regions sales as % of
Total Company sales
    
    
    11.38
    %
    
    
    3.78
    %
    
    
    1.12
    %
    
    
    16.28
    %
    
    
    83.72
    %
    
    
    100.00
    %Fiscal 2005 sales
    
    $
    9,124
    
    
    $
    2,026
    
    
    $
    939
    
    
    $
    12,089
    
    
    $
    21,400
    
    
    $
    33,489Regions sales as % of
total export sales
    
    
    75.47
    %
    
    
    16.76
    %
    
    
    7.77
    %
    
    
    100.00
    %Regions sales as % of
Total Company sales
    
    
    27.24
    %
    
    
    6.05
    %
    
    
    2.80
    %
    
    
    36.10
    %
    
    
    63.90
    %
    
    
    100.00
    %
  40




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 16. Contingencies
  17. Employee Benefit Plan
  18. Supplemental Disclosures of Cash Flow Information
 For the Year ended September 30,2007
    
    
    2006
    
    
    2005Supplemental disclosure of cash flow information:Interest paid
    
    $
    107
    
    
    $
    91
    
    
    $
    Supplemental
disclosure of non-cash investing and financing activities:Common
stock issued to CSI in connection with acquisition  1,931,745 shares
    
    $
    
    
    
    $
    5,505
    
    
    $
    Common stock issued to CSI in connection with the earn-out
provisions of the Purchase Agreement - 150,990 shares
    
    $
    563
    
    
    $
    
    
    
    $
    Restricted common
stock awarded as director compensation  18,482 shares
    
    $
    47
    
    
    $
    
    
    
    $
    Increase in additional paid-in capital related to warrants issued to
secure working capital line of credit    320,856 warrants
    
    $
    
    
    
    $
    356
    
    
    $
    
 19 Business Combination
 Business Combinations
   41




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Inventory
    
    $
    69Prepaid expenses and deposits
    
    
    112Property and
equipment
    
    
    2,349Acquired technology
    
    
    840Customer relationships
    
    
    3,070Other intangible assets
    
    
    293Goodwill
    
    
    4,097Total assets acquired
    
    
    10,830Reserve on purchase orders commitments
    
    
    517Accrued warranty reserve
    
    
    40Capital lease obligations
    
    
    113Liabilities in connection with the purchase
    
    
    197Total liabilities assumed
    
    
    867Net asset acquired
    
    $
    9,963
   Composition of final purchase price:Cash
    
    $
    3,044Common stock:1,931,745 shares issued on
purchase date
    
    
    5,505150,990 shares issued for earn-out
    
    
    563Direct costs of the acquisition
    
    
    851$
    9,963
  2006Revenues from discontinued operations
    
    $
    63,764Loss from discontinued operations
    
    
    (13,889
    )Net loss
    
    
    (14,533
    )Basic and diluted net loss per common share
    
    
    (0.88
    )
  42




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 20. Quarterly Results of Operations (Unaudited)
  Three months ended,December 31
    
    
    March 31
    
    
    June 30
    
    
    September 30Fiscal year 2007Total revenues
    
    $
    14,763
    
    
    $
    16,890
    
    
    $
    16,502
    
    
    $
    26,352Gross margin
    
    
    5,151
    
    
    
    5,496
    
    
    
    5,784
    
    
    
    9,100Income from continuing operations
    
    
    248
    
    
    
    288
    
    
    
    1,391
    
    
    
    3,698Loss from discontinued operations
    
    
    (2,327
    )
    
    
    (2,108
    )
    
    
    (976
    )
    
    
    (2,160
    )Net income (loss)
    
    
    (2,079
    )
    
    
    (1,820
    )
    
    
    415
    
    
    
    1,538Basic income (loss) per common share:Continuing operations
    
    $
    0.01
    
    
    $
    0.02
    
    
    $
    0.07
    
    
    $
    0.20Discontinued operations
    
    $
    (0.13
    )
    
    $
    (0.12
    )
    
    $
    (0.05
    )
    
    $
    (0.12
    )Net income (loss)
    
    $
    (0.12
    )
    
    $
    (0.10
    )
    
