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 PERIOD ENDED September 30, 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                                       59-3486297
-----------------------------------                   ----------
(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 September 30, 2001




PART I- FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

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

                                                                   September 30        December 31
                                                                      2001                 2000
                                                                  ------------------------------------
                                                                   (Unaudited)         (See note 1)

ASSETS
------
Current assets:
         Cash and cash equivalents                                   $    216              $    208
         Trade accounts receivable (net of allowance for doubtful       3,622                 3,712
           accounts of $1,546 as of September 30, 2001 and
          $1,555 as of December 31, 2000)
         Inventories, net                                               9,342                 8,940
         Prepaid expenses and other current                               477                   528
                                                                  -----------            ----------
Total current assets                                                   13,657                13,388

Property, plant and equipment, net                                      2,326                 2,833
Notes receivable, less current portion                                    977                   984
Debt issuance costs, net                                                  554                   682
Other assets                                                              448                   535
                                                                  -----------            ----------
Total assets                                                         $ 17,962              $ 18,422
                                                                  ===========            ==========

See notes to condensed consolidated financial statements.

2

ITEM 1 - FINANCIAL STATEMENTS - Continued

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

                                                        September 30    December 31
                                                            2001           2000
                                                       -------------------------------
                                                         (Unaudited)    (See note 1)

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
   Current maturities of long-term liabilities            $      129     $      848
   Accounts payable                                            3,133          3,604
   Accrued compensation and related taxes                        694            361
   Accrued expenses and other current liabilities                824            896
                                                        ------------  -------------
Total current liabilities                                      4,780          5,709

Long-term liabilities:
   Line of credit                                              3,591          3,193
   Convertible subordinated notes                              3,150          3,150
   Capital lease obligations                                      10             10
                                                        ------------  -------------
                                                               6,751          6,353

Stockholders' equity:
   Common stock; $.60 par value; 20,000,000 and 10,000,000
   authorized shares at September 30, 2001 and December 31, 2000:
   5,346,174 issued and outstanding shares at
   September 30, 2001 and December 31, 2000                    3,207          3,207
   Additional paid-in capital                                 21,452         21,452
   Accumulated deficit                                       (18,228)       (18,299)
                                                        ------------  -------------
Total stockholders' equity                                     6,431          6,360

                                                        ------------  -------------
Total liabilities and stockholders' equity                $   17,962     $   18,422
                                                        ============  =============

See notes to condensed consolidated financial statements.

3

ITEM 1 - FINANCIAL STATEMENTS - continued

RELM WIRELESS CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)

(In thousands except per share data)

                                                           THREE MONTHS ENDED                        NINE MONTHS ENDED
                                                  ----------------------------------     -------------------------------------
                                                  September 30          September 30      September 30           September 30
                                                      2001                  2000              2001                   2000
                                                  ------------          ------------     -------------           ------------
Sales                                             $      6,223          $     5,958      $     17,131            $    15,712
Expenses
    Cost of products                                     4,293                4,283            12,212                 11,572
    Selling, general & administrative                    1,528                1,907             4,378                  5,312
                                                  ------------          -----------      ------------            -----------
                                                         5,821                6,190            16,590                 16,884
                                                  ------------          -----------      ------------            -----------
Operating income (loss)                                    402                 (232)              541                 (1,172)
Other income (expense):
    Interest expense                                      (149)                (213)             (452)                  (735)
    Gain on sale of facility and equipment                   -                    -                 -                  1,165
    Other income (expense)                                 (40)                 115               (18)                   261
                                                  ------------          -----------      ------------            -----------
Net Income (loss)                                 $        213          $      (330)     $         71            $      (481)
                                                  ============          ===========      ============            ===========

Earnings (loss) per share-basic                   $       0.04          $     (0.06)     $       0.01            $     (0.09)
                                                  ============          ===========      ============            ===========

Earnings (loss) per share-diluted                 $       0.04          $     (0.06)     $       0.01            $     (0.09)
                                                  ============          ===========      ============            ===========

See notes to condensed consolidated financial statements.

