Prices
of products range from approximately $100 to $100,000 per unit, with most sales
occurring between approximately $2,000 and $35,000 per unit. The Company can
experience variations in gross profit based upon the mix of these products sold
as well as variations due to revenue volume and economies of scale. The Company
will continue to rigidly monitor costs associated with material acquisition,
manufacturing and production.
Operating
expenses for the year ended December 31, 2010 were $10,749,956 or 43.8% of net
sales as compared to $11,552,881 or 50.6% of net sales for the year ended
December 31, 2009. For the year ended December 31, 2010 as compared to the
prior year, operating expenses decreased by $802,925. Operating expenses are
lower in 2010 due to a decrease in general and administrative expenses, offset
by increased spending in both research and development and sales and marketing
expenses. The decrease in general and administrative expense is attributable to
lower administrative salaries, a decrease in non-cash stock option charges and
lower professional fees in 2010, coupled with a specific onetime warranty
accrual in the amount of $240,0000recorded in 2009.
Interest
income decreased by $23,214 for the year ended December 31, 2010. This decrease
was primarily due to the decline in interest rates in the Companys interest
bearing investment account in 2010. Substantially all of the Companys cash is
invested in money market funds.
Other
income increased by $58,556 for the year ended December 31, 2010. This increase
was primarily due to the reduction of an accrual in 2010 of approximately
$100,000 relating to the potential exposure on environmental contamination at a
site formerly leased by Boonton, partially offset by, foreign currency losses
realized during the period. The Company has been testing the ground water at
this site since 1982 in accordance with state regulations. Recently, the
Company has hired a new environmental consultant to evaluate the results of the
current remediation plan that has been in effect since 1982. The Company is
diligently pursuing efforts to satisfy the requirements of the original plan
and receive a new determination from the NJDEP. Management continues to be
encouraged by recent test results which support improvements in ground water
conditions over time. While management anticipates that the expenditures in
connection with this site will not be substantial in future years, the Company
could be subject to significant future liabilities and may incur significant
future expenditures if any additional contamination is identified and the NJDEP
requires additional remediation.
For
the year ended December 31, 2010, the Company realized a tax benefit of
$91,870. The tax benefit was primarily due to an increase in the Companys
deferred tax asset, net of a valuation allowance, partially offset by an
adjustment to the estimated 2009 carryback claim, due to the Companys
finalizing of its 2009 federal tax return, and the provision for state income
taxes. For the year ended December 31, 2009, the Company realized a tax
benefit, net of a valuation allowance, of $6,366,851, of which approximately
$1,900,000 was estimated to be realized in a carryback claim from taxes paid in
prior years. The remaining tax benefit of approximately $4,500,000 was
estimated to be utilized to offset taxable income in future years. The effect
of this tax benefit on earnings per share in 2009 was an increase of $0.25 per
share.
Net
income from continuing operations was $1,015,043 or $0.04 per share on a
diluted basis for the year ended December 31, 2010 as compared to net income
from continuing operations of $5,460,322 or $0.21 per share on a diluted basis
for the year ended December 31, 2009, a decrease of $4,445,279. The decrease
was primarily due to the analysis mentioned above.
Net
loss from discontinued operations was $1,742,853 or $0.07 per share on a
diluted basis for the year ended December 31, 2010 as compared to a net loss
from discontinued operations of $3,428,069 or $0.13 per share on a diluted
basis for the year ended December 31, 2009, a loss decrease of $1,685,216. The
2010 loss was primarily due to an adjustment to the loss recognized on the sale
of Willtek of $430,565 and $1,312,288 in operating losses in Willtek through
the May 7, 2010 sale date. The 2009 loss was primarily due to the $3,348,122
loss recognized in 2009 on the anticipated sale of Willtek.
Net
loss was $727,810 or $0.03 per share on a diluted basis for the year ended December
31, 2010 as compared to net income of $2,032,253 or $0.08 per share on a
diluted basis for the year ended December 31, 2009, a decrease of $2,760,063.
The decrease was primarily due to the analysis mentioned above.
17
Liquidity
and Capital Resources
The
Companys working capital has decreased by $3,482,729 to $22,671,245 at
December 31, 2010, from $26,153,974 at December 31, 2009. The decrease in
working capital is primarily due to the sale of Willteks net assets in 2010.
At December 31, 2010, the Company had a current ratio of 8.2 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 a ratio of debt to tangible net worth of .4 to
1.
The
Company had cash and cash equivalents of $13,643,220 at December 31, 2010,
compared to a balance of $14,076,382 at December 31, 2009. The Company believes
its current level of cash is sufficient enough to fund the current operating,
investing and financing activities.
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
2010. 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.
Operating
activities, including discontinued operations, used $1,160,482 in cash for the
year ending December 31, 2010. For the year ended December 31, 2009, operating
activities, including discontinued operations, provided $3,108,709 in cash
flows. For 2010, cash used for operations was primarily due to a decrease in
accounts payable and accrued expenses, a decrease in income taxes payable, and
increases in inventory and accounts receivable, partially offset by a decrease
in prepaid expenses, income taxes recoverable and other current assets. For
2009, cash provided by operations was primarily due to decreases in accounts
receivable and inventory, partially off-set by an increase in prepaid expenses,
recoverability of taxes and other assets, and a decrease in accounts payable
and accrued expenses.
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.
Net
cash provided by investing activities for 2010 amounted to $2,415,715 compared
to net cash provided by investing activities of $4,731,285 for the year ending
December 31, 2009. For 2010, the primary source of cash was proceeds relating
to the disposition of Willtek, offset by capital expenditures. For 2009, the
primary source of cash was proceeds from the sale of investment securities,
off-set by capital expenditures.
Financing
activities used $1,538,533 in cash for the year ended December 31, 2010. The
use of these funds was for the final payoff on the Companys bank loan and
periodic payments made on its mortgage note payable. Financing activities used
$423,898 in cash for the year ended December 31, 2009. The use of these funds
was for periodic payments made on the Companys bank and mortgage note payable.
