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<SEC-DOCUMENT>0001021408-01-500879.txt : 20010515
<SEC-HEADER>0001021408-01-500879.hdr.sgml : 20010515
ACCESSION NUMBER:		0001021408-01-500879
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20010331
FILED AS OF DATE:		20010514

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			RELM WIRELESS CORP
		CENTRAL INDEX KEY:			0000002186
		STANDARD INDUSTRIAL CLASSIFICATION:	RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663]
		IRS NUMBER:				042225121
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		
		SEC FILE NUMBER:	000-07336
		FILM NUMBER:		1631580

	BUSINESS ADDRESS:	
		STREET 1:		7100 TECHNOLOGY DRIVE
		CITY:			WEST MELBOURNE
		STATE:			FL
		ZIP:			32904
		BUSINESS PHONE:		2154303900

	MAIL ADDRESS:	
		STREET 1:		7100 TECHNOLOGY DRIVE
		CITY:			WEST MELBOURNE
		STATE:			FL
		ZIP:			32904

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ADAGE INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d10q.txt
<DESCRIPTION>FORM 10-Q FOR PERIOD ENDING 3/31/01
<TEXT>

<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549

                         ----------------------------

                                   FORM 10-Q

(Mark one)

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

For the quarterly period ended March 31, 2001
                               ---------------

                                      OR

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

For the transition period from  _____________  to ________________

Commission file number 0-7336

                           RELM WIRELESS CORPORATION
            (Exact name of registrant as specified in its charter)

              Nevada                                          04-2225121
   -------------------------------                       -------------------
   (State of other jurisdiction of                       (I.R.S. Employer
   incorporation or organization)                        Identification No.)

                              7100 Technology Drive
                             West Melbourne, Florida
                             -----------------------
                    (Address of principal executive offices)

                                      32904
                                      -----
                                   (Zip Code)

       Registrant's telephone number, including area code: (321) 984-1414



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 [  ]

     Common Stock, $.60 Par Value -- 5,346,174 shares outstanding as of March
     31, 2001
<PAGE>

                          PART I- FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS
         --------------------

                            RELM WIRELESS CORPORATION
                      Condensed Consolidated Balance Sheets
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                      March 31           December 31
                                                                                         2001                2000
                                                                                   -----------------------------------
                                                                                      (Unaudited)       (see note 1)
<S>                                                                                <C>                    <C>
ASSETS
Current assets:
              Cash and cash equivalents                                            $       102            $      208
              Trade accounts receivable (net of allowance for doubtful accounts          2,282                 3,712
              of $1,551 as of March 31, 2001 and $1,555 as of March 31, 2000)
              Inventories, net                                                           9,107                 8,940
              Prepaid expenses and other current                                           538                   528
                                                                                   -------------          ------------
Total current assets                                                                    12,029                13,388


Property, plant and equipment, net                                                       2,678                 2,833
Notes receivable less current portion                                                      984                   984
Debt issuance costs, net                                                                   640                   682
Other assets                                                                               505                   535
                                                                                   -------------          ------------
Total assets                                                                       $    16,836            $   18,422
                                                                                   =============          ============
</TABLE>

See notes to condensed consolidated financial statements.

                                       1
<PAGE>

                           RELM WIRELESS CORPORATION
                     Condensed Consolidated Balance Sheets
                       (In thousands except share data)

<TABLE>
<CAPTION>
                                                                                 March 31         December 31
                                                                                   2001               2000
                                                                             --------------      -------------
                                                                                (Unaudited)       (see note 1)
<S>                                                                          <C>                 <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
         Current maturities of long-term liabilities                          $       422         $      848
         Accounts payable                                                           3,402              3,604
         Accrued compensation and related taxes                                       472                361
         Accrued expenses and other current liabilities                               855                896
                                                                              --------------      ------------
Total current liabilities                                                           5,151              5,709


Long-term liabilities:
         Line of credit                                                             2,452              3,193
         Convertible subordinated notes                                             3,150              3,150
         Capital lease obligations                                                     10                 10
                                                                              --------------      ------------
                                                                                    5,612              6,353


Stockholders' equity:
         Common stock; $.60 par value; 10,000,000 authorized shares:
         5,346,174  issued and outstanding shares at
         March 31, 2001 and December 31, 2000                                       3,207              3,207
         Additional paid-in capital                                                21,452             21,452
         Accumulated deficit                                                      (18,586)           (18,299)
                                                                              --------------      ------------
Total stockholders' equity                                                          6,073              6,360
                                                                              --------------      ------------
Total liabilities and stockholders' equity                                    $    16,836         $   18,422
                                                                              ==============      ============
</TABLE>

See notes to condensed consolidated financial statements.