4

ITEM 1 - FINANCIAL STATEMENTS - continued

RELM WIRELESS CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)

(In thousands)

                                                                            NINE MONTHS ENDED
                                                                 ------------------------------------------
                                                                   September 30            September 30
                                                                       2001                    2000
                                                                 ------------------     -------------------
Cash provided (used) by operations                                 $       348                $     (169)

Investing
activities:
    Cash paid for Uniden product line                                        -                    (2,016)
    Property and equipment purchases                                       (64)                     (217)
    Proceeds from disposals of assets                                        2                     5,246
    Other                                                                   51                         6
                                                                   ------------         ----------------
    Cash provided (used) by investing activities                           (11)                    3,019

Financing
activities:
    Net change in line of credit                                           398                    (1,141)
    Proceeds from long term debt                                             -                     3,250
    Repayment of debt                                                     (719)                   (4,551)
    Payment of debt issuance costs                                           -                      (280)
    Other                                                                   (8)                        -
                                                                   ------------         ----------------
Cash used by financing activities                                          (329)                  (2,722)
Increase  in cash                                                             8                      128
Cash and cash equivalents at beginning of period                            208                        1
                                                                   ------------         ----------------

Cash and cash equivalents at end of period                         $        216         $            129
                                                                   ============         ================
Supplemental disclosure:
    Interest paid                                                  $        452         $            735
                                                                   ============         ================
Non-cash transactions:
        Common stock and common stock warrants
        payable for debt issuance and acquisition costs            $          -         $          1,059
                                                                   ============         ================
        Warrants issued for consulting services                    $          -         $            226
                                                                   ============         ================
         Common stock issued for conversion of debt                $          -         $            100
                                                                   ============         ================

See notes to condensed consolidated financial statements.

5

Notes to Condensed Consolidated Financial Statements
(Unaudited)

(In thousands except share data and per share data)

1. Condensed Consolidated Financial Statements

The condensed consolidated balance sheet as of September 30, 2001, the condensed consolidated statements of operations for the three and nine months ended September 30, 2001 and 2000 and the condensed consolidated statements of cash flows for the nine months ended September 30, 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 and nine month period ended September 30, 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 September 28, 2001 for the third quarter of fiscal 2001. The quarter began on June 30, 2001.

2. Significant Events and Transactions

Manufacturing Contract For Portable Radio Transceivers

In September 2001, we entered into a contract with Shenzhen Hyt Science & Technology, LTD (HYT) for the manufacture of a new family of portable two-way radios. Under the agreement, HYT will manufacture for RELM, four models of VHF and UHF portable two-way radio transceivers, and we will have exclusive distribution rights for these products in North, Central, and South America. The agreement is for a term of five years and may be expanded to include additional products. Certain models are expected to be available for sale in the fourth quarter 2001, while the remaining models are expected to be available in the first quarter 2002.

6

ITEM 1 - FINANCIAL STATEMENTS - continued

Significant Events and Transactions - Continued

3. Inventories

The components of inventory, net of reserves totaling $1,978 at September 30, 2001 and December 31, 2000, consist of the following:

                         September 30       December 31
                             2001              2000
                         -------------      -----------
Finished goods           $       6,019     $      5,043
Work in process                    578              796
Raw materials                    2,745            3,101
                         -------------     ------------
                         $       9,342     $      8,940
                         =============     ============

4. Stockholders' Equity

The consolidated changes in stockholders' equity for the nine months ended September 30, 2001 are as follows:

                                                                           Additional
                                                     Common Stock            Paid-In      Accumulated
                                             ---------------------------
                                                 Shares        Amount        Capital        Deficit         Total
                                             ----------------------------------------------------------------------
Balance at December 31, 2000                      5,346,174   $ 3,207      $  21,452      $  (18,299)       $6,360

Net income                                                -         -              -              71            71

                                             ----------------------------------------------------------------------
Balance at September 30, 2001                     5,346,174   $ 3,207      $  21,452      $  (18,228)       $6,431
                                             ======================================================================

7

5. Earnings Per Share

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

                                                                        THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                                  -------------------------------       ---------------------------

                                                                  September 30       September 30       September 30   September 30
                                                                      2001               2000               2001           2000
                                                                  ------------       ------------       ------------   ------------
Numerator:
   Net income (loss) (numerator for basic earnings
     per share)                                                   $      213         $      (330)       $        71    $      (481)
   Effect of dilutive securities:
     8% convertible notes                                                  -                   -                  -              -
                                                                  ----------         -----------        -----------    -----------
   Net income (loss) (numerator for dilutive earnings
     per share)                                                          213                (330)                71           (481)
                                                                  ----------         -----------        -----------    -----------
Denominator:
   Denominator for basic earnings per share-weighted
   average shares                                                  5,346,174           5,303,114          5,346,174      5,193,213