    $
    0.02
    
    
    $
    0.08Diluted income (loss) per common share:Continuing operations
    
    $
    0.01
    
    
    $
    0.02
    
    
    $
    0.07
    
    
    $
    0.19Discontinued operations
    
    $
    (0.13
    )
    
    $
    (0.12
    )
    
    $
    (0.05
    )
    
    $
    (0.11
    )Net income (loss)
    
    $
    (0.12
    )
    
    $
    (0.10
    )
    
    $
    0.02
    
    
    $
    0.08Fiscal year 2006Total revenues
    
    $
    7,656
    
    
    $
    7,588
    
    
    $
    14,420
    
    
    $
    16,042Gross margin
    
    
    2,819
    
    
    
    2,597
    
    
    
    4,211
    
    
    
    4,747Income
(loss) from continuing operations
    
    
    103
    
    
    
    (526
    )
    
    
    (278
    )
    
    
    57Loss from discontinued operations
    
    
    (1,361
    )
    
    
    (1,407
    )
    
    
    (6,161
    )
    
    
    (2,245
    )Net loss
    
    
    (1,258
    )
    
    
    (1,933
    )
    
    
    (6,439
    )
    
    
    (2,188
    )Basic and diluted income (loss) per
common share:Continuing operations
    
    $
    0.01
    
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    0.00Discontinued operations
    
    $
    (0.09
    )
    
    $
    (0.09
    )
    
    $
    (0.35
    )
    
    $
    (0.12
    )Net income (loss)
    
    $
    (0.08
    )
    
    $
    (0.12
    )
    
    $
    (0.37
    )
    
    $
    (0.12
    )
   43




---



##### 



TELULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 21. Cumulative Effect Adjustment to Retained Earnings
   44




---



##### 



PART III
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  ITEM 9A. CONTROLS AND PROCEDURES
   Managements Report on Internal Control Over Financial Reporting
    ITEM 9B. OTHER INFORMATION
   45




---



##### 



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
   www.telular.com/profile/codes.asp.
 ITEM 11. EXECUTIVE COMPENSATION
  ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
   46




---



##### 



PART IV
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 (a)
    
    1.
    
    The following financial statements are included in Part II, Item 8 of this Form 10-K.Reports of Independent Registered Public Accounting FirmConsolidated Balance Sheets as of September 30, 2007 and 2006Consolidated Statements of Operations for the years ended September 30, 2007, 2006 and 2005Consolidated Statements of Stockholders Equity for the years ended September 30, 2007, 2006
and 2005Consolidated Statements of Cash Flows for the years ended September 30, 2007, 2006 and 2005Notes to Consolidated Financial Statements2.
    
    The following financial statement schedule, Schedule II  Valuation and
Qualifying Accounts for the years ended September 30, 2007, 2006 and 2005 is filed as
part of this report. All other financial statement schedules have been omitted because
they are not applicable or are not required or the information required to be set forth
therein is included in the financial statements or notes thereto contained in Part II,
Item 8 of this annual report.Schedule II  Valuation and Qualifying Accounts
 ChargedBalance at
    
    
    to Costs
    
    
    Charged
    
    
    
    
    
    
    Balance atBeginning
    
    
    and
    
    
    to Other
    
    
    
    
    
    
    End ofDescription
    
    of Period
    
    
    Expenses
    
    
    Accounts
    
    
    Deductions
    
    
    PeriodPeriod Ended September 30, 2007Accumulated amortization of intangible
assets
    
    $
    2,956
    
    
    $
    3,149
    (1)
    
    $
    
    
    
    $
    
    
    
    $
    6,105Valuation
allowance of deferred tax asset
    
    
    55,822
    
    
    
    1,614
    (2)
    
    
    
    
    
    
    
    
    
    
    57,436Reserve for inventory obsolescence
    
    
    922
    
    
    
    328
    
    
    
    
    
    
    
    (699
    )(3)
    
    
    551Allowance for doubtful accounts
    
    
    185
    
    
    
    (54
    )(4)
    
    
    
    
    
    
    (91
    )(5)
    
    
    40Period Ended September 30, 2006Accumulated amortization of intangible
assets
    
    $
    1,350
    
    
    $
    1,606
    (1)
    