                                       2
<PAGE>

                           RELM WIRELESS CORPORATION
                Condensed Consolidated Statements of Operations
                                  (Unaudited)
                     (In thousands except per share data)

                                                         THREE MONTHS ENDED
                                                   ---------------------------
                                                    March 31          March 31
                                                      2001              2000
                                                   ---------       -----------
                                                   Unaudited       (see note 1)


Sales                                              $  4,720        $    4,596
Expenses
      Cost of products                                3,471             3,609
      Selling, general & administrative               1,388             1,526
                                                   ---------       -----------
                                                      4,859             5,135
                                                   ---------       -----------


Operating income (loss)                                (139)             (539)
Other income (expense):
      Interest expense                                 (158)             (298)
      Gain on sale of facility and equipment              -             1,165
      Other income                                       10                63
                                                   ---------       -----------
Net income (loss)                                  $   (287)       $      391
                                                   =========       ===========


Earnings (loss) per share-basic                    $  (0.05)       $     0.08
                                                   =========       ===========

Earnings (loss) per share-diluted                  $  (0.05)       $     0.07
                                                   =========       ===========

See notes to condensed consolidated financial statements.

                                      3
<PAGE>

                           RELM WIRELESS CORPORATION
                Condensed Consolidated Statements of Cash Flows
                                  (Unaudited)
                                (In thousands)
<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED
                                                   ------------------------------------
                                                     March 31              March 31
                                                       2001                  2000
                                                   --------------       ---------------
<S>                                                <C>                  <C>

Cash provided (used) by operations                     $ 1,097             $(1,040)

Investing activities:
     Cash paid for Uniden product line                       -              (2,016)
     Property and equipment purchases                      (36)                (94)
     Proceeds from disposals of assets                       -               5,208
     Other                                                   -                   4
                                                       ----------          ------------
     Cash provided (used) by investing activities          (36)              3,102

Financing activities:
     Net change in line of credit                         (741)             (1,141)
     Proceeds from long term debt                            -               3,250
     Repayment of debt and capital leases                 (426)             (3,799)
     Payment of debt issuance costs                          -                (188)
                                                       ----------          ------------
Cash used by financing activities                       (1,167)             (1,878)

Increase (decrease) in cash                               (106)                184

Cash and cash equivalents at beginning of period           208                   1
                                                       ----------          ------------

Cash and cash equivalents at end of period             $   102             $   185
                                                       ==========          ============

Supplemental disclosure:
     Interest paid                                     $   158             $   298
                                                       ==========          ============

Non-cash transactions:
     Common stock and common stock warrants
       payable for debt issuance and acquisition costs $     -             $ 1,059
                                                       ==========          ============
</TABLE>

See notes to condensed consolidated financial statements.

                                       4
<PAGE>

             Notes to Condensed Consolidated Financial Statements
                                  (Unaudited)
                       (In thousands except share data)

1.       Condensed Consolidated Financial Statements

The condensed consolidated balance sheet as of March 31, 2001, the condensed
consolidated statements of operations for the three months ended March 31, 2001
and 2000 and the condensed consolidated statements of cash flows for the three
months ended March 31, 2001 and 2000 have been prepared by RELM Wireless
Corporation (the Company), without audit. In the opinion of management, all
adjustments (which include normal recurring adjustments) necessary for a fair
presentation have been made. The balance sheet at December 31, 2000 has been
derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 2000 Annual
Report to Stockholders. The results of operations for the three month period
ended March 31, 2001 are not necessarily indicative of the operating results for
a full year.

The Company maintains its records on a calendar year basis. The Company's first,
second, and third quarters normally end on the Friday closest to the last day of
the last month of such quarter, which was March 30, 2001 for the first quarter
of fiscal 2001. The quarter began on January 1, 2001.

