WIRX Wireless Xcessories Group Inc (CE)

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

Securities to be registered pursuant to Section 12(g) of the Act: None

Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.001 per Share
(Title of class)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

In 2008, as part of our efforts to conserve cash and improve profitability, we filed a Form 15 voluntarily terminating the registration of our common stock under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”), thereby terminating our obligation to file reports under the Exchange Act. Our board of directors has determined to file this registration on Form 10 to re-register our common stock under the Exchange Act which will obligate us, our directors and significant shareholders to comply with the reporting provisions of the Exchange Act.

As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

We may take advantage of these provisions until the end of the fiscal year ending after the fifth anniversary of our initial public offering or such earlier time that we are no longer an emerging growth company and if we do, the information that we provide stockholders may be different than you might get from other public companies in which you hold equity. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our shares of common stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.

The JOBS Act permits an “emerging growth company” like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.

This registration statement contains forward-looking statements. Certain of the matters discussed herein concerning, among other items, our operations, cash flows, financial position and economic performance including, in particular, future sales, product demand, competition and the effect of economic conditions, include forward-looking statements.

Forward-looking statements are predictive in nature and can be identified by the fact that they do not relate strictly to historical or current facts and generally include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” and similar expressions. Although we believe that these statements are based upon reasonable assumptions, including projections of orders, sales, operating margins, earnings, cash flow, research and development costs, working capital, capital expenditures, distribution channels, profitability, new products, adequacy of funds from operations, and general economic conditions, these statements and other projections contained herein expressing opinions about future outcomes and non-historical information, are subject to uncertainties and, therefore, there is no assurance that the outcomes expressed in these statements will be achieved.

Investors are cautioned that forward-looking statements are not guarantees of future performance and actual results or developments may differ materially from the expectations expressed in forward-looking statements contained herein. Given these uncertainties, you should not place any reliance on these forward-looking statements which speak only as of the date hereof. See “Risk factors” for a discussion of factors that could cause our actual results to differ from those expressed or implied by forward-looking statements.

We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. You are advised, however, to consult any additional disclosures we make in our reports filed with the Securities and Exchange Commission (“SEC”).

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

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

Our cell phone accessory business was started in 1996 when we acquired Advanced Fox Antenna, and our product line has increased steadily since then as handheld cell phones have grown in popularity. In March 2000, we changed our name to Wireless Xcessories Group, Inc. Our headquarters are located at 1840 County Line Road, Huntingdon Valley, Pennsylvania 19006.

We are a leading distributor of accessories to independent wireless dealers in the United States. Our corporate website address is Wirexgroup.com. Some of our other operating websites are:

We purchase approximately two-thirds of our products from domestic sources which are primarily brand name products. The balance of our products, which are primarily after market, are manufactured in China, Hong Kong and Taiwan.

We distribute brand name products such as OtterBox, Trident, Ballistic, Plantronics, Jabra, Body Glove, Samsung and Motorola. Our product lines are sold along with comprehensive sales and marketing programs, and a series of value added services designed to separate and distinguish us in the minds of wireless resellers.

These services are offered free of charge:

We offer an on-line ordering option to our customers which permits them to view our current inventory along with our next receive date if an item is out of stock.

Our customer base consists of more than 3,000 independent dealers from a one-location mall kiosk to multi-store retail franchisers covering 250 locations and more. In addition, we sell to some of the largest distributors of cell phones, computers, and infrastructure products. These distributors in turn resell to airtime carriers, mass retailers, and prepaid phone distributors. In 2012 three customers accounted for 18%, 13% and 11%, and in 2011 one customer accounted for 17% of net sales, respectively. No other customers in either 2012 or 2011 accounted for more than 10% of net sales.

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

We offer our resellers three full product lines which provide low, middle and premium price point choices for end users to purchase.

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

Because of the rapid pace of new handset introductions, retail sales people find it hard to keep current on which accessories are compatible among various brands and models. We help solve this problem by making available a monthly chart of phone and accessory compatibilities to our customers who are agents of Verizon, Sprint/Nextel, T-Mobile, AT&T, U.S Cellular, Metro PCS, Cricket and other second and third tier carriers.

In 2011 and 2012, we significantly expanded and developed direct distributor relationships with several popular branded industry leading cell phone accessory manufacturers, such as with Otter Products, LLC (“OtterBox”), enabling us to offer a broader array of product in line with the industry trends, particularly to smart phones and higher quality brand name products. In 2012, sales of OtterBox products resulted in 54% of our revenues and in 2011, sales of OtterBox products resulted in 24% of our revenues.

In the fourth quarter of 2011, we added a third Point of Sale company as a customer for which we integrated our real time inventory with the customer’s accounting software package in order to enable their wireless dealer locations to order more efficiently from our website and/or participate in our tailored Vendor Managed Inventory program, “VMI”.

In 2011, we also added our first significant VMI customer with over 40 operating retail stores.

