ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Operating
expenses for the six-months ended June 30, 2010 were approximately $5,126,000
or 42% of net sales as compared to approximately $5,664,000 or 53% of net sales
for the six-months ended June 30, 2009. Operating expenses for the three-months
ended June 30, 2010 were approximately $2,635,000 or 43% as compared to
approximately $2,841,000 or 55% of net sales for the three-months ended June 30,
2009. Operating expenses are lower for the three and six-months ended June 30,
2010 due to decreases in both sales and marketing expenses and general and
administrative expenses, partially off-set by a slight increase in research and
development expenses. The decreases in general and administrative expenses are
primarily due to lower administrative salaries and stock option expense.
Interest
income decreased by approximately $3,000 and approximately $25,000 for the
three and six-months ended June 30, 2010, respectively, as compared to the
corresponding periods of the previous year. These decreases were primarily due
to the decline in interest rates in the Companys interest bearing accounts. In
reaction to uncertain financial market conditions, the Company has reallocated
substantially all of its cash investments to more secure money market funds.
Other income decreased by approximately $30,000 for the three-months ended June
30, 2010. For the six-months ended June 30, 2010, other income increased
approximately $39,000. The fluctuations in other income and expense are
primarily due to foreign currency gains and losses realized during the periods
reported. The Company can experience these fluctuations depending on the timing
and percentage of sales recorded in foreign currencies compared to overall
reported sales.
For
the six-months ended June 30, 2010, the Company realized net income from
continuing operations of approximately $619,000 or $0.02 per share on a diluted
basis, as compared to a net loss of approximately $422,000 or $0.02 per share
on a diluted basis for the six-months ended June 30, 2009, an increase of
approximately $1,041,000. Net income from continuing operations was
approximately $298,000 or $0.01 per share on a diluted basis for the quarter ended
June 30, 2010 as compared to a net loss from continuing operations of
approximately $198,000 or $0.01 per share on a diluted basis for the quarter
ended June 30, 2009, an increase of approximately $496,000. These increases
were primarily due to the analysis mentioned above.
The
results from continuing operations for all periods presented include certain
general and administrative expenses which are allocated amongst the Companys
individual business units. Due to the presentation of Willtek as a discontinued
operation, these expenses were removed from Willtek and re-allocated back to
the Companys remaining continuing operations. Additionally, for the three and
six-months ended June 30, 2009, included in the results from discontinued
operations are significant non-recurring sales that make the comparison to 2010
unfavorable.
Net
loss from discontinued operations was approximately $1,743,000 or $0.07 per
share on a diluted basis for the six-months ended June 30, 2010 as compared to
net income from discontinued operations of approximately $58,000 or $0.00 per
share on a diluted basis for the six-months ended June 30, 2009, a decrease of
approximately $1,801,000. The loss for the six-months ended June 30, 2010 was
primarily due to approximately $431,000 of a loss recognized on the sale of
Willtek and approximately $1,312,000 of operating losses in Willtek for this
six- month period. For the three-months ended June 30, 2010, net loss from
discontinued operations was approximately $459,000 or $0.02 per share on a
diluted basis as compared to net income of approximately $121,000 or $0.00 per
share on a diluted basis for the three-months ended June 30, 2009, a decrease
of approximately $580,000. The loss for the three-months ended June 30, 2010
was primarily due to approximately $638,000 of operating losses in Willtek
off-set by a $179,000 adjustment to the loss on the sale of Willtek recognized
in this three-month period.
For
the six-months ended June 30, 2010, the Company incurred a net loss of
approximately $1,124,000 or $0.05 per share on a diluted basis, compared to a
net loss of approximately $363,000 or $0.02 per share on a diluted basis for
the six-months ended June 30, 2009, a loss increase of approximately $761,000.
Net loss was approximately $160,000 or $0.01 per share on a diluted basis for
the quarter ended June 30, 2010 as compared to a net loss of approximately
$77,000 or $0.01 per share on a diluted basis for the quarter ended June 30,
2009, a loss increase of approximately $83,000. The net loss fluctuation was
primarily due to the analysis mentioned above.
LIQUIDITY AND CAPITAL RESOURCES
:
The
Companys working capital has decreased by approximately $3,513,000 to
approximately $22,641,000 at June 30, 2010, from approximately $26,154,000 at
December 31, 2009. At June 30, 2010 the Company had a current ratio of 8.1 to
1, and a ratio of debt to tangible net worth of .2 to 1. At December 31, 2009,
the Company had a current ratio of 4.4 to 1, and ratio of debt to tangible net
worth of .4 to 1.
17
ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
The
Company had a cash and cash equivalents balance of approximately $11,337,000 at
June 30, 2010, compared to approximately $14,076,000 at December 31, 2009. The
Company believes its current level of cash and cash equivalents is sufficient
enough to fund the current operating, investing and financing activities.
The
Company used cash for operating activities, including discontinued operations,
of approximately $3,712,000 for the six-month period ending June 30, 2010. The
primary use of this cash was due to a loss from operations as well as a
decrease in accounts payable, accrued expenses and other current liabilities,
an increase in inventory, and an increase in accounts receivable, partially
off-set by a decrease in prepaid expenses and other assets.
The
Company has historically been able to turn over its accounts receivable
approximately every two months. This average collection period has been
sufficient to provide the working capital and liquidity necessary to operate
the Company.