In
2010, the Company satisfied the entire outstanding principal and interest due
on its bank note payable through payment of $1,475,149. 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
of Contractual Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments by Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage
|
|
$
|
2,771,259
|
|
$
|
68,347
|
|
$
|
2,702,912
|
|
$
|
|
|
Facility
Leases
|
|
|
335,133
|
|
|
335,133
|
|
|
|
|
|
|
|
Operating
and Equipment leases
|
|
|
354,015
|
|
|
75,514
|
|
|
222,801
|
|
|
55,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,460,407
|
|
$
|
478,994
|
|
$
|
2,925,713
|
|
$
|
55,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
In
September 2009, the Company secured a line of credit with one of its financial
institutions. 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 December 31, 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 provided by
operations 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 dissolution of Willtek,
this funding will no longer be required.
Off-Balance Sheet Arrangements
Other
than contractual obligations incurred in the normal course of business, the
Company does not have any off-balance sheet arrangements.
Inflation and Seasonality
The
Company does not anticipate that inflation will significantly impact its
business nor does it believe that its business is seasonal.
Recent
Accounting Pronouncements Affecting the Company
In
December 2010, the Financial Accounting Standards Board (FASB) issued
Accounting Standard Update (ASU) 2010-28, When to Perform Step 2 of the
Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying
Amounts (amendments to FASB ASC Topic 350, Intangibles, Goodwill and Other).
The objective of this ASU is to address diversity in practice in the
application of goodwill impairment testing by entities with reporting units
with zero or negative carrying amounts, eliminating an entitys ability to
assert that a reporting unit is not required to perform Step 2 because the
carrying amount of the reporting unit is zero or negative despite the existence
of qualitative factors that indicate the goodwill is more likely than not
impaired. This ASU is effective for interim periods after January 1, 2011. The
Company is in the process of evaluating the impact of adopting this ASU on its
consolidated financial statements.
In
April 2010, the FASB issued ASU 2010-17, Revenue Recognition Milestone
Method (Topic 605). ASU 2010-17 provides guidance in applying the milestone
method of revenue recognition to research and development arrangements. Under
this guidance management may recognize revenue contingent upon the achievement
of a milestone in its entirety, in the period in which the milestone is
achieved, only if the milestone meets all the criteria within the guidance to
be considered substantive. This ASU is effective on a prospective basis for
research and development milestones achieved in fiscal years, beginning on or
after June 15, 2010. The Company does not expect the adoption of this standard
to have a material impact on its consolidated financial statements as the
Company has no material research and development arrangements which will be
accounted for under the milestone method.
In
January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. This
update provides amendments to Subtopic 820-10 that requires new disclosure
about recurring or nonrecurring fair-value measurements including significant
transfers into or out of Level 1 and Level 2 fair-value classifications. It
also requires information on purchases, sales, issuances and settlements on a
gross basis in the reconciliation of Level 3 fair-value assets and liabilities.
These disclosures are required for fiscal years beginning on or after December
15, 2009. The ASU also clarifies existing fair-value measurement disclosure
guidance about the level of disaggregation, inputs and valuation techniques,
which are required to be implemented in fiscal years and interim periods
beginning on or after December 15, 2010. Since the requirements of this ASU
only relate to disclosure, the adoption of the portion of this
19
guidance
that became effective January 1, 2010 did not have a material impact on the
Companys consolidated financial statements. Furthermore, we do not expect
the portion of the guidance to become effective January 1, 2011 to have a
material impact in the Companys consolidated financial statements.
In
October 2009, the FASB issued ASU 2009-14, Certain Revenue Arrangements that
Include Software Elements. This update amends Accounting Standards
Codification Subtopic 985-605, Software Revenue Recognition, to exclude from
its scope tangible products that contain both software and non-software
components that function together to deliver a products essential
functionality. The ASU is effective prospectively for revenue arrangements
entered into or materially modified in fiscal years beginning on or after June
15, 2010. Early adoption is permitted. The Company does not expect the adoption
of this standard to have a material impact on its consolidated financial
statements.
In
October 2009, the FASB issued ASU 2009-13, Revenue Recognition (Topic 605):
Multiple Deliverable Revenue Arrangements A Consensus of the FASB Emerging
Issues Task Force. This update provides application guidance on whether
multiple deliverables exist, how the deliverables should be separated and how
the consideration should be allocated to one or more units of accounting. This
update establishes a selling price hierarchy for determining the selling price
of a deliverable. The selling price used for each deliverable will be based on
vendor-specific objective evidence, if available, third-party evidence if
vendor-specific evidence is not available, or estimated selling price if
neither vendor-specific nor third-party evidence is available. The Company will
be required to apply this guidance prospectively for revenue arrangements
entered into or materially modified after January 1, 2011; however, earlier
application is permitted. The Company does not expect the adoption of this
standard to have a material impact on its consolidated financial statements.
|
|
Item 7A.
|
Quantitative and Qualitative
Disclosures About Market Risk
|
Industry Risk
The
electronic test and measurement industry is cyclical which can cause
significant fluctuations in sales, gross profit margins and profits, from year
to year. It is difficult to predict the timing of the changing cycles in the
electronic test and measurement industry.
|
|
I
tem 8.
|
Financial Statements and
Supplementary Data
|
The
response to this item is submitted in a separate section of this report.
|
|
I
tem 9.
|
Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
|
None.
|
|
I
tem
9A.
|
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. 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.
20
(b)
Managements Report on Internal Control over Financial Reporting
The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting. The Companys internal
control over financial reporting is a process designed under the supervision of
the Companys principal executive officer and principal financial officer to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of the Companys financial statements for external purposes
in accordance with generally accepted accounting principles. Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. All internal control systems, no matter how well
designed, have inherent limitations. Therefore, even those systems determined
to be effective can provide only reasonable assurances with respect to
financial statement preparation and presentation. Additionally, projections of
any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
As
of December 31, 2010, management assessed the effectiveness of the
Companys internal control over financial reporting based on the criteria for
effective internal control over financial reporting established in Internal
Control Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Based on the
assessment, management determined that the Company maintained effective
internal control over financial reporting as of December 31, 2010, based
on the COSO criteria.