During 2012, we substantially upgraded our VMI program, added to our staff, and brought in $7 million of revenues to the Company from new customers added as a result of the VMI program.

In May, 2012 we introduced our own private label cell phone accessory line called Upwardly Mobile Accessories or “UMA” which is tailored to the expanding Smartphone market. We proceeded to launch the full product line in early fall of 2012. Sales of the UMA products during 2012 consisted of approximately 1% of our revenues and we anticipate increased revenues from sales of UMA products in future periods.

As of June 30, 2013, Wireless Xcessories Group employed approximately 83 full time persons divided into accounting, sales, vendor managed inventory, customer services, graphic design, purchasing/product development, MIS, quality control, and warehouse picking and packing.

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

The aftermarket wireless accessory industry is both competitive and fragmented. There are a number of local and regional distributors who import a significant portion of their products from the Far East, and there are 10 or more national distributors. In addition, many manufacturers sell and fulfill directly to distributors or retailers.

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

The agreements or arrangements with our customers or vendors are of limited duration and are terminable by either party upon short notice. Accordingly, our ability to maintain these relationships is subject to competitive pressures and challenges.

The continual introduction of new phone models combined with popularity changes that can be measured in weeks and months have caused some of the larger resellers to seek out accessory specialists like Wireless Xcessories Group, Inc. to manage the selection, packaging and sourcing of their accessory programs under our VMI program. We believe this program will help us to compete favorably in the marketplace and to differentiate ourselves from our competitors.

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

Each of our employees other than our warehouse employees and our chief executive officer have entered into our standard confidentiality and non-compete agreement in favor of the Company. Our chief executive officer, Stephen Rade, has entered into an employment agreement with the Company that contains non-compete and confidentiality provisions.

We maintain a number of registered trade names and registered trademarks, including UMA Upwardly Mobile Accessories ​ ® , get upwardly mobile ​ ® , IndustrialStrength.com ​ ® , Platinumaccessories.com ​ ® and WirexGroup.com ​ ® .

If appropriate in the future, we intend to seek protection for any patentable technology we may create. At the present time, we hold no patents nor have we filed any patent applications.

The cell phone accessory market is competitive and fragmented, and is comprised of several national distributors that offer a broad range of products, as well as numerous regional distributors and small distributors that focus on a particular segment of the market. In addition, many manufacturers sell directly to customers. Barriers to entry for distributors are relatively low and the risk of new competitors entering the market is high. Some of our current competitors have substantially greater capital resources and sales and distribution capabilities than we do. In response to competitive pressures from any of our current or future competitors, we may be required to lower selling prices in order to maintain or increase market share, and such measures could adversely affect our operating results.

Our sales to customers and our purchases from vendors are largely governed by individual sales or purchase orders, so there is no guarantee of future business. In some cases, we have formal agreements or arrangements with significant customers or vendors, but they are terminable by either party upon short notice, and they contain no purchase or sale obligations. If our vendors or suppliers refuse to, or for any reason are unable to supply products to us, and if we are not able to procure those products from alternative sources, we may not be able to maintain appropriate inventory levels to meet customer demand and our financial position and results of operations would be adversely affected. Similarly, if customers decide to make purchases from other sources, experience significant changes in demand internally or from their own customer bases, become financially unstable, or are acquired by another company; our ability to generate revenues from these customers may be significantly affected, resulting in an adverse effect on our financial position and results of operations.

Our relationship with our largest supplier, OtterBox, currently expires on December 31, 2013. Although we would use our best efforts to extend the relationship, there can be no assurance that the relationship would be extended. During the 2012 year, our revenues from sales of OtterBox products to our customers increased by approximately $16.5 million from the revenues from sales of OtterBox products to our customers during 2011. Sales of OtterBox products represented 54% of our revenues in 2012 and 24% of our revenues in 2011. The loss or non-renewal of such relationship with OtterBox could have a material adverse effect on our revenues and results of operations.

Notwithstanding the increased potential for economic recovery, the ongoing weakness in the global economic environment may materially adversely affect our customers’ access to capital or willingness to spend capital on our products, and/or their levels of cash liquidity with which to pay for our products. In addition, our suppliers’ access to capital and liquidity may continue to be affected, which may in turn adversely impact their ability to maintain inventories, production levels, and/or product quality, or cause them to raise prices or lower production levels, or result in their ceasing operation.

Any of the foregoing effects could have a material adverse effect on our results of operations and financial condition.

We must constantly introduce new products, services and product features to meet competitive pressures. We may be unable to timely change our existing merchandise sales mix in order to meet these competitive pressures, which may result in increased inventory costs, inventory write-offs or loss of market share.

Additionally, our inventory may also lose value due to price changes made by our significant vendors, in cases where our arrangements with these vendors do not provide for inventory price protection, or in cases that the vendor is unable or unwilling to provide these protections.