2.       Significant Transactions

Acquisition of Product Line

On March 13, 2000, the Company completed the acquisition of certain private
radio communications products from Uniden America Corporation (Uniden) for
$1,864 which included assumption of certain liabilities related to the product
line. Additionally, the Company incurred acquisition costs of $639. The entire
purchase price was allocated to tooling and inventory based on their estimated
fair values. Uniden will continue to provide manufacturing support for certain
Uniden land mobile radio products, which will be marketed by the Company.

Acquisition costs included grants of 150,000 shares at $3.25 per share of the
Company's common stock valued at $488.

Private Placement

On March 16, 2000, the Company completed the private placement of $3,250 of
convertible subordinated notes. The notes earn interest at 8% per annum, are
convertible at $3.25 per share, and are due on December 31, 2004. The
registration of the common stock shares underlying the convertible notes was
effective June 2000. Portions of the proceeds from this private placement were
used to acquire the Uniden land mobile radio products.

The debt issuance costs included grants to Simmonds Capital Limited of 50,000
shares at $3.25 per share of the Company's common stock valued at $163 and
warrants to purchase 300,000 shares of the Company's common stock valued at
$409. The warrants have a five year term and an exercise price of

                                       5
<PAGE>

Private Placement-continued

$3.25 per share. Additionally,  the Company incurred approximately $817 in costs
related to the private placement. These costs are currently being amortized on a
straight-line basis over the life of the notes.

Sale of West Melbourne, Florida Facility and Completion of Manufacturing
Agreement

On March 24, 2000, the Company completed the sale of its 144 square foot
facility located in West Melbourne, Florida for $5,600. The transaction resulted
in a net gain of $1,165 and provided approximately $1,600 in cash after related
expenses and after payoff of the note and satisfaction of the mortgage on the
property. Upon the sale of the building, the Company leased approximately 54
square feet of comparable space at a nearby location.

On March 23, 2000, the Company entered into a contract manufacturing agreement
for the manufacture of certain land mobile radio subassemblies. Under this
agreement, the contract manufacturer employed sixty-eight of the Company's
direct manufacturing workforce and agreed to purchase certain existing raw
material inventories from the Company as needed, based on material requirements
indicated by purchase orders for finished product from the Company. Revenues are
recognized as the contract manufacturer uses these inventories. Until that time,
they are treated as an asset of the Company and are included in the Company's
inventory reserve analysis.

3.       Inventories

The components of inventory, net of reserves totaling $1,978 at March 31, 2001
and December 31, 2000, consist of the following:

                                           March 31             December 31
                                             2001                   2000
                                     ------------------    --------------------

    Finished goods                   $         5,337       $          5,043
    Work in process                              690                    796
    Raw materials                              3,080                  3,101
                                     ------------------    --------------------
                                     $         9,107       $          8,940
                                     ==================    ====================


4.       Stockholders' Equity

The consolidated changes in stockholders' equity for the three months ended
March 31, 2001 are as follows:

<TABLE>
<CAPTION>
                                                                Additional
                                          Common Stock           Paid-In    Accumulated
                                 --------------------------
                                        Shares#      Amount      Capital      Deficit           Total
                                 --------------------------------------------------------------------------
<S>                                  <C>            <C>         <C>          <C>               <C>

Balance at December 31, 2000            5,346,174    $  3,207    $ 21,452     $ (18,299)        $6,360

Net loss                                        -           -           -          (287)          (287)

                                 --------------------------------------------------------------------------
Balance at March 31, 2001               5,346,174    $  3,207    $ 21,452     $ (18,586)        $6,073
                                 ==========================================================================
</TABLE>

                                       6
<PAGE>

5.     Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                                                                  ---------------------------
                                                                    March 31        March 31
                                                                     2001            2000
                                                                  -------------   -----------
<S>                                                               <C>             <C>
Numerator:
   Net income (loss)(numerator for basic earnings per share)      $     (287)     $      391
   Effect of dilutive securities:
      8% convertible notes                                                 -              11
                                                                  -------------   -----------
   Net income (loss) (numerator for dilutive earnings per share)        (287)            402
                                                                  -------------   -----------
Denominator:
   Denominator for basic earnings per share-weighted
   average shares                                                  5,346,174       5,090,405
   Effect of dilutive securities:
      8% convertible notes                                                 -         166,667
      Options                                                              -         341,297
                                                                  -------------   -----------
   Denominator for diluted earnings per share -
   adjusted weighted average shares                                5,346,174       5,598,369
                                                                  =============   ===========
Basic earnings per share                                          $    (0.05)     $     0.08
                                                                  =============   ===========
Diluted earnings per share                                        $    (0.05)     $     0.07
                                                                  =============   ===========
</TABLE>