This
annual report does not include an attestation report of the Companys
independent registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by the
Companys independent registered public accounting firm pursuant to the
Dodd-Frank Wall Street and Consumer Protection Act, which exempts
non-accelerated filers from the auditor attestation requirement of Section 404
(b) of the Sarbanes-Oxley Act.
(c) 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.
|
|
I
tem 9B.
|
Other
Information
|
None.
21
P
ART III
|
|
I
tem 10.
|
Directors and Executive Officers of the Registrant
|
|
|
The
information required under this item is set forth in the Companys Definitive
Proxy Statement relating to the Companys 2011 annual meeting of shareholders
and is incorporated herein by reference. Such Proxy Statement will be filed
with the Commissions within 120 days of the Companys year-end.
|
|
|
I
tem 11.
|
Executive Compensation
|
|
|
The
information required under this item is set forth in the Companys Definitive
Proxy Statement relating to the Companys 2011 annual meeting of shareholders
and is incorporated herein by reference. Such Proxy Statement will be filed
with the Commissions within 120 days of the Companys year-end.
|
|
|
I
tem 12.
|
Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters
|
|
|
The
information required under this item is set forth in the Companys Definitive
Proxy Statement relating to the Companys 2011 annual meeting of shareholders
and is incorporated herein by reference. Such Proxy Statement will be filed
with the Commissions within 120 days of the Companys year-end.
|
|
|
I
tem 13.
|
Certain
Relationships and Related Transactions, and Director Independence
|
|
|
The
information required under this item is set forth in the Companys Definitive
Proxy Statement relating to the Companys 2011 annual meeting of shareholders
and is incorporated herein by reference. Such Proxy Statement will be filed
with the Commissions within 120 days of the Companys year-end.
|
|
|
I
tem 14.
|
Principal
Accountant Fees and Services
|
|
|
The
information required under this item is set forth in the Companys Definitive
Proxy Statement relating to the Companys 2011 annual meeting of shareholders
and is incorporated herein by reference. Such Proxy Statement will be filed
with the Commissions within 120 days of the Companys year-end.
|
22
P
ART IV
|
|
I
tem
15.
|
Exhibits and Financial Statement
Schedules
|
|
|
|
|
(a)
|
(1)
|
Report of Independent Registered Public Accounting
Firm
|
|
|
Consolidated Balance Sheets as of December 31, 2010
and 2009
|
|
|
Consolidated Statements
of Operations for the Two Years in the Period ended December 31, 2010
|
|
|
Consolidated Statements
of Changes in Shareholders Equity for the Two Years in the Period ended
December 31, 2010
|
|
|
Consolidated Statements
of Cash Flows for the Two Years in the Period ended December 31, 2010
|
|
|
Notes to Consolidated
Financial Statements
|
|
|
|
|
|
(2)
|
Financial Statement
Schedules
|
|
|
Schedule II Valuation
and Qualifying Accounts
|
|
|
|
|
|
|
All other schedules
have been omitted because the required information is included in the
financial statements or notes thereto or because they are not required.
|
|
|
|
|
|
(3)
|
Exhibits
|
|
|
|
|
|
|
2.1
|
Asset Purchase Agreement,
dated as of April 9, 2010, by and among the Registrant, Willtek
Communications GmbH, Willtek Communications SARL, Willtek Communications,
Inc., Aeroflex Incorproated, Aeroflex Wichita, Inc., Aeroflex GmbH and
Aeroflex SAS* (10)
|
|
|
|
|
|
|
3.1
|
Certificate of
Incorporation, as amended (1)
|
|
|
|
|
|
|
3.2
|
Amended and Restated
By-laws (1)
|
|
|
|
|
|
|
3.3
|
Amendment to the
Certificate of Incorporation (2)
|
|
|
|
|
|
|
3.4
|
Amendment to the
Certificate of Incorporation (3)
|
|
|
|
|
|
|
4.2
|
Form of Stock
Certificate (1)
|
|
|
|
|
|
|
10.1
|
Summary Plan
Description of Profit Sharing Plan of the Registrant (1)
|
|
|
|
|
|
|
10.2
|
Incentive Stock Option
Plan of the Registrant and related agreement (1)
|
|
|
|
|
|
|
10.3
|
Amendment to
Registrants Incentive Stock Option Plan and related agreement (3)
|
|
|
|
|
|
|
10.4
|
Wireless Telecom Group,
Inc. 2000 Stock Option Plan (4)
|
|
|
|
|
|
|
10.5
|
Stock Purchase
Agreement dated December 21, 2001, by and among the Company, Microlab/FXR and
Harry A. Augenblick (5)
|
|
|
|
|
|
|
10.6
|
Stock Purchase
Agreement made as of December 21, 2001, by and among the Company and
Microlab/FXR Employees Stock Ownership Plan (5)
|
|
|
|
|
|
|
10.7
|
Amended and Restated
Stock Purchase Agreement, dated as of March 29, 2005, among the Company,
Willtek Communications GmbH, Investcorp Technology Ventures, L.P., and Damany
Holding GmbH (6)
|
23
|
|
|
|
|
|
10.8
|
Amended and Restated
Loan Agreement, dated March 29, 2005, by and among Investcorp Technology
Ventures, L.P., Willtek Communications GmbH and Wireless Telecom Group, Inc.