In an effort to protect our intellectual property, including our product data, customer information and information technology systems; we typically require our employees, consultants and others having access to this information or our technology to execute confidentiality and non-disclosure agreements. These agreements, however, may not provide us with adequate protection against improper use or disclosure of confidential information, and these agreements may be breached. A breach of confidentiality could adversely affect our business. Adequate remedies may not exist in the event of unauthorized use or disclosure of our confidential information. The disclosure of our proprietary information could impair our competitive position and could have a material adverse effect on our business, financial condition and results of operations.

We sell to a large and diverse customer base. We finance a significant portion of such sales through trade credit, typically by providing 30-day payment terms. As a result, our business could be adversely affected in the event of a deterioration of the financial condition of our customers, resulting in the customers’ inability to repay us. This risk may increase if there is a general economic downturn affecting a large number of our customers and in the event our customers do not adequately manage their business or properly disclose their financial condition.

In 2012, we commenced offering our own product line under the name UMA. During 2012, these product offerings represented approximately 1% of our revenues. Our own product line would compete with other manufacturers’ branded items that we offer. A manufacturer may choose to not sell its products to us, or may substantially increase the price of products to us, in response to the competition created by the sales of our own branded products. Either could have a material adverse effect on our business and financial performance.

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

Our performance depends on our ability to purchase our products in sufficient quantities at competitive prices and on our vendors’ ability to make and deliver high quality products in a cost effective, timely manner. Some of our smaller vendors have limited resources, production capacities and limited operating histories. We have no long-term purchase contracts or other contracts that provide continued supply, pricing or access to new products and any vendor or distributor could discontinue selling to us at any time. There can be no assurance that we will be able to acquire the products that we desire in sufficient quantities or on terms that are acceptable to us in the future. In addition, there can be no assurance that our vendors will make and deliver high quality products in a cost effective, timely manner.

As stated above, we have one domestic vendor, OtterBox, who supplied approximately 63% of our product purchases during the twelve months ended December 31, 2012 which represented approximately 54% of our revenues during 2012. Any full or partial cut off in service from this vendor for whatever reason could have a material negative impact on our business and our results of operations. This vendor agreement expires on December 31, 2013, unless the Company is able to reach a new agreement or extend the existing agreement with the vendor.

We may also be unable to develop relationships with new vendors. Our inability to acquire suitable products in a cost effective, timely manner or the loss of one or more key vendors or freight carriers could have a negative impact on our business.

A major part of our business has come from larger customers. For the year ended December 31, 2012, three customers accounted for 42% of our sales with the largest at 18%. In 2011, one customer accounted for 17% of the sales. The loss of any or all of these accounts could result in a significant reduction in sales and a negative impact on our business.

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

Our success depends to a significant extent upon the abilities of our senior management. The loss of the services of any of the members of our senior management or of certain other key employees could have a significant adverse effect on our business. We currently do not have any written employment agreements with our executive officers or any other key employees other than our chief executive officer, Stephen Rade. In addition, our performance will depend upon our ability to attract and retain qualified management, merchandising and sales personnel. There can be no assurance that the members of our existing management team will be able to manage the Company or our growth or that we will be able to attract and hire additional qualified personnel as needed in the future.

Our executive officers and directors beneficially owned approximately 29% of our outstanding common stock as of June 30, 2013. Stephen Rade, our chairman, president and chief executive officer beneficially owned approximately 26.7% of our outstanding common stock as of June 30, 2013. Should these shareholders decide to act together, they would have the ability to significantly influence all matters requiring shareholder approval, including the election of directors and any significant corporate transaction requiring shareholder approval.

Our common stock is currently quoted on OTC Pink under the symbol WIRX, where trading volume has been limited. There is not currently an established trading market for our stock, and an active trading market for our common stock may not develop or, if developed, may not be sustained. The lack of an active market may impair a stockholder’s ability to sell shares of our common stock. We cannot assure you that a more active trading market in our common stock will ever develop or if one does develop, that it will be sustained. In the absence of a more active trading market, any attempt to sell a substantial number of our shares could result in a decrease in the price of our stock. Specifically, you may not be able to resell your shares of common stock at or above the price you paid for such shares or at all.

Future sales of our common stock pursuant Rule 144 under the Securities Act, or the perception that such sales could occur, could have an adverse effect on the market price of our common stock. Under Rule 144, shares of common stock issued or issuable upon conversion of securities sold in private offerings are eligible for resale by non-affiliates after six months, assuming we file reports under the Exchange Act containing current information about us, and after one year regardless of whether current information about us is available. As substantially all of our shares of common stock are currently eligible for sale under Rule 144, the number of shares eligible for resale pursuant to Rule 144 is enormous relative to the trading volume of our common stock. Any attempt to sell a substantial number of our shares will severely depress the market price of our common stock. In addition, we may use our capital stock in the future to finance acquisitions and to compensate employees and management, which will further dilute the interests of our existing stockholders and could depress the trading price of our common stock.