Shares related to options and convertible debt are not included in the
computation of loss per share for the three months ended March 31, 2001, because
to do so would have been anti-dilutive.

6.       Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities, and its amendments
Statements 137 and 138, in June 1999 and June 2000, respectively. The Statements
require the Company to recognize all derivatives on the balance sheet at fair
value. If the derivative is a hedge, depending on the nature of the hedge,
changes in the fair value of derivatives are either offset against the change of
fair value of assets, liabilities, or firm commitments through earnings, or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. The Company adopted these Statements on
January 1, 2001, and did not have a material impact on the Company's financial
position or results of operations. At March 31, 2001, the Company had no hedges
or firm commitments outstanding.

7.       Contingent Liabilities

From time to time, the Company may become liable with respect to pending and
threatened litigation, tax, environmental and other matters.

                                       7
<PAGE>

General Insurance

Under the Company's insurance programs, coverage is obtained for catastrophic
exposures as well as those risks required to be insured by law or contract. It
is the policy of the Company to retain a significant portion of certain expected
losses related primarily to workers' compensation, physical loss to property,
business interruption resulting from such loss and comprehensive general,
product, and vehicle liability. Provisions for losses expected under these
programs are recorded based upon the Company's estimates of the aggregate
liability for claims incurred. Such estimates utilize certain actuarial
assumptions followed in the insurance industry and are included in accrued
expenses. The amounts accrued are included in accrued compensation and related
taxes in the balance sheets.

Former Affiliate

In 1993, a civil action was brought against the Company by a plaintiff to
recover losses sustained on notes of a former affiliate. The plaintiff alleges
violations of federal securities and other laws by the Company in collateral
arrangements with the former affiliate. In response, the Company filed a motion
to dismiss the complaint in the fall of 1993, which the court has yet to rule.
In February 1994, the plaintiff executed and circulated for signature, a
stipulation of voluntary dismissal. After the stipulation was executed the
plaintiff refused to file the stipulation with the court. Subsequently the
Company and others named in the complaint filed a motion to enforce their
agreement with the plaintiff. The court has also yet to rule on that motion.

In a second related action, an adversarial action in connection with the
bankruptcy proceedings of the former affiliate has been filed. In response to
that complaint the Company filed motion to dismiss for failure to state a cause
of action. Although the motion for dismissal was filed during 1995, the
bankruptcy court has not yet ruled on the motion. The range of potential loss,
if any, as a result of these actions cannot be presently determined.


Former Affiliate-continued

In February 1986, the liquidator of the former affiliate filed a complaint
claiming intentional and negligent conduct by the Company and others named in
the complaint caused the former affiliate to suffer millions of dollars of
losses leading to its ultimate failure. The complaint does not specify damages
but an unfavorable outcome could have a material adverse impact on the Company's
financial position. The range of potential loss, if any, cannot be presently
determined.

Management, with the advice of counsel, believes the Company has meritorious
defenses and the likelihood of an unfavorable outcome in each of these actions
is remote.

Counter Claims

In February 1999, the Company initiated collection and legal proceedings against
its former Brazilian dealer, Chatral, for failure to pay for 1998 product
shipments totaling $1.4 million which has been fully

                                       8
<PAGE>

reserved. On December 8, 1999, Chatral filed a counter claim against the Company
that alleges damages totaling $8 million as a result of the Company's
discontinuation of shipments to Chatral.

Although the Company and its counsel believe the Company has a meritorious
defense, the outcome of this action is uncertain. An unfavorable outcome could
have a material adverse effect on the financial position of the Company.