(6)
|
|
|
|
|
|
|
10.9
|
Severance Agreement, dated
March 29, 2005, between Wireless Telecom Group, Inc. and Paul Genova (8)
|
|
|
|
|
|
|
10.10
|
Employment and
Severance Agreement, dated January 23, 2006, between Wireless Telecom Group,
Inc. and James M. Johnson (9)
|
|
|
|
|
|
|
10.11
|
Employment and
Severance Agreement, dated February 6, 2007, between Wireless Telecom Group,
Inc. and Lawrence Henderson (9)
|
|
|
|
|
|
|
14
|
Code of Ethics (7)
|
|
|
|
|
|
|
23.1
|
Consent of Independent
Registered Public Accounting Firm (PKF LLP) filed herewith as Exhibit 23.1
|
|
|
|
|
|
|
31.1
|
Certification pursuant
to section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
31.2
|
Certification pursuant
to section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
32.1
|
Certification pursuant
to 18 U.S.C. section 1350
|
|
|
|
|
|
|
32.2
|
Certification pursuant
to 18 U.S.C. section 1350
|
* All exhibits and
schedules to this Exhibit have been omitted in accordance with Regulation S-K
Item 601(b)(2). The Registrant agrees to furnish supplementally a copy of all
omitted exhibits and schedules to the Securities and Exchange Commission upon
its request.
|
|
(1)
|
Filed as an exhibit to
the Companys Registration Statement on Form S-18
|
|
(File No.33-42468-NY)
and incorporated by reference herein.
|
(2)
|
Filed as an exhibit to
the Companys Annual Report on Form 10-K for the year ended December
1994 and incorporated by reference herein.
|
(3)
|
Filed as an exhibit to
the Companys Annual Report on Form 10-K for the year ended December
1995 and incorporated by reference herein.
|
(4)
|
Filed as Annex B to the
Definitive Proxy Statement of the Company filed on July 17, 2000 and
incorporated by reference herein.
|
(5)
|
Filed as an exhibit to
the Companys Current Report on Form 8-K, dated December 21, 2001, filed with
the Commission on January 4, 2002 and incorporated by reference herein.
|
(6)
|
Filed as an exhibit to
the Companys Current Report on Form 8-K, dated March 29, 2005, filed with
the Commission on March 29, 2005 and incorporated by reference herein.
|
(7)
|
Filed as an exhibit to
the Companys Annual Report on Form 10-K for the year ended December 31,
2003 and incorporated by reference herein.
|
(8)
|
Filed as an exhibit to
the Companys Annual Report on Form 10-K for the year ended December 31,
2004 and incorporated by reference herein.
|
(9)
|
Filed as an exhibit to
the Companys Annual Report on Form 10-K for the year ended December 31,
2007 and incorporated by reference herein.
|
(10)
|
Filed as an exhibit to
the Companys Amendment No. 1 to Annual Report of Form 10-K/A for the year
ended December 31, 2009 and incorporated by reference herein.
|
24
S
I G N A T U R E S
Pursuant
to the requirements of Section 13 or 15(d) 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.
|
|
|
|
|
WIRELESS TELECOM GROUP,
INC.
|
|
|
Date: March 30, 2011
|
|
By:
|
/s/ Paul Genova
|
|
|
|
|
|
|
|
Paul Genova
|
|
|
|
Chief Executive Officer
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/s/ Adrian Nemcek
|
|
Chairman of the Board
|
|
March 30, 2011
|
|
|
|
|
|
Adrian Nemcek
|
|
|
|
|
|
|
|
|
|
/s/ Paul Genova
|
|
Chief Executive Officer
|
|
March 30, 2011
|
|
|
|
|
|
Paul Genova
|
|
|
|
|
|
|
|
|
|
/s/ Robert Censullo
|
|
Acting Chief Financial
Officer
|
|
March 30, 2011
|
|
|
|
|
|
Robert Censullo
|
|
|
|
|
|
|
|
|
|
/s/ Henry Bachman
|
|
Director
|
|
March 30, 2011
|
|
|
|
|
|
Henry Bachman
|
|
|
|
|
|
|
|
|
|
/s/ Rick Mace
|
|
Director
|
|
March 30, 2011
|
|
|
|
|
|
Rick Mace
|
|
|
|
|
|
|
|
|
|
/s/ Joseph Garrity
|
|
Director
|
|
March 30, 2011
|
|
|
|
|
|
Joseph Garrity
|
|
|
|
|
|
|
|
|
|
/s/ Hazem Ben-Gacem
|
|
Director
|
|
March 30, 2011
|
|
|
|
|
|
Hazem Ben-Gacem
|
|
|
|
|
|
|
|
|
|
/s/ Glenn Luk
|
|
Director
|
|
March 30, 2011
|
|
|
|
|
|
Glenn Luk
|
|
|
|
|
25
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
F 1
R
eport of
Independent Registered Public Accounting Firm
To the Board
of Directors and Shareholders
Wireless Telecom Group, Inc.
Parsippany, NJ
We have audited the accompanying consolidated balance sheets of
Wireless Telecom Group, Inc. and Subsidiaries as of December 31, 2010 and 2009,
and the related consolidated statements of operations, changes in shareholders
equity, cash flows and the schedule listed in the accompanying index for the
years then ended. These consolidated financial statements and schedule are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these consolidated financial statements and the schedule 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 and the schedule are free of material misstatement. We
were not engaged to perform an audit of the Companys 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 Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting amounts and disclosures in the
consolidated financial statements and the schedule, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements
and the schedule. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Wireless
Telecom Group, Inc. and Subsidiaries at December 31, 2010 and 2009 and the
results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States
of America. Also, in our opinion, the schedule presents fairly, in all material
respects, the information set forth therein.
|
|
|
/s/PKF LLP
|
|
|
March 29,
2011
|
|
New York, NY
|
|
F 2
|
C
ONSOLIDATED BALANCE SHEETS
|
|
Wireless
Telecom Group, Inc.