   Effect of dilutive securities:
     8% convertible notes                                                  -                   -                  -              -
     Options                                                          50,000                   -             30,000              -
                                                                  ----------         -----------        -----------    -----------
   Denominator for diluted earnings per share -
   adjusted weighted average shares                                5,396,174           5,303,114          5,376,174      5,193,213
                                                                  ==========         ===========        ===========    ===========

Earnings (loss) per share-basic                                   $     0.04         $     (0.06)       $      0.01    $     (0.09)
                                                                  ==========         ===========        ===========    ===========

Earnings (loss) per share-diluted                                 $     0.04         $     (0.06)       $      0.01    $     (0.09)
                                                                  ==========         ===========        ===========    ===========

Shares related to options and convertible debt are not included in the computation of loss per share for the three and nine months ended September 30, 2000, because to do so would be anti-dilutive.

6. Comprehensive Income (Loss)

The total comprehensive income (loss) for the three and nine months ended September 30, 2001 was $213 and $71, respectively, compared to ($330) and ($481) for the same periods in the previous year.

8

ITEM 1 - FINANCIAL STATEMENTS - continued

7. Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board (FASB) 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 operating results. At September 30, 2001, the Company had no hedges or firm commitments outstanding.

In June 2001, the FASB issued Statements of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets. Under the new rules, goodwill and indefinite lived intangible assets are no longer amortized but are reviewed annually for impairment. Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives. The amortization provisions of SFAS No. 142 apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, the Company will apply the new accounting rules beginning January 1, 2002. The adoption of SFAS No. 141 and No. 142 will not have a material impact on our Consolidated Financial Statements.

8. Contingent Liabilities

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

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 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.

9

ITEM 1 - FINANCIAL STATEMENTS - continued

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.

A related action in connection with the bankruptcy proceedings of the former affiliate has been filed. In response to that complaint the Company filed a 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.

In February 1996, 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 reserved. In April 2001, the Brazilian court ordered the Company to post security with the court totaling approximately $300 thousand in the form of cash or a bond in order for the case to proceed. The Company has elected not to post security. Consequently, the case has been involuntarily dismissed. There has been no ruling on the merits of the case, and the Company has preserved its rights to pursue this matter in the future.

10

ITEM 1 - FINANCIAL STATEMENTS - continued

Counter Claims-continued

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.

11

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

FINANCIAL CONDITIONS

Results of Operations

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

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

                                September 30     September 30     September 30     September 30
                                    2001             2000             2001             2000
                               --------------   --------------   --------------   --------------
Sales                                 100.0%           100.0%           100.0%           100.0%
Cost of sales
                                       69.0             71.9             71.3             73.7
                               ------------     ------------     ------------     ------------
Gross margin                           31.0%            28.1             28.7             26.3
Selling, general and
  administrative expenses             (24.6)           (32.0)           (25.6)           (33.8)
Interest expense                       (2.4)            (3.5)            (2.6)            (4.7)
Other income (expense)                 (0.6)             1.9             (0.1)             9.1
                               ------------     ------------     ------------     ------------
Net income (loss)                       3.4%            (5.5)%            0.4%            (3.1)%
                               ============     ============     ============     ============

Net Sales

Net sales for the three months ended September 30, 2001 increased approximately $0.3 million (4.4%) compared to the same period for the prior year. This increase was the result of strong demand for BK Radio-branded products in the government and public safety sectors, including sales to the U.S. Forest Service and the Communications Electronics Command of the U.S. Army. Additionally, we continued to make progress in the business and industrial market segment through increased sales of our Uniden-branded products and ESAS systems. Sales of these products increased $0.7 million (339.5%) to $0.9 million, compared to the same period for the prior year. The complete Uniden product line was not yet available for sale during the third quarter of the prior year. Sales of our RELM-branded products decreased $0.7 million (77.2%) to $0.2 million compared to the same period for the prior year. This reflects the introduction of Uniden models to the business and industrial market. These models have more modern designs and feature sets.

Net sales for the nine months ended September 30, 2001 increased approximately $1.4 million (9.0%) to $17.1 million, compared to the same period for the prior year. This increase was primarily due to BK Radio product sales, particularly our new GMH mobile radio. Strong demand from the U.S. Forest service was also a

12

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

FINANCIAL CONDITIONS-continued

Net Sales-continued

contributing factor. Additionally, sales of Uniden-branded products increased by $1.6 million (148.4%) to $2.4 million, compared to the same period for the prior year. The Uniden product line was not acquired by RELM until late in March 2000 and the full compliment of product offerings was not available for sale until January 2001.