                                       9
<PAGE>

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

Results of Operations
- ---------------------

As an aid to understanding the Company's operating results, the following table
shows each item from the consolidated statement of operations expressed as a
percentage of net sales:

                                                      Percentage of Sales
                                                  ---------------------------
                                                       THREE MONTHS ENDED

                                                     March 31        March 31
                                                       2001            2000
                                                  -------------   -----------

Sales                                                   100.0%        100.0%
Cost of sales                                            73.5          78.5
Gross Margin                                             26.5          21.5
Selling, general and administrative expenses            (29.4)        (33.2)
Interest expense                                         (3.4)         (6.5)
Other income                                              0.2          26.7
                                                  -------------   -----------
Net income                                               (6.1%)         8.5%
                                                  =============   ===========

Net Sales

Net sales for the three months ended March 31, 2001 increased approximately
$124,000 or 2.7% compared to the same period for the prior year. Revenues for
our core land mobile radio (LMR) products increased approximately $261,000 or
5.9% due to stronger sales in our government and public safety markets and sales
of our Uniden products, which were not offered for sale during the same period
for the prior year. Non-LMR revenues decreased $137,000 or 97.2% compared to the
same period for the prior year as we exited businesses and discontinued products
that performed poorly or did not fit our strategic focus in wireless
communications.

Cost of Sales and Gross Margins

Cost of sales as a percentage of net sales decreased from 78.5% to 73.5% for the
three months ended March 31, 2001 compared to the same period for the prior
year. This improvement is primarily the result of our continued actions to
reduce manufacturing overhead costs while improving efficiency and quality.
Specifically, we have moved operations to a smaller, lower cost facility and
reduced both our direct and indirect workforce. Additionally, we have
out-sourced the surface-mount and other portions of our front-end manufacturing
processes as well as the production of our Uniden products. Also, the mix of
product revenues during the first quarter of 2001 compared to the same period
for the prior year was greater in our higher margin BK Radio and Uniden
products.

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses consist of marketing, sales,
commissions, engineering, research and development, management information
systems, accounting and headquarters expenses. For the three months ended March
31, 2001, SG&A expenses totaled $1,388,000 or 29.4% of sales compared to
$1,526,000 or 33.2% of sales for the same period in 2000. The decrease in SG&A

                                      10
<PAGE>

Selling, General and Administrative Expenses-continued

expenses reflects our actions to structure our SG&A support activities in
accordance with our current revenue run-rates and overall business conditions.
Marketing and selling expenses decreased approximately 23.5% compared to the
same period in 2000 as we reengineered our marketing and sales departments.
Also, we reduced our engineering staff compared to the same period for the prior
year, reflecting our strategy to utilize external engineering resources, where
possible, for specific research and development projects. Staffing and expense
reductions have also been made in our general and administrative functions such
as finance, human resources, and headquarters.

Interest Expense

For the three months ended March 31, 2001 interest expense totaled $158,000 or
3.4% of sales compared with $298,000 or 6.5% of sales for the same period in
2000. The decrease is primarily a result of the satisfaction of the mortgage on
our facility in connection with its sale in the first quarter of 2000. Also, we
sold certain manufacturing equipment during the fourth quarter of 2000 and
satisfied the related capital lease commitment. A portion of the proceeds from
our private placement of convertible subordinate notes and working capital
generated in part from expense reductions enabled us to reduce the amounts
outstanding on our revolving credit facility and existing capital lease
obligations.

Other Income

On March 24, 2000, we completed the sale of our 144,000 square foot facility
located in West Melbourne, Florida for $5.6 million. The transaction resulted in
a gain of approximately $1.2 million and approximately $1.6 million in cash
after related expenses and the satisfaction of the mortgage on the property. We
currently lease approximately 54,000 square feet of comparable space at a nearby
location.

Income Taxes

No income tax provision was provided for the three months ended March 31, 2001
or March 31, 2000 as we have net operating loss carryforward benefits totaling
approximately $30 million at March 31, 2001. We have evaluated our tax position
in light of the requirements of SFAS No. 109, Accounting for Income Taxes, and
do not believe that we have met the more-likely-than-not criteria for
recognizing a deferred tax asset. As a result, we have provided valuation
allowances against our net deferred tax assets.