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-ASSETS-
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
13,643,220
|
|
$
|
14,076,382
|
|
Accounts receivable - net of allowance for doubtful accounts of
$73,819 and $155,173 for 2010 and 2009, respectively
|
|
|
4,303,720
|
|
|
3,023,318
|
|
Income taxes recoverable
|
|
|
|
|
|
1,910,846
|
|
Inventories
|
|
|
6,935,172
|
|
|
6,944,231
|
|
Deferred income taxes - current
|
|
|
457,215
|
|
|
464,192
|
|
Prepaid expenses and other current assets
|
|
|
465,798
|
|
|
523,642
|
|
Assets held for sale
|
|
|
|
|
|
6,978,163
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
25,805,125
|
|
|
33,920,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT - NET
|
|
|
4,238,015
|
|
|
4,436,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS:
|
|
|
|
|
|
|
|
Goodwill
|
|
|
1,351,392
|
|
|
1,351,392
|
|
Deferred income taxes non-current
|
|
|
5,236,175
|
|
|
4,560,312
|
|
Other assets
|
|
|
988,108
|
|
|
863,023
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER ASSETS
|
|
|
7,575,675
|
|
|
6,774,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
37,618,815
|
|
$
|
45,131,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- LIABILITIES AND SHAREHOLDERS EQUITY -
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
743,398
|
|
$
|
904,542
|
|
Accrued expenses and other current liabilities
|
|
|
2,322,135
|
|
|
1,930,225
|
|
Current portion of note payable bank
|
|
|
|
|
|
375,238
|
|
Current portion of mortgage payable
|
|
|
68,347
|
|
|
63,386
|
|
Liabilities held for sale
|
|
|
|
|
|
4,493,409
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
3,133,880
|
|
|
7,766,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG TERM LIABILITIES:
|
|
|
|
|
|
|
|
Note payable - bank
|
|
|
|
|
|
1,313,333
|
|
Mortgage payable
|
|
|
2,702,912
|
|
|
2,771,259
|
|
Deferred rent payable
|
|
|
37,922
|
|
|
90,946
|
|
|
|
|
|
|
|
|
|
TOTAL LONG TERM LIABILITIES
|
|
|
2,740,834
|
|
|
4,175,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS EQUITY:
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value, 2,000,000 shares authorized, none
issued
|
|
|
|
|
|
|
|
Common stock, $.01 par value, 75,000,000 shares authorized, 28,753,861
shares issued, 25,658,203 shares outstanding
|
|
|
287,539
|
|
|
287,539
|
|
Additional paid-in capital
|
|
|
37,746,005
|
|
|
37,528,841
|
|
Retained earnings
|
|
|
1,257,371
|
|
|
1,985,181
|
|
Accumulated other comprehensive income
|
|
|
|
|
|
934,755
|
|
Treasury stock, at cost 3,095,658 shares
|
|
|
(7,546,814
|
)
|
|
(7,546,814
|
)
|
|
|
|
|
|
|
|
|
|
|
|
31,744,101
|
|
|
33,189,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
|
|
$
|
37,618,815
|
|
$
|
45,131,840
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an
integral part of these consolidated financial statements.
F 3
|
C
ONSOLIDATED STATEMENTS OF OPERATIONS
|
|
Wireless
Telecom Group, Inc.
|
|
|
|
|
|
|
|
|
|
|
For
the Year Ended December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES
|
|
$
|
24,564,226
|
|
$
|
22,828,328
|
|
|
|
|
|
|
|
|
|
COST OF SALES
|
|
|
13,008,747
|
|
|
12,199,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
11,555,479
|
|
|
10,628,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
Research and development
|
|
|
2,174,798
|
|
|
2,066,018
|
|
Sales and marketing
|
|
|
4,358,024
|
|
|
4,158,836
|
|
General and administrative
|
|
|
4,217,134
|
|
|
5,328,027
|
|
|
|
|
|
|
|
|
|
TOTAL OPERATING EXPENSES
|
|
|
10,749,956
|
|
|
11,552,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS)
|
|
|
805,523
|
|
|
(923,949
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER (INCOME) EXPENSE
|
|
|
|
|
|
|
|
Interest (income)
|
|
|
(22,655
|
)
|
|
(45,869
|
)
|
Interest expense - net
|
|
|
212,149
|
|
|
277,037
|
|
Other (income) net
|
|
|
(307,144
|
)
|
|
(248,588
|
)
|
|
|
|
|
|
|
|
|
TOTAL OTHER (INCOME) EXPENSE
|
|
|
(117,650
|
)
|
|
(17,420
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
(BENEFIT) FROM INCOME TAXES
|
|
|
923,173
|
|
|
(906,529
|
)
|
|
|
|
|
|
|
|
|
(BENEFIT)
FROM INCOME TAXES
|
|
|
(91,870
|
)
|
|
(6,366,851
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS
|
|
|
1,015,043
|
|
|
5,460,322
|
|
|
|
|
|
|
|
|
|
(LOSS) FROM DISCONTINUED OPERATIONS NET OF TAXES
|
|
|
(1,742,853
|
)
|
|
(3,428,069
|
)
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
(727,810
|
)
|
$
|
2,032,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) PER COMMON SHARE:
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.04
|
|
$
|
0.21
|
|
Discontinued operations
|
|
$
|
(0.07
|
)
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER COMMON SHARE
|
|
$
|
(0.03
|
)
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
Basic
|
|
|
25,658,203
|
|
|
25,658,203
|
|
Diluted
|
|
|
25,685,291
|
|
|
25,658,203
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
F 4
|
C
ONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS
EQUITY
|
|
Wireless
Telecom Group, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings(Deficit)
|
|
Accumulated
Other
Comprehensive
Income
|
|
Treasury
Stock at Cost
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT DECEMBER 31, 2008
|
|
$
|
287,539
|
|
$
|
37,259,386
|
|
$
|
(47,072
|
)
|
$
|
724,408
|
|
$
|
(7,546,814
|
)
|
$
|
30,677,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
2,032,253
|
|
|
|
|
|
|
|
|
2,032,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
|
|
293,448
|
|
|
|
|
|
293,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount recognized for employee pension obligation
|
|
|
|
|
|
|
|
|
|
|
|
(83,101
|
)
|
|
|
|
|
(83,101
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,242,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options expensed
|
|
|
|
|
|
269,455
|
|
|
|
|
|
|
|
|
|
|
|
269,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT DECEMBER 31, 2009
|
|
$
|
287,539
|
|
$
|
37,528,841
|
|
$
|
1,985,181
|
|
$
|
934,755
|
|
$
|
(7,546,814
|
)
|
$
|
33,189,502
|
|
F 5
|
CONSOLIDATED
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
|
|
Wireless
Telecom Group, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings(Deficit)
|
|
Accumulated
Other
Comprehensive
Income
|
|
Treasury
Stock at
Cost
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
(727,810
|
)
|
|
|
|
|
|
|
|
(727,810
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
|
|
(31,320
|
)
|
|
|
|
|
(31,320
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount recognized for employee pension obligation
|
|
|
|
|
|
|
|
|
|
|
|
(903,435
|
)
|
|
|
|
|
(903,435
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,662,565
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options expensed
|
|
|
|
|
|
217,164
|
|
|
|
|
|
|
|
|
|
|
|
217,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT DECEMBER 31, 2010
|
|
$
|
287,539
|
|
$
|
37,746,005
|
|
$
|
1,257,371
|
|
$
|
0
|
|
$
|
(7,546,814
|
)
|
$
|
31,744,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F 6
|
C
ONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
Wireless
Telecom Group, Inc.