The
Company used cash for operating activities, including discontinued operations,
of approximately $2,224,000 for the six-month period ending June 30, 2009. The
primary use of this cash was due to an increase in accounts receivable, a
decrease in accounts payable, accrued expenses and other current liabilities,
and an increase in prepaid expenses and other assets, partially off-set by a
decrease in inventory.
Net
cash provided by investing activities for the six-months ended June 30, 2010
was approximately $2,629,000. The source of these funds was from proceeds
relating to the disposition of Willtek, off-set by capital expenditures. For
the six-months ended June 30, 2009, net cash provided by investing activities
was approximately $2,924,000. The primary source of these funds was from the
sale of short-term securities, off-set by capital expenditures.
Cash
used for financing activities for the six-months ended June 30, 2010 and 2009
was approximately $1,506,000 and $204,000, respectively. The use of these funds
for the six-months ended June 30, 2010 was for the re-payment of a bank loan
and periodic payments of a mortgage note. For the six-months ended June 30,
2009, the use of these funds was for the periodic payments of a bank loan and
mortgage note.
In
2010, the Company satisfied the entire outstanding principal and interest due
on its bank note payable through payment of approximately $1,475,000. Since
this bank note was in principle a Euro denominated loan, the outstanding loan
balance was subject to foreign currency fluctuations. The Company benefited
from the weakening Euro at time of payment.
Other
than contractual obligations incurred in the normal course of business, the
Company does not have any off-balance sheet arrangements.
In
September 2009, the Company secured a line of credit with its investment bank.
The credit facility provides borrowing availability of up to 100% of the
Companys money market account balance and 99% of the Companys short-term
investment securities (U.S. Treasury bills) and, under the terms and conditions
of the loan agreement, is fully secured by said money fund account and
short-term investment holdings. Advances under the facility will bear interest
at a variable rate equal to the London InterBank Offered Rate (LIBOR) in
effect at time of borrowing. Additionally, under the terms and conditions of
the loan agreement, there is no annual fee and any amount outstanding under the
loan facility may be paid at any time in whole or in part without penalty. As
of June 30, 2010, the Company had no borrowings outstanding under the facility
and approximately $6,000,000 of borrowing availability.
The
Company believes that its financial resources from working capital are adequate
to meet its current needs. However, should current global economic conditions
continue to deteriorate, additional working capital funding may be required
which may be difficult to obtain due to restrictive credit markets.
Throughout
its ownership of Willtek, the Company had been required to fund its foreign
operations through cash loans and advances. Due to the successful completion of
the sale of Willteks assets, this funding will no longer be required.
INFLATION AND
SEASONALITY
The
Company does not anticipate that inflation will significantly impact its
business or its results of operations nor does it believe that its business is
seasonal.
18
I
TEM 3 -
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable.
I
TEM 4T -
CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure
Controls and Procedures
Under
the supervision and with the participation of our management, including our
principal executive officer and principal financial officer, as of the end of
the period covered by this report, we conducted an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Act of 1934. Our disclosure controls and procedures are designed to provide
reasonable assurance that the information required to be included in our
Securities and Exchange Commission (SEC) reports is recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms,
relating to Wireless Telecom Group, Inc., including our consolidated
subsidiaries, and was made known to them by others within those entities,
particularly during the period when this report was being prepared. Based on
this evaluation, our principal executive officer and principal financial
officer concluded that, as of the period covered by this report, our disclosure
controls and procedures are effective at these reasonable assurance levels.
(b) Changes in Internal
Controls over Financial Reporting
In
connection with the evaluation required by paragraph (d) of Rule 13a-15
under the Exchange Act, there was no change identified in our internal control
over financial reporting that occurred during the last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
19
P
ART II - OTHER
INFORMATION
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I
tem
1. LEGAL PROCEEDINGS
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The Company is not aware of any
material legal proceeding against the Company or in which any of their
property is subject.
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I
tem
1A. RISK FACTORS
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The Company is not aware of any
material changes from risk factors as previously disclosed in its Form 10-K
for the year ended December 31, 2009.
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I
tem
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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None.
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I
tem
3. DEFAULTS UPON SENIOR SECURITIES
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None.
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I
tem
4. REMOVED AND RESERVED
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I
tem
5. OTHER INFORMATION
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None.
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I
tem
6. EXHIBITS
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Exhibit No.
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Description
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31.1
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Certification Pursuant to Section
302 of The Sarbanes-Oxley Act of 2002 (Principal Executive Officer and
Principal Financial Officer)
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32.1
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Certification Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley
Act of 2002 (Principal Executive Officer and Principal Financial Officer)
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20
S
IGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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WIRELESS TELECOM
GROUP, INC.
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(Registrant)
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Date: August 12,
2010
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/S/Paul Genova
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Paul Genova
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Chief Executive
Officer and CFO
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21
E
XHIBIT
LIST
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Exhibit
No.
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Description
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31.1
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Certification
Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (Principal
Executive Officer and Principal Financial Officer)
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|
|
|
|
32.1
|
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Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The
Sarbanes-Oxley Act of 2002 (Principal Executive Officer and Principal
Financial Officer)
|
22
Wireless Telecom (AMEX:WTT)
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Wireless Telecom (AMEX:WTT)
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