The JOBS Act permits “emerging growth companies” like us to rely on some of the reduced disclosure requirements that are already available to companies having a public float of less than $75 million, for as long as we qualify as an emerging growth company. During that period, we are permitted to omit the auditor’s attestation on internal control over financial reporting that would otherwise be required by the Sarbanes-Oxley Act. Companies with a public float of $75 million or more must otherwise procure such an attestation beginning with their second annual report after their initial public offering. For as long as we qualify as an emerging growth company, we are also excluded from the requirement to submit “say-on-pay”, “say-on-pay frequency” and “say-on-parachute” votes to our stockholders and may avail ourselves of reduced executive compensation disclosure compared to larger companies. In addition, as described in the following risk factor, as an emerging growth company we can take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.

Until such time as we cease to qualify as an emerging growth company, investors may find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

Section 107 of the JOBS Act also provides that, as an emerging growth company, we can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. We can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations  —  Critical Accounting Policies and Estimates” for further discussion of the extended transition period for complying with new or revised accounting standards.

We will continue to be deemed an emerging growth company until the earliest of (i) the last day of the fiscal year during which we had total annual gross revenues of $1 billion (as indexed for inflation), (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common stock under a registration statement under the Securities Act; (iii) the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt; or (iv) the date on which we are deemed to be a ‘large accelerated filer’ as defined by the SEC, which would generally occur upon our attaining a public float of at least $700 million. Once we lose emerging growth company status, we expect the costs and demands placed upon management to increase, as we would have to comply with additional disclosure and accounting requirements, particularly if our public float should exceed $75 million.

As a public company, we will incur significant legal, accounting and other expenses under the Exchange Act and the Sarbanes-Oxley Act of 2002, together with rules implemented by the SEC and applicable market regulators. These rules impose various requirements on public companies, including filing current, quarterly and annual reports with the SEC, and requiring certain corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluations and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Compliance with Section 404 may require that we incur substantial accounting expenses and expend significant management efforts. Our testing may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. In the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner, the market price of our stock could decline if investors and others lose confidence in the reliability of our financial statements and we could be subject to sanctions or investigations by the SEC or other applicable regulatory authorities.

We have identified the policies below as critical to our business operations and the understanding of our financial results.

We prepare financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The Company considers all highly liquid investment with original maturities of three months or less to be cash equivalents.

Revenue is recognized at the time goods are shipped, title has passed, evidence of an arrangement exists, the fee if fixed or determinable, and collectability is reasonably assured.

Accounts receivable are stated at the amounts management expects to collect. An allowance for doubtful accounts is recorded based on a combination of historical experience, aging analysis and information on specific accounts. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Security investments that the company has the intent to hold to maturity are classified as held-to maturity securities and recorded at amortized cost in investments. Securities investments that are bought and principally held for purposes of selling them in the near term are classified as trading securities. Trading securities are recorded at fair value on the balance sheet in investments, with the change in fair value during the period recorded in earnings. Securities investments not classified as either held-to-maturity or trading securities are classified as available-for-sales securities. Available -for-sale securities are recorded at fair value on the balance sheet in investments, with the change in fair value during the period excluded from earnings and recorded as a component of other comprehensive income.

Inventories, which consist solely of finished goods, are carried at the lower of cost (first-in, first out) or market. The Company periodically reviews its inventories and makes provisions as necessary for estimated obsolescence and slow moving goods. The amount of such markdown is equal to the difference between cost of inventory and the estimated value based upon assumptions about future demands, selling price and market conditions.

Property and equipment are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization based on the useful lives of the assets. The estimated useful lives for financial reporting purposes are: 3 to 7 years for furniture and fixtures; the shorter of the lease term or estimated useful life of the asset for leasehold improvements; and 2 to 5 years for computer equipment and software. Expenditures for repairs and maintenance are expensed as incurred.

The Company recognizes all share based payments, including grants to employees of common stock options, as an expense based on fair values of the grants measured on award dates, generally using Black-Scholes valuation model, over vesting periods of such grants and net of an estimated forfeiture rate for grants to employees. The Company estimates the expected life of options granted based on historical exercise patterns and volatility based on trading patterns of its common stock over a period similar to vesting period of the grants.

Advertising costs are expensed as incurred.

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” we may, under Section 7(a)(2)(B) of the Securities Act, delay adoption of new or revised accounting standards applicable to public companies until such standards would otherwise apply to private companies. We may take advantage of this extended transition period until the first to occur of the date that we (i) are no longer an “emerging growth company” or (ii) affirmatively and irrevocably opt out of this extended transition period. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Until the date that we are no longer an “emerging growth company” or affirmatively and irrevocably opt out of the exemption provided by Securities Act Section 7(a)(2)(B), upon issuance of a new or revised accounting standard that applies to our financial statements and that has a different effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting standard.

For a discussion on the impact of recently issued accounting pronouncements, see “Recently Adopted and Issued Accounting Standards” in Note 2 to the financial statements incorporated by reference in “Item 15. Financial Statements and Exhibits.”