|
|
|
|
|
|
|
|
|
|
|
For
the Year Ended December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
CASH FLOW FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(727,810
|
)
|
$
|
2,032,253
|
|
Adjustments to reconcile net income (loss) to net cash provided by
(used for) operating activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
621,706
|
|
|
868,790
|
|
Amortization
|
|
|
13,906
|
|
|
42,409
|
|
Loss on sale of discontinued operations
|
|
|
430,565
|
|
|
3,348,122
|
|
Stock compensation expense
|
|
|
217,164
|
|
|
269,455
|
|
Interest on investment securities
|
|
|
|
|
|
(27,184
|
)
|
Deferred rent
|
|
|
(53,025
|
)
|
|
(10,720
|
)
|
Deferred income taxes
|
|
|
(668,886
|
)
|
|
(4,298,689
|
)
|
Provision for (recovery of) doubtful accounts
|
|
|
(106,247
|
)
|
|
75,284
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(269,247
|
)
|
|
1,041,512
|
|
Inventory
|
|
|
(314,836
|
)
|
|
985,587
|
|
Income taxes payable
|
|
|
(253,543
|
)
|
|
9,272
|
|
Prepaid expenses, income taxes recoverable and other current assets
|
|
|
1,953,073
|
|
|
(592,478
|
)
|
Other long-term liabilities
|
|
|
|
|
|
42,881
|
|
Accounts payable and accrued expenses
|
|
|
(2,003,302
|
)
|
|
(677,785
|
)
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) operating activities
|
|
|
(1,160,482
|
)
|
|
3,108,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(334,260
|
)
|
|
(276,631
|
)
|
Proceeds from dispositions of property, plant and equipment
|
|
|
|
|
|
4,340
|
|
Proceeds from dispositions of Willtek assets
|
|
|
2,749,975
|
|
|
|
|
Proceeds from sale of investment securities
|
|
|
|
|
|
5
,
003,576
|
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
|
2,415,715
|
|
|
4,731,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Payments of mortgage note
|
|
|
(63,384
|
)
|
|
(58,784
|
)
|
Payment on bank note payable
|
|
|
(1,475,149
|
)
|
|
(365,114
|
)
|
|
|
|
|
|
|
|
|
Net cash (used for) financing activities
|
|
|
(1,538,533
|
)
|
|
(423,898
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency on cash and cash equivalents
|
|
|
(149,862
|
)
|
|
32,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
(433,162
|
)
|
|
7,448,985
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, at beginning of year
|
|
|
14,076,382
|
|
|
6,627,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, AT END OF YEAR
|
|
$
|
13,643,220
|
|
$
|
14,076,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for:
|
|
|
|
|
|
|
|
Taxes
|
|
$
|
537,332
|
|
$
|
304,850
|
|
Interest
|
|
$
|
238,707
|
|
$
|
294,994
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
F 7
|
NO
TES TO CONSOLIDATED FINANCIAL
STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 1 -
|
DESCRIPTION OF COMPANY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:
|
|
|
|
Organization and
Basis of Presentation:
|
|
|
|
Wireless Telecom Group, Inc. and Subsidiaries (the Company),
develops and manufactures a wide variety of electronic noise sources, testing
and measurement instruments and high-power, passive microwave components,
which it sells to customers throughout the United States and worldwide
through its foreign sales corporation and foreign distributors to commercial
and government customers in the electronics industry. The consolidated
financial statements include the accounts of Wireless Telecom Group, Inc. and
its wholly-owned subsidiaries, Boonton Electronics Corporation, Microlab/FXR,
Willtek Communications GmbH (through May 7, 2010), WTG Foreign Sales
Corporation and NC Mahwah, Inc. All intercompany transactions are eliminated
in consolidation.
|
|
|
|
Throughout 2009, Willtek Communications GmbH (Willtek) experienced
a decline in revenues and, consequently, a decline in gross margins primarily
due to an overall industry slowdown in worldwide cellular handset demand. In
light of these, and other, current market challenges facing Willtek,
including significant research and development expenses required to remain
competitive, management evaluated several strategic alternatives and
opportunities, such as, restructuring the existing business, finding a
strategic partner, making additional investments in technology research and
development or a sale of some or all of the Willtek assets.
|
|
|
|
In November 2009, the Companys board of directors made a decision to
conclude efforts to seek strategic alternatives regarding the operations,
assets and intellectual property relating to the Companys foreign
subsidiary, Willtek, so that the Company could focus on growing its domestic
based business divisions. The board of directors authorized management to
begin negotiations with interested parties to sell substantially all of the
assets of Willtek or cease incurring costs related to its development. On
April 9, 2010, the Company entered into an asset purchase agreement to sell
substantially all the operating assets and certain liabilities of Willtek and
on May 7, 2010 successfully completed this sale.
|
|
|
|
As a result of the aforementioned sale of Willtek, the Companys
consolidated balance sheet at December 31, 2009 presents the accounts of
Willtek as assets and liabilities held for sale. Willteks operating activities
through the May 7, 2010 sale date, and for all of fiscal year 2009, are
included in the Companys consolidated statement of operations as
discontinued operations (see Note 2). As a result, the succeeding information
presented in these notes to the financial statements pertains primarily to
the Companys continuing operations.
|
|
|
|
Use of Estimates:
|
|
|
|
In preparing financial statements in accordance with accounting
principles generally accepted in the United States of America (U.S. GAAP),
management makes certain estimates and assumptions, where applicable, that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
|
|
|
|
Concentrations of
Credit Risk and Fair Value:
|
|
|
|
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and accounts
receivable.
|
|
|
|
The Company maintains significant cash investments primarily with two
financial institutions, which at times may exceed federally insured limits.