Cost of Sales and Gross Margin

Cost of sales as a percentage of net sales for the three months ended September 30, 2001 was 69.0% compared to 71.9% for the same period in the prior year. For the nine months ended September 30, 2001, cost of sales as a percentage of net sales was 71.3% compared to 73.7% for the previous year. The overall improvement in cost of sales and gross margins was the result of reductions in manufacturing staff and expenses that were implemented starting in the fourth quarter 2000, combined with increased manufacturing volumes, which allowed for more effective use of manufacturing overhead resources.

We have also realized cost improvements by employing a strategy to outsource certain manufacturing operations and products. In March 2000 we entered into a contract manufacturing agreement with Solectron for the manufacture of certain LMR subassemblies for a period of five years. Also, in connection with our acquisition in March 2000 of certain Uniden product lines, we entered into a manufacturing contract with Uniden Corporation pursuant to which Uniden Corporation manufactures our LMR products branded under the "Uniden" name. Although the contract expired in September 2001, Uniden has continued to manufacture and provide products in accordance with its terms and conditions.

In September 2001, we entered into a contract with Shenzhen Hyt Science & Technology, LTD (HYT) for the manufacture of a new family of portable two-way radios. Under the agreement, HYT will manufacture for RELM, four models of VHF and UHF portable two-way radio transceivers, and we will have exclusive distribution rights for these products in North, Central, and South America. The agreement is for a term of five years and may be expanded to include additional products. Certain models are expected to be available for sale in the fourth quarter 2001, while the remaining models are expected to be available in the first quarter 2002.

We are continuing to evaluate new external manufacturing alternatives, with a particular focus in the Far East, in order to further reduce our product costs. We anticipate that the current relationships or comparable alternatives will be available to the company in the future.

13

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

FINANCIAL CONDITIONS-continued

Selling, General and Administrative Expenses

Selling, general and administrative expenses (SG&A) consist of marketing, sales, commissions, engineering, research and development, management information systems, accounting, and headquarters expenses. For the three months ended September 30, 2001, expenses totaled approximately $1.5 million compared to $1.9 million for the same period last year. For the nine months ended September 30, 2001 SG&A expenses totaled $4.4 million compared to $5.3 million for the same period during the prior year.

These decreases are driven by reduced selling and marketing expenses, particularly for our Uniden products. Also, general and administrative staff and expenses in Finance, Human Resources, MIS, and headquarters have all been reduced from the prior year. Compared to the same period last year, engineering expenses increased approximately $40,000 (12.9%) and $144,000 (17.0%) for the three and nine months ended September 30, 2001, respectively. This reflects the development of multi-site dispatch capability for our Uniden ESAS Systems. These systems were introduced in March of this year.

Interest Expense

For the three months ended September 30, 2001 interest expense totaled $149,000 compared to $213,000 for the same period during the prior year. For the nine months ended September 30, 2001 interest expense totaled $452,000 compared to $735,000 for the same period during the prior year. Revenue growth and expense reductions have generated working capital and, combined with a portion of the proceeds from our private placement of convertible subordinated notes, enabled us to reduce the amount outstanding on our revolving line of credit. Additionally, last year we satisfied the mortgage on our facility in connection with its sale and satisfied obligations under capital leases associated with certain manufacturing and computer equipment.

Gain on sale of facility and equipment

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 provided approximately $1.6 million in cash after related expenses and the satisfaction of the mortgage on the property. We have leased approximately 54,000 square feet of comparable space at a nearby location.

14

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

FINANCIAL CONDITIONS-continued

Income Taxes

No income tax provision was provided for the three or nine months ended September 30, 2001 or 2000 as we have net operating loss carryforward benefits totaling approximately $30 million at September 30, 2001. We have evaluated our tax position in accordance with 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 and have provided valuation allowances against net deferred tax assets.

Significant Customers

Sales to the United States government represented approximately 34.6% and 38.9% of our total sales for the three months and nine months ended September 30, 2001, respectively, compared to 45.0% for the year ended December 31, 2000. These sales were primarily to the United States Forest Service (USFS) and the Communications Electronics Command of the U. S. Army (CECOM). Sales to the USFS represented approximately 24.7% and 27.9% of total sales for the three months and nine months ended September 30, 2001, respectively. Sales to the CECOM represented approximately 9.9% and 11.0% of total sales for the three months and nine months ended September 30, 2001, respectively.