Net sales increased by 80.0% or $17.8 million from $22.4 million in 2011 to $40.2 million in 2012. The increase in sales is mainly attributable to the following factors:

During 2012, revenues derived from brand name products represented 82% of our revenues compared to 61% of our revenues during 2011. During 2012, revenues from after-market products represented 18% of our revenues compared to 39% of revenues during 2011, or an increase of $0.4 million.

Gross profit increased by $1.6 million from $6.2 million in 2011 to $7.8 million in 2012, and as a percentage of sales decreased from 28.0% to 19.4%. The decrease in gross profit as a percentage of sales resulted from the following:

Selling, general and administrative (“SG&A”) expenses increased by 9.5%, or $0.6 million in 2012, from $6.4 million in 2011 to $ 7.0 million in 2012. Total SG&A expenses, as a percentage of sales, decreased from 28.7% in 2011 to 17.4% in 2012. The increase in SG&A expenses in 2012 is mainly due to an increase in sales commissions of $0.2 million due to the increase in sales in 2012, an increase in warehouse labor and supplies expense of $0.2 million, an increase in insurance expense of $0.06 million, an increase in accounting and legal professional fees of $0.04 million associated with the preparation of becoming an SEC registrant, and a $0.03 million increase in customer credit card processing costs due to the increase in sales volume in 2012.

Total depreciation charges have decreased from $0.15 million in 2011 to $0.1 million in 2012 as a result of the Company limiting its capital additions in the past 2 years after investing heavily in upgrading its business systems in 2010.

Other income decreased from $0.4 million in 2011 to $0.2 million in 2012. The reduction in other income is due to a combination of a $0.1 million decrease in investment income earned in 2012 due to the reduction of the Company’s investment portfolio from the prior year and a $0.1 million decrease in interest income as a result of the suspension of interest on one $0.2 million note receivable from a vendor in fall of the 2011 that was subsequently written off and the suspension of interest in early 2012 on a second vendor interest bearing notes receivable (original balance of $0.3 million) as a result of the note terms being amended in 2012.

The effective tax rate was approximately 40% in 2012 as compared to approximately 44% in 2011. The decrease in the effective tax rate during 2012 was mainly due to the tax rate differential on state income tax expense, net of federal benefit.

Net income was $0.6 million or $0.15 per diluted share for 2012 compared to $0.1 million or $0.03 per diluted share for 2011. The weighted-average number of shares used in the diluted earnings per share computation was 4,006,419 and 4,036,339 for 2012 and 2011, respectively.

Net sales increased by 2.6% or $0.5 million from $17.7 million in 2012 to $18.2 million in 2013. The $0.5 million increase in sales for the six months ended June 30, 2013 compared to the same period in 2012 is attributable to a $0.7 million increase in sales of brand name product offerings, offset by a $0.2 million decrease in after-market product sales as more fully described below:

Gross profit was approximately $3.5 million for both of the six months ended June 30, 2013 and 2012, and as a percentage of sales decreased from 20.0% to 19.1%. The decrease in gross profit percentage resulted from the following:

Selling, general and administrative (“SG&A”) expenses increased by 6.1%, or $0.2 million in 2013, from $3.2 million in the six months ended 2012 to $3.4 million in the six months ended 2013. Total SG&A expenses, as a percentage of sales, increased from 18.0% in the six months ended 2012 to 18.6% in the six months ended 2013. The increase in SG&A expense in 2013 was primarily related to additional payroll and related benefits of approximately $0.2 million to upgrade our sales staff, an increase in stock based compensation of approximately $0.1 million relating to the granting of 75,000 shares of the Company’s common stock to three outside directors and four key executives, offset by a decrease in bad debt expense of approximately $0.05 million and credit card charges of $0.05 million.

Total depreciation charges have decreased from $0.06 million for the six months ended June 30, 2012 to $0.05 million for the six months ended June 30, 2013 as a result of the Company limiting its capital additions in recent years after investing heavily in upgrading its business systems in 2010.

Other expenses of approximately $0.003 million, for the six months ended June 30, 2013, mainly represents interest expenses incurred on the Company’s line of credit with a bank, that was entered into in January 2013. Other income, of approximately $0.04 million for the six months ended June 30, 2012, mainly represents dividends and realized gains on the Company’s available-for-sale investment portfolio.

The effective income tax rate was approximately 43% for both the six months ended June 30, 2013 and June 30, 2012.

Net income was $0.02 million or $0.01 per basic and diluted earnings per share for the six months ended June 30, 2013 compared to $0.2 million or $0.05 per share for six months ended June 30, 2012. The weighted-average number of shares used in the earnings per share for the basic and dilutive computation was 4,037,911 for 2013 and 4,006,419 in 2012, respectively, since all potentially dilutive securities were determined to be anti-dilutive.

We do not have any off-balance sheet arrangements as of June 30, 2013 and December 31, 2012.

