ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
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. The Company is closely monitoring
its operations spending in order to effectively scale these expenses to match
current operating levels. Additionally, for the three and nine-months ended
September 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 nine-months ended September 30, 2010 as
compared to net income from discontinued operations of approximately $240,000
or $0.01 per share on a diluted basis for the nine-months ended September 30,
2009, a decrease of approximately $1,983,000. The loss for the nine-months
ended September 30, 2010 was primarily due to an approximate adjustment of
$431,000 to the loss recognized on the sale of Willtek and approximately
$1,312,000 in operating losses in Willtek through the May 7, 2010 sale date.
Net income from discontinued operations for the nine-months ended September 30,
2009 was due to operating income in Willtek, primarily derived from significant
revenue relating to one customer. For the three-months ended September 30,
2010, net results from discontinued operations was $0 or $0.00 per share on a
diluted basis as compared to net income of approximately $181,000 or $0.01 per
share on a diluted basis for the three-months ended September 30, 2009, a
decrease of approximately $181,000.
For
the nine-months ended September 30, 2010, the Company incurred a net loss of
approximately $1,085,000 or $0.04 per share on a diluted basis, compared to a
net loss of approximately $200,000 or $0.01 per share on a diluted basis for
the nine-months ended September 30, 2009, a loss increase of approximately
$885,000. Net income was approximately $39,000 or $0.00 per share on a diluted
basis for the quarter ended September 30, 2010 as compared to net income of
approximately $163,000 or $0.01 per share on a diluted basis for the quarter
ended September 30, 2009, a decrease of approximately $124,000. The net income
and loss fluctuation was primarily due to the analysis mentioned above.
LIQUIDITY AND CAPITAL RESOURCES
:
The
Companys working capital has decreased by approximately $3,914,000 to
approximately $22,240,000 at September 30, 2010, from approximately $26,154,000
at December 31, 2009. The decrease in working capital is primarily due to the
sale of Willteks net assets and the payment in full of a bank note in 2010. At
September 30, 2010 the Company had a current ratio of 8.5 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.
The
Company had a cash and cash equivalents balance of approximately $11,389,000 at
September 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 approximately $1,500,000 Federal income tax refund due from the
Internal Revenue Service, which is recorded as income taxes recoverable on the
Companys condensed consolidated balance sheets as of September 30, 2010, was
received in October 2010.
The
Company expects to realize tax benefits in future periods due to the available
net operating loss carryforwards resulting from the disposition of Willtek in
2009. Accordingly, future taxable income is expected to be offset by the
utilization of operating loss carryforwards and as a result, will increase the
Companys liquidity as cash needed to pay Federal income taxes will be
substantially reduced.
The
Company used cash for operating activities, including discontinued operations,
of approximately $3,465,000 for the nine-month period ending September 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, a decrease in prepaid expenses and other assets, and
a decrease in accounts receivable.
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.
19
ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
The
Company realized cash from operating activities, including discontinued
operations, of approximately $2,445,000 for the nine-month period ending
September 30, 2009. The primary source of this cash was from a decrease in
prepaid expenses and other assets, a decrease in inventory and a decrease in
accounts receivable, partially off-set by a decrease in accounts payable,
accrued expenses and other current liabilities.
Net
cash provided by investing activities for the nine-months ended September 30,
2010 was approximately $2,450,000. The source of these funds was from proceeds
relating to the disposition of Willtek, off-set by capital expenditures. For
the nine-months ended September 30, 2009, net cash provided by investing
activities was approximately $3,750,000. 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 nine-months ended September 30, 2010 and
2009 was approximately $1,522,000 and $223,000, respectively. The use of these
funds for the nine-months ended September 30, 2010 was for the re-payment of a
bank loan and periodic payments of a mortgage note. For the nine-months ended
September 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
September 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.
20
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.
21
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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It
em 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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It
em 2. UNREGISTERED SALES OF EQUITY SECURITIES AND
USE OF PROCEEDS
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None.
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It
em 3. DEFAULTS UPON SENIOR SECURITIES
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None.
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It
em 4. REMOVED AND RESERVED
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It
em 5. OTHER INFORMATION
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None.
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It
em 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)
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31.2
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Certification Pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002 (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)
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|
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32.2
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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 Financial Officer)
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22
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:
November 15, 2010
|
/S/Paul
Genova
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Paul Genova
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Chief
Executive Officer
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Date: November 15, 2010
|
/S/Robert Censullo
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Robert Censullo
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Acting Chief Financial Officer
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23
E
XHIBIT LIST
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|
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Exhibit No.
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|
Description
|
|
|
|
|
|
|
31.1
|
|
Certification
Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (Principal
Executive Officer)
|
|
|
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31.2
|
|
Certification
Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (Principal
Financial Officer)
|
|
|
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32.1
|
|
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)
|
|
|
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32.2
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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 Financial Officer)
|
24
Wireless Telecom (AMEX:WTT)
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Wireless Telecom (AMEX:WTT)
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