The Company performs periodic evaluations of the relative credit rating of
these institutions as part of its investment strategy.
|
F 8
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
|
NOTE 1 -
|
DESCRIPTION OF COMPANY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued):
|
|
|
|
|
Concentrations of credit risk with respect to accounts receivable are
limited due to the Companys large customer base. However, at December 31,
2010, primarily all of the Companys receivables do pertain to the
telecommunications industry.
|
|
|
|
|
The carrying amounts of cash and cash equivalents, trade receivables,
other current assets and accounts payable approximate fair value due to the
short-term nature of these instruments. At December 31, 2010, the fair value
(estimated based upon expected cash outflows discounted at current market
rates) and carrying value of fixed rate mortgage amounted to $2,860,698 and
$2,771,259, respectively. At December 31, 2009, the fair value and carrying
value of fixed rate mortgage amounted to $2,930,764 and $2,834,645,
respectively.
|
|
|
|
|
The Company records its financial assets and liabilities at fair
value. The accounting standard for fair value (i) defines fair value as the
price that would be received to sell an asset or paid to transfer a liability
(an exit price) in an orderly transaction between market participants at the
measurement date, (ii) establishes a framework for measuring fair value,
(iii) establishes a hierarchy of fair value measurements based upon the
observability of inputs used to value assets and liabilities, (iv) requires
consideration of nonperformance risk, and (v) expands disclosures about the
methods used to measure fair value.
|
|
|
|
|
The accounting standard establishes a three-level hierarchy of
measurements based upon the reliability of observable and unobservable inputs
used to arrive at fair value. Observable inputs are independent market data,
while unobservable inputs reflect our assumptions about valuation. The three
levels of the hierarchy are defined as follows:
|
|
|
|
|
|
Level 1:
Observable
inputs such as quoted prices in active markets for identical assets and
liabilities;
|
|
|
|
|
|
Level 2:
Inputs
other than quoted prices but are observable for the asset or liability,
either directly or indirectly. These include quoted prices for similar assets
or liabilities in active markets and quoted prices for identical or similar
assets or liabilities in markets that are not active; and model-derived
valuations in which all significant inputs and significant value drivers are
observable in active markets; and
|
|
|
|
|
|
Level 3:
Valuations derived from valuation techniques in which one or more significant
inputs or significant value drivers are unobservable.
|
|
|
|
|
At December 31, 2010, the Company did not have any financial assets
or liabilities which are required to be measured at fair value on a recurring
basis. At December 31, 2009, the net assets of Wiltek (see note 2) were
recorded at their net realizable values based upon Level 2 hierarchy.
|
|
|
|
|
Cash and Cash Equivalents:
|
|
|
|
|
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. Cash and
cash equivalents consist of operating and money market accounts.
|
|
|
|
|
The Company classifies investments as short-term investments if their
original or remaining maturities are greater than three months and their
remaining maturities are one year or less. As of December 31, 2010,
substantially all of the Companys investments consisted of cash and cash
equivalents.
|
F 9
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 1 -
|
DESCRIPTION OF COMPANY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued):
|
|
|
|
Accounts
Receivable:
|
|
|
|
The Company accounts for uncollectible accounts under the allowance
method. Potentially uncollectible accounts are provided for throughout the
year and actual bad debts are written off to the allowance on a timely basis.
|
|
|
|
Inventories:
|
|
|
|
Raw material inventories are stated at the lower of cost (first-in,
first-out method) or market. Finished goods and work-in-process are valued at
average cost of production, which includes material, labor and manufacturing
expenses. Inventory carrying value is net of inventory reserves of $452,310
and $810,904 for the years ended December 31, 2010 and 2009, respectively. In
2010, during the review of its inventory reserves, the Company identified and
scrapped $243,713 of obsolete inventory.
|
|
|
|
Inventories consist of:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raw
materials
|
|
$
|
4,632,195
|
|
$
|
4,393,992
|
|
Work-in-process
|
|
|
830,684
|
|
|
1,252,251
|
|
Finished
goods
|
|
|
1,472,293
|
|
|
1,297,988
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,935,172
|
|
$
|
6,944,231
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant
and Equipment:
|
|
|
|
Property, plant and equipment are reflected at cost, less accumulated
depreciation. Depreciation and amortization are provided on a straight-line
basis over the following useful lives:
|
|
|
|
|
|
|
Building and
improvements
|
39
|
|
years
|
|
Machinery
and equipment
|
5-10
|
|
years
|
|
Furniture
and fixtures
|
5-10
|
|
years
|
|
Transportation
equipment
|
3-5
|
|
years
|
|
|
|
Leasehold improvements are amortized over the remaining term of the
lease and reflect the estimated life of the improvements. Repairs and
maintenance are charged to operations as incurred; renewals and betterments
are capitalized.
|
|
|
|
Goodwill:
|
|
|
|
The Company reviews the goodwill of its subsidiary, Microlab, for
impairment whenever events or changes in circumstances indicate that the
carrying amount of this asset may not be recoverable, and also reviews
Microlabs goodwill annually in accordance with Accounting Standards
Codification (ASC) 350, Accounting for Business Combinations, Goodwill, and
Other Intangible Assets. The process of evaluating the potential impairment
of goodwill is ongoing, subjective and requires significant judgment and
estimates regarding future cash flows and forecasts. Goodwill represents the
excess of the cost of an acquisition over fair value of net assets acquired.