In 1998, we were awarded portions of the current USFS contract. This contract expired in September 2001. Earlier this year, bids for a new contact were solicited and we were awarded the contract for portable radios, base stations, and repeaters. The contact is for a period of one year with options for three additional years, and does not specify a minimum purchase. Although the contract for mobile radios has not yet been awarded, we do not believe that RELM will receive the award.

In 1996, we were awarded a contract to provide land mobile radios to CECOM. This contract is for a term of five years with no specified minimum purchase requirement, and will expire this year. Bids for a new contract have not yet been solicited by CECOM.

Inflation and Changing Prices

Inflation and changing prices for the three and nine months ended September 30, 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.

15

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

FINANCIAL CONDITIONS-continued

Liquidity and Capital Resources

As of September 30, 2001, we had working capital of $8.9 million compared with $7.7 million as of December 31, 2000. This increase was primarily the result of reductions in accounts payable and other current liabilities, enabled by revenue growth and expense reductions.

We have a $7 million revolving line of credit. As of September 30, 2001, the formula under the terms of the agreement supported a borrowing base totaling approximately $5.3 million, of which approximately $2.1 million was available.

Capital expenditures for property and equipment for the nine months ended September 30, 2001 were $64,000 compared to $217,000 for the same period in 2000. Capital expenditures for the fourth quarter 2001 are anticipated to remain consistent with the levels experienced in the first three quarters of this year.

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.

16

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

The Company utilizes a variable-rate line of credit. The Company does not expect changes in interest rates to have a material effect on income or cash flows in fiscal year 2001, although there can be no assurance that interest rates will not significantly change.

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

On July 2, 2001 the NASDAQ Listing Qualification Review Panel granted the Company's request to transfer its listing from the Nasdaq National Market to the Nasdaq SmallCap Market, effective on July 5, 2001. On July 19, 2001, Nasdaq approved the Company's SmallCap transfer application. The Company is presently listed on the Nasdaq SmallCap market and is compliant with all the related listing requirements.

17

ITEM 6. EXHIBITS AND REPORTS FORM 8-K

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

10.2 OEM Shenzhen Hyt Science & Technology Company, LTD Manufacturing Agreement

10.3 Certificate of Amendment to the Articles of Incorporation of RELM WIRELESS CORPORATION

(b) Reports on Form 8-K during the fiscal quarter ended September 30, 2001.

None

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:  November 1, 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)

18

Exhibit 10.2 OEM Manufacturing Agreement

THIS OEM MANUFACTURING AGREEMENT ("Agreement") is made and entered into as of September 11, 2001, by and between Shenzhen Hyt Science & Technology Company, LTD., ("HYT"), and RELM Wireless Corporation, a Nevada corporation ("RELM").

RECITALS

RELM may desire from time to time during the term hereof to purchase Products (as defined herein) from HYT and HYT may desire to sell Products to RELM, upon the terms and conditions set forth herein below.

NOW THEREFORE, for good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the parties agree as follows:

1. Definitions. As used herein, the following capitalized terms shall have the following means:

(a) "Affiliate" of any Person means any other Person Controlling, Controlled by or under common Control with such Person.

(b) "Control" and all derivations thereof means the ability to either
(i) vote, directly or indirectly, fifty (50%) percent or more of the voting interests in any Person or (ii) direct the affairs of another, whether through voting power, contract or otherwise.

(c) "Person" means any natural person, any governmental authority or agency and any entity, including corporations, partnerships, joint ventures, limited liability companies, joint stock companies, trusts, estates, companies and associations, whether organized for profit or otherwise.

(d) "Product" shall mean the products described in Exhibit A, and any additional products that the parties may agree to include under this Agreement pursuant to Section 2.1(a).

(e) "Specifications" shall mean the design, performance, and features of the respective Products as initially set forth on Exhibit A, and such other or modified Specifications as may be agreed to by HYT and RELM from time to time.

2. Product, Price and Ordering. RELM shall have the exclusive right to acquire Products from HYT pursuant to the terms and conditions set forth in this Agreement, and HYT shall not sell Products, or any derivations thereof, to any other Person in the Americas (North, Central, and South).

2.1. Product Models. The initial Product models available hereunder are set forth on Exhibit A. Additional Product models may be agreed to by the parties in writing by

execution of a New Model Addendum, substantially in the form of Exhibit B. Hyt hereby represents and warrants that the Products, and any additional Products, do not and shall not infringe on the products or intellectual property of any third party. Product documentation, including owners manuals and service manuals, in forms acceptable to RELM, shall be delivered with the Products ordered hereunder.