    $
    
    
    
    $
    
    
    
    $
    2,956Valuation
allowance of deferred tax asset
    
    
    51,268
    
    
    
    4,554
    (2)
    
    
    
    
    
    
    
    
    
    
    55,822Reserve for inventory obsolescence
    
    
    2,285
    
    
    
    245
    
    
    
    
    
    
    
    (1,608
    )(3)
    
    
    922Allowance for doubtful accounts
    
    
    95
    
    
    
    90
    
    
    
    
    
    
    
    
    
    
    
    185Period Ended September 30, 2005Accumulated amortization of intangible
assets
    
    $
    750
    
    
    $
    600
    (1)
    
    $
    
    
    
    $
    
    
    
    $
    1,350Valuation
allowance of deferred tax asset
    
    
    47,103
    
    
    
    4,165
    (2)
    
    
    
    
    
    
    
    
    
    
    51,268Reserve for inventory obsolescence
    
    
    1,389
    
    
    
    937
    
    
    
    
    
    
    
    (41
    )(3)
    
    
    2,285Allowance for doubtful accounts
    
    
    137
    
    
    
    (35
    )(4)
    
    
    
    
    
    
    (7
    )(5)
    
    
    95
 
 (1)
    
    Amortization of intangibles includes impairment charges. All charges are
included in loss from discontinued operations.(2)
    
    Amount represents the change in the valuation amount for deferred taxes due
principally to the origination and utilization of net operating loss carryforwards. The
valuation amount reflects the net tax effects of temporary differences between the carry
amounts of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes.(3)
    
    Inventory disposed.(4)
    
    Reversal of previously charged expense for the allowance for doubtful accounts.(5)
    
    Accounts receivable written-off.  47




---



##### 



Number
    
    Description
    
    Reference3.1
    
    Certificate of Incorporation
    
    Filed as Exhibit 3.1
to Registration Statement
No. 33-72096 (the Registration
Statement)3.2
    
    Amendment No. 1 to Certificate
of Incorporation
    
    Filed as
Exhibit 3.2 to
the Registration
Statement3.3
    
    Amendment No. 2 to Certificate
of Incorporation
    
    Filed as
Exhibit 3.3 to
the Registration
Statement3.4
    
    Amendment No. 3 to Certificate
of Incorporation
    
    Filed as
Exhibit 3.4 to
Form 10-Q filed
February 16, 19993.5
    
    Amendment No.4 to Certificate
of Incorporation
    
    Filed as
Exhibit 3.5 to
Form 10-Q filed
February 16, 19993.6
    
    By-Laws
    
    Filed as
Exhibit 3.4 to
the Registration
Statement4.1
    
    Certificate of Designations, Preferences,
and Rights of Series A Convertible Preferred
Stock
    
    Filed as Exhibit 99.2
Form 8-K filed
April 25, 199710.1
    
    Appointment of Larry J. Ford
    
    Filed as Exhibit 10.2
to Form 10-Q filed 
May 1, 199510.2
    
    Nonqualified Stock Option Agreement,
dated as of October 31, 2000, by and
between the Company and Larry J. Ford
    
    Filed as Exhibit 4.9 to
Registration Statement on
Form S-8, Registration
No. 333-61970 filed
May 31, 200110.3
    
    Nonqualified Stock Option Agreement,
dated as of October 26, 1999, by and
between the Company and Larry J. Ford
    
    Filed as Exhibit 4.10 to
Registration Statement on
Form S-8, Registration
No. 333-61970 filed
May 31, 2001
  48




---



##### 



Number
    
    Description
    
    Reference10.4
    
    Nonqualified Stock Option Agreement,
dated as of October 31, 2000, by and
between the Company and John E. Berndt
    
    Filed as Exhibit 4.15 to
Registration Statement on
Form S-8, Registration
No. 333-61970 filed
May 31, 200110.5
    
    Nonqualified Stock Option Agreement,
dated as of October 26, 1999, by and
between the Company and John E. Berndt
    
    Filed as Exhibit 4.16 to
Registration Statement on
Form S-8, Registration
No. 333-61970 filed
May 31, 200110.6
    