Our anticipated requirements for capital for the remainder of fiscal 2013 and 2014 is to fund sales growth and development of additional markets.

Our working capital as of June 30, 2013, December 31, 2012 and 2011 was $8.2 million, $8.1 million and $7.4 million, respectively.

Net cash (utilized in) operating activities for the twelve months ended December 31, 2012 and 2011 was $(2.3) million and $(0.7) million, respectively. We utilized our net cash flow from our sales of available securities and cash on hand to partially finance our 80% sales growth and resultant increase in working capital activities, principally inventory.

In 2012, the non-cash items totaling $1.1 million consisted of depreciation and amortization of $0.1 million, bad debt expense of $0.2 million, inventory reserve of $0.8 million, partially offset by a change in deferred taxes of $(0.1) million.

During 2012, the Company liquidated all but approximately $.009 million of its investments generating approximately $1.6 million of net cash provided by investing activities. These proceeds were used to acquire additional inventory. An additional $0.2 million of cash from investing activities was generated through the collection of notes receivable from a vendor. During 2011, the company generated approximately $0.8 million in net cash provided by investing activities from the sales of its investments of $1.2 million and collection of vendor notes receivable of $0.2 million, offset by advances to vendors of $(0.3) million and investment purchases of $(0.3) million.

There were minimal capital expenditures during 2012 and 2011 as the Company had completed its business system upgrades in 2010. Capital expenditures were $0.02 million in 2012 and $0.07 million in 2011, principally for computer and office equipment and software upgrades. Management anticipates capital expenditures of approximately $0.05 million during 2013.

Net cash (utilized in) operating activities for the six months ended June 30, 2013 and 2012 was $(0.6) million and $(0.5) million respectively. For the six months ended June 30, 2013, the Company had $0.04 million of net cash provided by investing activities related to the collection of vendor notes receivable of $0.05 million, offset by capital expenditures of $(0.01) million. For the six months ended June 30, 2013, the Company had $0.3 million in net cash provided by financing activities due to cash proceeds received under its line of credit with a bank which was entered into in January 2013. For the six months ended June 30, 2012, the Company had net cash provided by investing activities of $0.4 million, consisting of $0.4 million in sales of investments and $0.1 million from collection of vendor notes receivable, offset by $(0. 2 ) million in investment purchases and capital expenditures. The Company had no financing activities for the six months ended June 30, 2012.

Based upon the Company’s present plans, management believes that the Company’s future operating cash flows and borrowing availability under its line of credit facility, which the Company plans to extend or refinance upon its maturity in January 2014, will be sufficient to meet the Company’s anticipated working capital and capital expenditure needs over the next twelve months.

We do not have any off-balance sheet arrangements as of June 30 , 201 3 and December 31, 2012.

On January 15, 2013, the Company entered into a Loan and Security Agreement and other ancillary documents (the “Loan Documents”) with TD Bank, N.A. (the “Bank”), providing for a secured revolving line of credit in an amount of up to $2.0 million (the “Line of Credit”). The outstanding balance of the amounts advanced under the Line of Credit bear interest at 2.5% above the one month LIBOR Rate as defined in the Loan Documents. Interest is payable on a monthly basis. The Line of Credit and the Company’s obligations under the Loan Documents are secured by substantially all of the Company’s assets. The term of the Line of Credit is one year (January 15, 2014). At the time of maturity, all outstanding advances under the Line of Credit as well as any unpaid interest is due and payable. Prior to maturity of the Line of Credit, the Company may prepay amounts due under the Line of Credit without penalty, and subject to the terms of the Loan Documents, may re-borrow any such amounts. The Company is required to comply with quarterly net worth and quick ratio financial covenants, as defined in the Loan Documents. The Company was in compliance with all financial covenants as of June 30, 2013. As of June 30, 2013, $0.3 million has been borrowed and $1.7 million is available on the line.

We lease warehouse and administrative office space and copy machines with non-cancelable operating lease agreements, which expire at various dates. Certain leases for warehouse and other space contain rental escalation clauses. Future minimum lease payments including base rent, common area charges, and lease required real estate tax charges under non-cancelable operating leases as of December 31, 2012 are as follows:

Inflation or increased pricing of our products did not materially affect our revenues for the years ended December 31, 2011 and 2012 and for the six months ended June 30, 2013 .

We lease approximately 65,100 square feet of warehouse space in Huntingdon Valley, Pennsylvania, which we have occupied since 2001.

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

In March 2009, we renewed our lease for a 5-year period, expiring in April 2014, with no increase in costs, except for a 3% percent increase in the last full year of the lease. Our rent is approximately $450,000 annually.

The following table provides certain information concerning our leased properties:

The following table sets forth certain information as of June 30, 2013, as supplied to the Company, regarding the beneficial ownership of the Common Stock by all persons known to the Company who own more than 5% of the outstanding shares of the Company’s Common Stock, each director of the Company, and each executive officer and employee of the Company named in the Summary Compensation Table included elsewhere in this registration statement, and all executive officers and directors as a group. Unless otherwise indicated, based on information provided to the Company, the persons named in the table below have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them.