2.2. Price. The price for the Product models is as specified on Exhibit A, or as otherwise agreed to by HYT and RELM. Pricing for any additional Product models shall be specified on the New Model Addendum for that model, or as otherwise agreed to by HYT and RELM. Except as set forth in Section 2.3, available accessories and parts shall be offered to RELM at HYT's regular wholesale prices for such accessories and parts. All transaction shall be valued and executed in United States dollars.

2.3. Ordering Procedure. RELM shall order its desired quantities of Products, accessories or spare parts/units to be provided by HYT under this Agreement by means of purchase orders (the "Purchase Orders"). Purchase Orders shall be in writing and specify the Product, accessories and/or spare parts, as well as the applicable price, quantity, and requested delivery schedule. RELM shall provide to HYT a twelve (12) month forecast of requirements for products. A forecast will be considered firm within two months of the scheduled delivery date. RELM agrees to issue purchase orders for firm forecast requirements.

2.4. Spare parts shall be included with Purchase Orders at no additional cost to RELM. The value of such spare parts will not exceed five (5%) percent of the value of the Purchase Order, except for catastrophic failures as provided in Section 7.1. Such spare parts will be specified by RELM on the purchase order.

3. Delivery, Title And Risk Of Loss

3.1. HYT shall deliver the Products purchased hereunder FOB to the location designated by RELM. HYT shall arrange the shipping method, shipping carrier and insurance applicable to each shipment for delivery to a location specified by RELM. Title to the Product and risk of loss or damage for the Product shall pass from HYT to RELM upon delivery at the location designated by RELM. HYT is responsible for importation and all duties and taxes. HYT shall provide RELM with an estimated delivery and shipment schedule for each Purchase Order.

3.2. RELM may, within fourteen (14) days of receipt of any ordered Product units at its ship-to destination, notify HYT in writing of rejection of any Product units which do not comply with the Specifications. RELM may return such rejected units to HYT at HYT's expense and risk.

4. Distributorship. In addition to the right to acquire Products hereunder, HYT hereby grants to RELM the exclusive right to sell the products specified in EXHIBIT A throughout the territories of North America, Central America, and South America. HYT will sell its products to RELM at the prices specified in EXHIBIT A. RELM shall pay HYT for the

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products in accordance with the payment terms specified in section 5 of this agreement. RELM may resell the products at such prices and on such terms as RELM shall determine.

5. Payment. Twenty (20%) percent of the purchase price for each Purchase Order shall be paid by wire transfer to HYT upon issuance of the Purchase Order by RELM and the remaining eighty (80%) percent of the purchase price shall be paid by wire transfer to HYT upon acceptance of the Products pursuant to Section 3.2.

6. Quality Assurance. HYT will perform such inspections and tests of each Product unit at least comparable to the level of quality assurance that HYT implements for other products.

7. Product Protection

7.1. Catastrophic Failure. A catastrophic failure is a material failure of a Product due to a single cause or any material, component or part therefore in an amount exceeding ten percent (10%) of the total units shipped under this Agreement. In case of catastrophic failure, HYT shall repair affected units of Product at its expense. RELM shall inform HYT in writing of all catastrophic failures.

7.2. Indemnity. HYT shall be responsible for and agrees to indemnify RELM and hold RELM harmless from and against all third party claims, demands and causes of action (including claims relating to compliance with all applicable labor laws of the jurisdiction in which the Product is manufactured) for direct damages (including reasonable legal fees and expenses) for personal injuries or damage to tangible property (other than Product) directly resulting from the willful misconduct or negligent acts or omissions of HYT in the manufacturing of the Product or from any and all claims that the Products infringe on the products or intellectual property of any third party. RELM agrees to notify HYT as soon as practical of any third party claim, demand or cause of action for which RELM will request indemnification from HYT. RELM will provide HYT with the information and assistance reasonably requested by HYT to defend such claim, demand or cause of action.

8. Confidentiality.

8.1. The information supplied by one party to the other under this Agreement which is marked or otherwise designated in writing to be of a proprietary or confidential nature ("Confidential Information") shall be kept confidential by the receiving party for a period of two (2) years following expiration of this Agreement. Except as otherwise specified in writing, the receiving party shall: (a) treat and protect the terms and provisions of this Agreement and all information, documentation, and know-how received as Confidential Information; (b) not reproduce (except in a manner and purpose consistent with the purpose of this Agreement) Confidential Information in whole or in part; and, (c) use Confidential Information only in conjunction with its performance hereunder or its use of the Products.