    Nonqualified Stock Option Agreement,
dated as of October 30, 2001, by and
between the Company and John E. Berndt
    
    Filed as Exhibit 10.41 to
Form 10-K filed
December 21, 200110.7
    
    Nonqualified Stock Option Agreement,
dated as of October 30, 2001, by and
between the Company and Larry J. Ford
    
    Filed as Exhibit 10.42 to
Form 10-K filed
December 21, 200110.8
    
    Telular Corporation Non-employee
Directors Stock Incentive Plan
    
    Filed as Exhibit 10.22
to Form 10-Q filed
February 14, 200310.9
    
    Employment Agreement with
Michael J. Boyle dated July 22, 2005
    
    Filed as Exhibit 10.1
to Form 8-K filed
July 25, 200510.10
    
    Telular Corporations Asset Purchase
Agreement with CSI Wireless Inc. and
CSI Wireless LLC dated April 21, 2006
    
    Filed as Exhibit 10.1
to Form 10-Q filed
May 10, 200610.11
    
    Loan and Security Agreement
(Working Capital Line of Credit)
dated June 27, 2006
    
    Filed as Exhibit
10.1 to Form 10-Q
filed August 7,
200610.12
    
    Non-Recourse Receivable
Purchase Agreement dated
June 27, 2006
    
    Filed as Exhibit
10.2 to Form 10-Q
filed August 7,
200610.13
    
    Amended and Restated Employment
Agreement with Michael J. Boyle
dated October 31, 2006
    
    Filed as Exhibit 10.22 to Form 10-K
filed December 14, 200621
    
    Subsidiaries of Registrant
    
    Filed herewith23
    
    Consent of Ernst & Young LLP
    
    Filed herewith31.1
    
    Certification Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
    
    Filed herewith
  49




---



##### 



Number
    
    Description
    
    Reference31.2
    
    Certification Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
    
    Filed herewith32.1
    
    Certification Pursuant to 18
U.S.C. Section 1350 as Adopted
Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Furnished herewith99
    
    Cautionary Statements
    
    Furnished herewith
 (1)
    
    Certain portions of this exhibit have been omitted and filed separately with the
United States Securities and Exchange Commission pursuant to a request for confidential
treatment. The omitted portions have been replaced by an * enclosed by brackets ([*]).  50




---



##### 



SIGNATURES
  Telular CorporationDate: December 14, 2007
    By: /s/ MICHAEL J. BOYLEMichael J. BoylePresident & Chief Executive Officer  Signature
    
    Title
    
    Date/s/
    
    MICHAEL J. BOYLE
    
    President, Chief Executive
    
    December 14, 2007Michael J. Boyle
    
    Officer and Director/s/
    
    JOSEPH A. BEATTY
    
    Executive Vice President,
    
    December 14, 2007Joseph A. Beatty
    
    Chief Financial Officer and Secretary/s/
    
    ROBERT L. DEERING
    
    Chief Accounting Officer
    
    December 14, 2007Robert L. Deering/s/
    
    JOHN E. BERNDT
    
    Chairman of the Board
    
    December 14, 2007John E. Berndt/s/
    
    LARRY J. FORD
    
    Lead Independent Director
    
    December 14, 2007Larry J. Ford/s/
    
    BRIAN J. CLUCAS
    
    Director
    
    December 14, 2007Brian J. Clucas/s/
    
    LAWRENCE S. BARKER
    
    Director
    
    December 14, 2007Lawrence S. Barker/s/
    
    BETSY J. BERNARD
    
    Director
    
    December 14, 2007Betsy J. Bernard/s/
    
    M. BRIAN MCCARTHY
    
    Director
    
    December 14, 2007M. Brian McCarthy
  51




---



##### 



EXHIBIT INDEX
 Number
    
    Description
    
    Reference21
    
    Subsidiaries of Registrant
    
    Filed herewith23
    
    Consent of Ernst & Young LLP
    
    Filed herewith31.1
    
    Certification Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
    
    Filed herewith31.2
    
    Certification Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
    
    Filed herewith32.1
    
    Certification Pursuant to 18 U.S.C. Section
1350 as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
    
    Furnished herewith99
    
    Cautionary Statements
    
    Furnished herewith
  52