The business address of each shareholder named in this table is 1840 County Line Road, Huntingdon Valley, PA 19006.

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

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

Mr. McConnell has been a director of the Company since December 1998 while holding the title of Chairman of the Board through June 2002. In addition, he is co-founder and President of Adondo Corporation, a company focused on Internet telephony, and enhancing communications through artificial intelligence and real-time streaming media. Adondo Phone Portals allow companies to distribute their audio content, including live streams, broadly and efficiently over any telephone. Mr. McConnell also co-founded CFM Technologies, Inc., a semiconductor capital equipment company and until it merged into Matson Technologies in March 2001. He currently serves as a director of Point 5 Technologies. Mr. McConnell holds eighteen U.S patents in semiconductor processing and wireless communications.

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

Mr. Kalish has been a director since 1998. He is the owner of Kalish & Associates, a consulting firm specializing in marketing, advertising and public relations, which he founded in 1986. Kalish & Associates serves advertisers, marketers and advertising agencies throughout the country, including three New York Stock Exchange companies. Prior to founding Kalish & Associates, Mr. Kalish managed Kalish & Rice, Inc., one of the largest advertising agencies in Philadelphia. In 2002, he co-founded WorkZone, LLC, a software company which markets collaboration, communication and project management tools internationally. He serves as Chairman of WorkZone. Mr. Kalish served as a member of the Board of Directors of Checkpoint Systems, Inc., a New York Stock Exchange company, from 1993 to 1997.

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

Mrs. Reale has been with the Company since 1993, and holds the title of Vice President a position she was promoted to in August, 2005. Prior thereto, she has held the title of Business Development and Purchasing manager from 2001 and Purchasing Manager from 1994 to 2001.

Other compensation may consist of all or part of the following: health insurance, auto expenses, auto lease, auto insurance, life insurance, mobile phone service and mobile phone.

As of December 31, 2012, none of the executive officers or employees named in the summary compensation table held any unvested stock awards, unvested equity incentive plan awards, or unexercised stock options.

The Company does not have any written employment agreements with any of its executive officers or other employees identified in the Summary Compensation Table set forth above other than with Stephen Rade, our Chief Executive Officer. Each of the executive officers and employees identified in the Summary Compensation Table other than Stephen Rade has entered into a Confidentiality and Non-Solicitation Agreement pursuant to which he or she has agreed not to compete with the business of the Company or to solicit customers of the Company for a period of 12 months following his or her termination of employment and also not to use or disclose certain confidential information of the Company other than in connection with the business of the Company.

On September 1, 2005, the Company entered into an Employment Agreement with Mr. Rade. The agreement had an initial term of three years, and is thereafter automatically continued from year to year unless terminated by the Board of Directors or Mr. Rade by at least 90-days’ notice prior to the end of any renewal period.

The agreement provides for an annual base salary of $250,000 and an annual bonus of a minimum of $50,000. Mr. Rade is entitled to participate in the standard benefits that are made available to all employees of the Company, including retirement, medical, dental, disability, life insurance, stock option, profit sharing, or other plan or benefit. Pursuant to the agreement, the Company is required to purchase a long-term disability policy which shall pay benefits equal to 75% of Mr. Rade’s base salary at the time of any disability that lasts more than six consecutive months or termination of employment due to such disability.

Upon the termination of the agreement due to Mr. Rade’s death, his estate will receive the greater of either: (i) a one-time lump sum payment equivalent to two times the sum of Mr. Rade’s last base salary, or (ii) a portion of the benefits of a life insurance policy owned by the Company and taken on Mr. Rade’s life (which is currently $500,000). If the Company terminates Mr. Rade’s employment for other than cause, death or disability, or Mr. Rade terminates his employment for good reason, then the Company shall pay to Mr. Rade a severance in an amount equal to two years of Mr. Rade’s then annual base salary. The Company shall also pay the first six months of COBRA premiums if Mr. Rade makes such an election. If Mr. Rade’s employment is terminated within one year of a change of control, Mr. Rade will be paid severance in the amount of his last annual base salary plus his last annual bonus amount for a period of two years. In addition, all benefits, including, but not limited to, health insurance benefits, will continue during such two-year period.

Mr. Rade’s employment agreement also contains confidentiality, non-competition and non-solicitation clauses.

The agreement provides that should Mr. Rade introduce, cause or be responsible in any material way for an acquisition, consolidation, sale, merger, disposition or change of control of the Company, he will be compensated by payment of between 1% and 5% of the purchase or sale price received or paid by the Company in connection with any such transaction depending on the amount of consideration paid or received.

In 2012, each of our non-employee Directors were paid a flat $2,500 for attendance at Board meetings and committee meetings for the year.