8.2 Neither party shall forward or disclose any Confidential Information of the other party to any third party without the prior written consent of the other party, except that

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nothing herein shall preclude a party from disclosing such information to any Affiliate of such party with a need to know such information. Notwithstanding the foregoing, neither party shall have any obligation with respect to any information of the other party which: (a) was previously known by or is independently and demonstrably developed at any time by the receiving party without any connection with the information received; (b) at any time becomes a matter of public knowledge or literature without any act or negligence by the receiving party; or (b) is at any time lawfully received by the receiving party from a third Person under circumstances permitting its disclosure to others.

8.3 Each party shall take the same actions and utilize the same precautions in preventing unauthorized disclosure of the other party's Confidential Information as it uses with regard to its own Confidential Information, which shall in no event be less than reasonable care.

8.4 In the event of termination of this Agreement for any reason, both parties shall return or destroy and certify to the other party the return or destruction of all Confidential Information and reproductions thereof. Notwithstanding the foregoing, RELM may retain certain confidential or proprietary information for an agreed period of time for the sole purpose of servicing the Product after which time RELM shall then return such information to HYT.

9. Term and Termination.

9.1 This Agreement shall be for a term commencing on the date of this Agreement and ending five years thereafter, unless extended by the HYT and RELM in writing.

9.2 Either party may by written notice to the other party terminate this Agreement with immediate effect if the other party has committed a substantial and material breach of this Agreement and, after receipt of written notice from the other party specifying the breach, the breach is not rectified within a time period which shall be reasonable taking into account previous technical and other relevant conditions; provided, however, that such time period shall not be less than fifteen (15) days for corrective actions involving the payment of money and thirty (30) days for all other purposes.

9.3 The acceptance of any Purchase Order from, or the sale of any Product to, RELM after the termination or expiration of this Agreement shall not be construed as a renewal or extension thereof, nor as a waiver of termination but, in the absence of a new fully executed written agreement, all such transactions shall be governed by provisions identical with the provisions of this Agreement.

10. Notices. Notices and other communications between the parties shall be transmitted by facsimile or in writing to the other parties at the addresses indicated below and shall be deemed effective upon confirmed receipt. Either party may change its address by giving notice in writing thereof to the other party.

HYT: Shenzhen Hyt Science & Technology Company, LTD.
At R2-A 1/F Shenzhen High-Tech Industrial Park Shennan Road

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         Shenzhen, China 518057
         Attention: Chen Quing Zhou - President
         Phone: 0755-6972-999
         Fax: 0755-6970-899

RELM:    RELM WIRELESS CORPORATION
         at 7100 Technology Drive
         West Melbourne, Florida 32904
         Attention: President & Chief Executive Officer or
                    Vice President & Chief Financial Officer
         Phone: (321) 984-1414
         Fax: (321) 984-0168

11. Partial Invalidity. The invalidity, in whole or part, of any section or paragraph of these terms shall not affect the validity of the remainder of such section or paragraph, or of these terms. Section headings are inserted for convenience only and shall not be used in any way to define the meaning of these terms.

12. Assignment. Either party may assign its rights or obligations under this Agreement to any Affiliate of such party. Otherwise, neither party shall transfer or assign its rights or obligations under this Agreement.

13. Party Relationship. This Agreement does not create any agency, joint venture or partnership between RELM and HYT. Neither party shall impose or create any obligation or responsibility, express or implied, or make any promises, representations or warranties on behalf of the other party or other than as expressly provided herein.

14. Governing Law and Controversies.

14.1 The validity, performances and all matters relating to the interpretation and effect of these terms and the Agreement and any amendment thereto shall be governed by the laws of the State of Florida without reference to its rules with respect to conflict of laws. The parties agree to the exclusive venue and jurisdiction of the state and federal courts located in Brevard County, Florida.

14.2 If any controversies or disputes arise out of or relating to this Agreement, the parties shall first make efforts to resolve and settle the same through a good faith negotiation initiated within ten (10) days of receipt of written request for same by either party to the other. If no resolution of such controversy or dispute is reached within sixty (60) days of the original request (or by such other date as the parties may agree in writing), then either party may such controversy or dispute in binding arbitration.