Inflation and Changing Prices

Inflation and changing prices for the three months ended March 31, 2001 and 2000
have contributed to increases in wages, facilities, and raw material costs.
Effects of these inflationary effects were partially offset by increased prices
to customers. We believe that we will be able to pass on most of our future
inflationary increases to our customers. We are also subject to changing foreign
currency exchange rates in our purchase of some raw materials. We employ several
methods to protect against increases in cost due to currency fluctuations. It is
not always possible to pass on these effects. Competitors in the LMR markets are
subject to similar fluctuations.

Liquidity and Capital Resources
- -------------------------------

As of March 31, 2001, we had working capital of $6.9 million compared with $7.7
million as of December 31, 2000. This decrease was primarily the result of
accounts receivable collections, which were utilized primarily to reduce
long-term borrowings under our revolving line of credit.

                                      11
<PAGE>

Liquidity and Capital Resources-continued

We have a $7 million revolving line of credit. As of March 31, 2001, the formula
under the terms of the agreement supported a borrowing base totaling
approximately $4.5 million, of which approximately $1.0 million was available.
As of December 31, 2000, we were in default of certain financial covenants under
the line of credit. In February 2000, our lender signed a waiver of those
defaults effective as of December 31, 2000. In March 2001, our lender agreed to
modify those covenants effective as of January 1, 2001.

Capital expenditures for property and equipment for the three months ended March
31, 2001 were $36,000 compared to $94,000 for the same period in 2000.

Forward-Looking Statements
- --------------------------

This report contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act Of 1995 and is subject to the
safe-harbor created by such act. These forward-looking statements concern the
Company's operations, economic performance and financial condition and are based
largely on the Company's beliefs and expectations. These statements involve
known and unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of the Company, or industry results,
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors and risks
include, among others, the following: the factors described in the Company's
filings with the Securities and Exchange Commission; general economic and
business conditions; changes in customer preferences; competition; changes in
technology; changes in business strategy; the indebtedness of the Company;
quality of management, business abilities and judgment of the Company's
personnel; and the availability, terms and deployment of capital. Certain of
these factors and risks, as well as other risks and uncertainties are stated in
more detail in the Company's Annual Report on Form 10-K. These forward-looking
statements are made as of the date of this report, and the Company assumes no
obligation to update the forward-looking statements or to update the reasons why
actual results could differ from those projected in the forward-looking
statements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
- ------   -------------------------------------------------------

None.


                                      12
<PAGE>

                          PART II- OTHER INFORMATION
                          --------------------------

ITEM 1.  LEGAL PROCEEDINGS
         -----------------

None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.
         ------------------------------------------

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.
         --------------------------------

None

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

None

ITEM 5.  OTHER INFORMATION
         -----------------

We have filed an appeal of a NASDAQ staff determination dated April 26, 2001 to
remove our listing on the National Market System for failure to maintain a
minimum market value of public float of $5,000,000 as required by Marketplace
Rule 4450(a)(2). Our application for transfer to the SmallCap Market System was
not approved by NASDAQ because we do not meet the Small Cap Market's $1.00
minimum bid price requirement. We are presently in compliance with all other
SmallCap Market listing requirements.

The NASDAQ listing qualifications panel (the "Panel") has granted our request
for an oral hearing which is scheduled to be held on June 8, 2001 to review the
staff determination. We will continue to trade under the symbol RELM pending the
outcome of these proceedings. There can be no assurance that the Panel will
grant our request for continued listing on the National Market System or for
transfer to the Small Cap Market System subject to a temporary exception from
the minimum bid price requirement.

ITEM 6.  EXHIBITS AND REPORTS FORM 8-K
         -----------------------------

(a)      The following documents are filed as part of this report:

         10.1  Fourth Amendment to Loan and Security Agreement between the RELM
               Communications, Inc., RELM Wireless Corporation, RXD, Inc. and
               Summit Commercial/Gibraltar Corp. dated May 4, 2001.

(b)      Reports on Form 8-K during the fiscal quarter ended March 31, 2001.

         The Registrant filed a report dated December 22, 2000 on Form 8-K on
         January 11, 2001, reporting an Item 5 event.