We employ Susan Rade, spouse of Stephen Rade, our CEO, as a high volume and senior sales person with certain administrative functions. In this role, Mrs. Rade earned the compensation set forth in the Summary Compensation Table appearing above.

Our Board of Directors has determined that Christopher McConnell, Allan Kalish and Christopher C. Cole are “independent directors” with the meaning of NASDAQ Marketplace Rule 5605(a)(2).

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

There were 47 record holders of the Company’s Common Stock on June 30, 2013. A substantially larger number of beneficial owners hold such shares of Common Stock in depository or nominee form.

No dividends have been paid on the outstanding shares of Common Stock during the 2012 and 2011 calendar years or the six months ended June 30 , 2013 .

As of the date hereof, 4, 006,419 of our issued and outstanding shares of Common Stock are eligible for sale under Rule 144 promulgated under the Securities Act.

As of the date hereof, there are issued and outstanding options to purchase up to 17,281 shares of Common Stock.

As of December 31, 2012, equity securities authorized for issuance by the Company with respect to compensation plans were as follows:

On April 16, 2013, we awarded 15,000 shares of common stock to each of the following executives for services rendered to the Company: Ronald E. Badke, Chief Financial Officer; Dawn Reale, Vice President and Purchasing Manager; Sergio Reale, Purchasing and Quality Control Director; and Dan Kenderdine, Operation Manager. The shares were awarded pursuant to the exemption from registration provided by Rule 701 promulgated under the Securities Act of 1933, as amended.

On April 16, 2013, we awarded 5,000 shares of common stock to each of our non-employee directors, Messrs. Kalish, Cole, and McConnell, for past and anticipated services to the Company. The shares cannot be sold or transferred for a period of six months from the date of the award. The shares were awarded pursuant to the exemption from registration provided by Rule 701 promulgated under the Securities Act of 1933, as amended.

We are authorized to issue 10,000,000 shares of common stock, $.001 par value per share, and 1,000,000 shares of preferred stock, $.001 par value per share. There are no shares of preferred stock issued and outstanding.

As of June 30, 2013, we had outstanding 4,081,419 shares of common stock.

Holders of our common stock are entitled to receive dividends when and as declared by our Board out of funds legally available therefore. Upon dissolution of our company, the holders of common stock are entitled to share, pro rata, in our net assets after payment of or provision for all of our debts and liabilities, and subject to the preferential rights of any class of preferred stock or other senior security which we may issue. Each share of common stock is entitled to participate on a pro rata basis with each other share of such stock in dividends and other distributions declared on shares of common stock.

The holders of common stock are entitled to one vote per share on all matters submitted to a vote of the stockholders and may not cumulate their votes for the election of directors. The holders of common stock do not have preemptive rights to subscribe for additional shares of any class that we may issue, and no share of common stock is entitled in any manner to any preference over any other share of such stock.

Section 145 of the Delaware General Corporation Law (“DGCL”) provides, among other things, that a corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. A Delaware corporation may indemnify any persons who were or are a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests, provided further that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him or her against the expenses (including attorneys’ fees) which such officer or director has actually and reasonably incurred.

Our bylaws provide that we must indemnify, and advance expenses to, our directors and officers to the fullest extent authorized by the DGCL if such officer or director was made a party or is threatened to be made a party or is involved in any action, suit or proceeding; provided, however, that any such indemnification must be authorized by the Board of Directors of the Company in connection with any proceeding initiated by such officer or director.

The information required by this item may be found beginning on page F-1 of this Form 10.

N/A

Documents filed as part of this Report:

Wireless Xcessories Group, Inc.  —  years ended December 31, 2012 and 2011

Report of Independent Registered Public Accounting Firm

Balance Sheets as of December 31, 2012 and 2011

Statements of Operations and Comprehensive Income (Loss) for the Years ended December 31, 2012 and 2011

Statements of Stockholders’ Equity for the Years ended December 31, 2012 and 2011

Statements of Cash Flows for the Years ended December 31, 2012 and 2011

Notes on Financial Statements  —  December 31, 2012 and 2011

Condensed Balance Sheets as of June 30, 2013 (Unaudited) and December 31, 2012

Condensed Statements of Operations and Comprehensive Income for the Six Months Ended June 30 , 2013 and 2012 (Unaudited)

Condensed Statements of Cash Flows for the Six Months Ended June 30 , 2013 and 2012 (Unaudited)

Notes to Condensed Financial Statements (Unaudited)

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

WIRELESS XCESSORIES GROUP, INC.

Date: September 10 , 2013

Board of Directors and Stockholders
Wireless Xcessories Group, Inc.
Huntingdon Valley, Pennsylvania

We have audited the accompanying balance sheets of Wireless Xcessories Group, Inc. (the “Company”) as of December 31, 2012 and 2011 and the related statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wireless Xcessories Group, Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 3 to the financial statements, the Company restated its 2011 financial statements.

/s/BDO USA, LLP

Philadelphia, Pennsylvania

August 12, 2013