14.3 The parties irrevocably agree that all disputes arising out of or in connection with this Agreement shall be referred to final and binding arbitration, before a single arbitrator, under the commercial arbitration rules of the American Arbitration

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Association ("AAA") in Brevard County, Florida. The parties agree to use the "special expedited procedures" of the AAA. The arbitrator shall be selected by the parties, but if the parties are unable to reach agreement on selection of the arbitrator within seven (7) days after the date on which the notice of arbitration is sent to the parties to the arbitration, then the arbitrator will be selected in accordance with the rules of the American Arbitration Association. Judgment upon the award rendered by the arbitrator shall be final, binding and conclusive upon the parties and their respective administrators, executors, legal representatives, heirs, successors and permitted assigns, and may be entered in any court of competent jurisdiction. All questions as to the meaning of the provisions of this paragraph, or as to the ability to arbitrate any dispute under this paragraph shall be resolved by the arbitrators, shall be absolutely binding, and not subject to judicial review. The costs and expenses of arbitration shall be borne by the non-prevailing party.

15. Successors And Assigns. The terms and provisions of this Agreement shall inure to the benefit and be binding upon the successors and permitted assigns of either RELM or HYT.

16. Entire Agreement. This Agreement constitutes the entire understanding between the RELM and the HYT concerning the subject matter hereof, and any representation, promise, understanding, proposal, agreement, warranty, course of dealing or trade usage not expressly contained or referenced herein shall not be binding on HYT. No modifications, amendment, rescission, waiver or other change shall be binding on either party unless accepted in writing by that party.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duty authorized representatives as of the dates set forth below.

Shenzhen HYT Science & Technology, LTD.     RELM Wireless Corporation

By:    /s/Chen Quing Zhou                   By:    /s/David P. Storey
    ---------------------------------           --------------------------------
Name: Chen Quing Zhou                       Name: David P. Storey

Title: President & Owner                    Title: President & CEO

Date: September 11, 2001                    Date: September 11, 2001

Witness: ____________________________       Witness: ___________________________

Witness Name: _______________________       Witness Name: ______________________

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Exhibit 10.3

FILED #C2378497

SEP 20 2001

IN THE OFFICE OF

       /s/ Dean Heller
DEAN HELLER SECRETARY OF STATE

CERTIFICATE OF AMENDMENT

TO THE

ARTICLES OF INCORPORATION

OF

RELM WIRELESS CORPORATION

RELM WIRELESS CORPORATION, a corporation organized and existing under the Nevada General Corporation Law (the "Corporation"), does hereby certify as follows:

1. The Articles of Incorporation of the Corporation are hereby amended by deleting Article Fifth in its entirety and substituting the following in lieu thereof:

FIFTH:

The aggregate number of shares which the corporation shall have authority to issue is 20,000,000 shares of common stock, par value $0.60 per share, and 1,000,000 shares of preferred stock, par value $1.00 per share. Any and all shares of stock may be issued, reissued, transferred or granted by the board of directors, as the case may be, to persons, corporations, and associations, and for such lawful consideration, and on such terms, as the board of directors shall have the authority to issue pursuant to the Nevada Revised Statutes and the Bylaws of the corporation. The board of directors shall have the authority to set, by resolution, the particular designations, preferences and the relative, participating, optional, voting or other rights and qualifications, limitations or restrictions of any class of stock or any series of stock within any class of stock issued by this corporation.

No holder of any of the shares of any class of the corporation shall be entitled as of right to subscribe for, purchase, or otherwise acquire any shares of any class of the corporation which the corporation proposes to issue or any rights or options which the corporation proposes to grant for the purchase of any shares of any class of the corporation or for the purchase of any shares, bonds, securities, or obligations of the corporation which are convertible into or exchangeable for, or which carry any rights, to subscribe for, purchase, or otherwise acquire shares of any class of


the corporation; and any and all of such rights and options may be granted by the board of directors to such persons, firms, corporations, and associations, and for such lawful consideration, and on such terms, as the board of directors in its discretion may determine, without first offering the same, or any thereof, to any said holder.

2. This amendment to the Articles of Incorporation was duly adopted in accordance with the provisions of Section 78.390 of the Nevada General Corporation Law. The amendment was approved by the stockholders, the number of votes cast was sufficient for approval. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed and attested by its duly authorized officers, this 22 day of August, 2001.

RELM WIRELESS CORPORATION

                                           By /s/ David P. Storey
                                             -----------------------------
                                                  David P. Storey, President and
                                                  Chief Executive Officer

ATTEST:

  /s/ W.P. Kelly
------------------------------
William P. Kelly, Secretary

[CORPORATE SEAL]


STATE OF NEVADA
Secretary of State
I hereby certified that this is a true and
complete copy of the document as filed
in this office

SEP 21 2001

By /s/ Dean Heller
   ---------------------------------------