                                      13
<PAGE>

                                  SIGNATURES
                                  ----------

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

                                             RELM WIRELESS CORPORATION
                                             (The "Registrant")
Date:  May 14, 2001

                                             By: /s/ W. P. Kelly
                                                 -----------------------------
                                                 William P. Kelly
                                                 Vice President - Finance and
                                                 Chief Financial Officer
                                                 (principal financial and
                                                 accounting officer and duly
                                                 authorized officer)

                                      14
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>dex101.txt
<DESCRIPTION>4TH AMENDMENT TO LOAN & SECURITY AGREEMENT
<TEXT>

<PAGE>







                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549


                           ------------------------



                           RELM WIRELESS CORPORATION



                           ------------------------


                          FORM 10-Q QUARTERLY REPORT

                         FOR THE FISCAL QUARTER ENDED:

                                MARCH 31, 2001


                           -------------------------


                                   EXHIBITS


                           -------------------------
<PAGE>

                                                                    EXHIBIT 10.1
                                                                    ------------

                FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
                -----------------------------------------------

     THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Amendment") is made
effective as of the 4 day of May, 2001, by and between RELM COMMUNICATIONS,
INC., RELM WIRELESS CORPORATION, RXD, INC. (jointly, severally and collectively,
"Borrower") and SUMMIT COMMERCIAL/GIBRALTAR CORP. ("Lender").


                                  BACKGROUND
                                  ----------

     A.   Pursuant to that certain Loan and Security Agreement dated February
26, 1999 by and between Borrower and Lender (as amended by that certain
Amendment to Loan and Security Agreement dated December 17, 1999, that certain
Second Amendment to Loan and Security Agreement dated March 10, 2000, that
certain Third Amendment to Loan and Security Agreement dated March 24, 2000 and
as the same may be amended, modified, supplemented or restated from time to
time, the "Loan Agreement"), Lender agreed to extend certain credit facilities
to Borrower.

     B.   Borrower and Lender have agreed to amend the Loan Agreement as
described herein.

     C.   All capitalized terms used herein and not separately defined shall
have the meanings provided for such terms in the Loan Agreement.

     NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:

     1.   Financial Covenants. Effective January 1, 2001, Sections 8.1 and 8.2
          -------------------
of the Loan Agreement are hereby deleted in their entirety and replaced with the
following:

          "8.1 Cash Flow Coverage Ratio. Borrower shall have a Cash Flow
               ------------------------
          Coverage Ratio as of the end of each fiscal quarter of
          Borrower, measured on a cumulative year to date basis, of not
          less than (a) .5 to 1.0 as of March 31, 2001; and (b) 1.0 to
          1.0 as of each fiscal quarter of Borrower ending thereafter.

          8.2  Tangible Net Worth. Borrower shall have a Tangible Net
               ------------------
          Worth of not less than (a) Five Million Two Hundred Thousand
          Dollars ($5,200,000.00) as of March 31, 2001; (b) Five Million
          Four Hundred Thousand Dollars ($5,400,000) as of June 30,
          2001; (c) Five Million Four Hundred Fifty Thousand Dollars
          ($5,450,000.00) as of September 30, 2001; and (d) Five Million
          Five Hundred Thousand Dollars ($5,500,000.00) as of December
          31, 2001 and as of the end of each fiscal quarter of Borrower
          thereafter."

     2.   Amendment Fee. On the date hereof, Borrower shall pay to Lender an
          --------------
amendment fee equal to Two Thousand Dollars $2,000.00), which fee may be charged
to the Line.

     3.   Additional Documents; Further Assurances. Borrower shall execute and
          ----------------------------------------
deliver or cause to be executed and delivered to Lender any and all documents,
agreements, corporate resolutions,
<PAGE>

certificates and opinions as Lender shall request in connection with the
execution and delivery of this Amendment or any documents in connection
herewith, all of which shall be in form and content acceptable to Lender in its
sole discretion.

     4.   Further Agreements and Representations of Borrower. Borrower does
          --------------------------------------------------
hereby:

          (a)  ratify, confirm and acknowledge that, as amended hereby, the Loan
Agreement and the other Loan Documents are valid, binding and in full force and
effect;

          (b)  covenant and agree to perform all of its obligations under the
Loan Agreement and the other Loan Documents, as amended;

          (c)  acknowledge and agree that as of the date hereof Borrower has no
defense, set-off, counterclaim or challenge against the payment of any sums
owing under the Lender Indebtedness or the enforcement of any of the terms of
the Loan Agreement or the other Loan Documents, as amended;

          (d)  acknowledge and agree that all representations and warranties of
Borrower contained in the Loan Agreement and/or the other Loan Documents, as
amended, are true, accurate and correct on and as of the date hereof as if made
on and as of the date hereof;

          (e)  represent and warrant that no Event of Default exists or will
exist upon the delivery of notice, passage of time or both, and all information
described in the foregoing Background is true and accurate; and

          (f)  acknowledge and agree that nothing contained herein and no
actions taken pursuant to the terms hereof is intended to constitute a novation
of the Loan Agreement or any of the other Loan Documents and does not constitute
a release, termination or waiver of any of the liens, security interests, rights
or remedies granted to the Lender therein, which liens, security interests,
rights and remedies are hereby ratified, confirmed, extended and continued as
security for the Lender Indebtedness.

     5.   Costs and Expenses. In addition to the fee set forth in Section 2
          ------------------                                      ---------
hereof, upon execution of this Amendment, Borrower shall pay to Lender all costs
and expenses incurred by Lender in connection with the review, preparation and
negotiation of this Amendment and all documents in Connection therewith,
including, without limitation, all of Lender's attorneys' fees and costs.

     6.   Inconsistencies. To the extent of any inconsistency between the terms,
          ---------------
conditions and provisions of this Amendment and the terms, conditions and
provisions of the Loan Agreement or the other Loan Documents, the terms,
conditions and provisions of this Amendment shall prevail. All terms, conditions
and provisions of the Loan Agreement and the other Loan Documents not
inconsistent herewith shall remain in full force arid effect.

     7.   Construction. All references to the Loan Agreement therein or in any
          ------------
other Loan Documents shall be deemed to be a reference to the Loan Agreement as
amended hereby.

     8.   No Waiver. Nothing contained herein is intended to nor shall it
          ---------
constitute a waiver by Lender of any rights and remedies available to it at law
or in equity or as provided in the Loan Agreement or in the Loan Documents.

                                       2
<PAGE>

     9.   Binding Effect. This Amendment shall be binding upon and inure to the
          --------------
benefit of the parties hereto and their respective successors and assigns.

     10.  Governing Law. This Amendment shall be governed by and construed in
          -------------
accordance with the laws of the State of New York.

     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
the day and year first above written.

                               RELM COMMUNICATIONS, INC.


                               By:       /s/ W. P. Kelly
                                  --------------------------------------------
                                         William P. Kelly, Vice President/CFO
(CORPORATE SEAL)


                               RELM WIRELESS CORPORATION


                               By:       /s/ W. P. Kelly
                                  --------------------------------------------
                                         William P. Kelly, Vice President/CFO
(CORPORATE SEAL)


                               RXD, INC.


                               By:       /s/ W. P. Kelly
                                  --------------------------------------------
                                         William P. Kelly, Vice President/CFO
(CORPORATE SEAL)


                               SUMMIT COMMERCIAL/GIBRALTAR CORP.

                               By:       /s/ Stewart J. Jensen.
                                  --------------------------------------
                               Name/Title      Stewart J. Jensen, V.P.
                                         -------------------------------



     The undersigned, intending to be legally bound hereby, acknowledge and
agree (a) to the terms of the foregoing Amendment; (b) that the foregoing
Amendment shall not in any way adversely affect or impair the obligations of the
undersigned to Lender under those certain Surety Agreements front the
undersigned to Lender, each dated February 26, 1999, or under any documents in
connection therewith or collateral thereto; and (c) that such Surety Agreement
and all such other documents are hereby ratified, confirmed and continued as of
this 4 day of May, 2001.


                               REDGO PROPERTIES, INC.

                                       3
<PAGE>

                               By:        /s/ W. P. Kelly
                                  ---------------------------------------------
                                          William P. Kelly, Vice President/CFO
(CORPORATE SEAL)


                               RELM COMMUNICATIONS OF FLORIDA, INC.


                               By:        /s/ W. P. Kelly
                                  ---------------------------------------------
                                          William P. Kelly, Vice President/CFO
(CORPORATE SEAL)

                                       4
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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