Testing for the impairment of goodwill involves a two step process. The first
step of the impairment test requires the comparing of a reporting units fair
value to its carrying value. If the carrying value is less than the fair
value, no impairment exists and the second step is not performed. If the
carrying value is higher than the fair value, there is an indication that
impairment may exist and the second step must be performed to compute the
amount of the impairment.
|
F 10
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 1 -
|
DESCRIPTION OF COMPANY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued):
|
|
|
|
In the second step, the impairment is computed by estimating the fair
value of all recognized and unrecognized assets and liabilities of the
reporting unit and comparing the implied fair value of reporting unit
goodwill with the carrying amount of that units goodwill. As noted above,
goodwill is attributable to one of the Companys reporting units, Microlab.
|
|
|
|
In the fourth quarters of 2010 and 2009, management performed their
annual impairment test of goodwill which indicated that Microlabs fair value
was significantly in excess of its carrying value, therefore, there was no
impairment for either of the periods presented.
|
|
|
|
Impairment of
long-lived assets:
|
|
|
|
Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of such assets may
not be recoverable. Determination of recoverability is based on an estimate
of undiscounted cash flows resulting from the use of the assets and its
eventual disposition. Measurement of an impairment loss for long-lived assets
that management expects to hold for sale is based on the fair value of the
assets. Long-lived assets to be disposed of are reported at the lower of
carrying amount or fair value less costs to sell.
|
|
|
|
Revenue
Recognition:
|
|
|
|
Revenue from product shipments, including shipping and handling fees,
is recognized once delivery has occurred provided that persuasive evidence of
an arrangement exists, the price is fixed or determinable, and collectability
is reasonably assured. Delivery is considered to have occurred when title and
risk of loss have transferred to the customer. Sales to international distributors
are recognized in the same manner. If title does not pass until the product
reaches the customers delivery site, then recognition of revenue is deferred
until that time. There are no formal sales incentives offered to any of the
Companys customers. Volume discounts may be offered from time to time to
customers purchasing large quantities on a per transaction basis. There are
no special post shipment obligations or acceptance provisions that exist with
any sales arrangements.
|
|
|
|
Research and Development
Costs:
|
|
|
|
Research and development
costs are charged to operations when incurred. The amounts charged to
continuing operations for the years ended December 31, 2010 and 2009 were
$2,174,798 and $2,066,018, respectively.
|
|
|
|
Advertising Costs:
|
|
|
|
Advertising expenses are charged to operations during the year in
which they are incurred and aggregated $358,248 and $357,063 for the years
ended December 31, 2010 and 2009, respectively.
|
|
|
|
Comprehensive
Income (Loss):
|
|
|
|
Prior to the disposition of Willtek (see Note 2), assets and
liabilities of the Companys foreign subsidiaries were translated at
period-end exchange rates, while income and expenses were translated at
average rates for the period. Translation gains and losses were reported as a
component of accumulated other comprehensive income (loss) on the statement
of changes in shareholders equity in accordance with ASC 220, Comprehensive
Income.
|
F 11
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 1 -
|
DESCRIPTION OF COMPANY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued):
|
|
|
|
During the fiscal year ended December 31, 2009, included in other
comprehensive income (loss) was an adjustment for Willteks employee benefit
obligations due to the provisions of ASC 715, Compensation Retirement
Benefits, as well as, foreign currency translation gains and losses. At
December 31, 2009, in connection with the Companys intent and eventual sale
of substantially all of the assets of its foreign subsidiary (see Note 2),
amounts recorded in other comprehensive income (loss) were included in the
determination of the loss of discontinued operations.
|
|
|
|
Components of other comprehensive income (loss) consist of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency
Translation
|
|
Pension Liability
Adjustments
|
|
Total Accumulated
Other Comprehensive
Income (loss)
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
$
|
(262,128
|
)
|
$
|
986,536
|
|
$
|
724,408
|
|
Amounts recognized for employee pension
costs
|
|
|
|
|
|
(83,101
|
)
|
|
(83,101
|
)
|
Foreign currency translation
|
|
|
293,448
|
|
|
|
|
|
293,448
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
31,320
|
|
$
|
903,435
|
|
$
|
934,755
|
|
Amounts recognized for employee pension
costs
|
|
|
|
|
|
(903,435
|
)
|
|
(903,435
|
)
|
Foreign currency translation
|
|
|
(31,320
|
)
|
|
|
|
|
(31,320
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Based
Compensation:
|
|
|
|
The Company follows the provisions of ASC 718, Share-Based Payment.
The fair value of options at the date of grant was estimated using the
Black-Scholes option pricing model. For the performance-based options granted
in 2010 and 2009, the Company took into consideration guidance under ASC 718
and SEC Staff Accounting Bulletin No. 107 (SAB 107) when reviewing and
updating assumptions. The expected option life is derived from assumed
exercise rates based upon historical exercise patterns and represents the
period of time that options granted are expected to be outstanding. The
expected volatility is based upon historical volatility of our shares using
weekly price observations over an observation period that approximates the
expected life of the options. The risk-free rate is based on the U.S.
Treasury yield curve rate in effect at the time of grant for periods similar
to the expected option life. The estimated forfeiture rate included in the
option valuation was zero.
|
|
|
|
Income Taxes:
|
|
|
|
The Company records deferred taxes in accordance with ASC 740,
Accounting for Income Taxes. This ASC requires recognition of deferred tax
assets and liabilities for temporary differences between tax basis of assets
and liabilities and the amounts at which they are carried in the financial
statements, based upon the enacted rates in effect for the year in which the
differences are expected to reverse. The Company establishes a valuation
allowance when necessary to reduce deferred tax assets to the amount expected
to be realized. The Company periodically assesses the value of its deferred
tax asset, a majority of which has been generated by the disposition of
Willtek, and determines the necessity for a valuation allowance.
|
|
|
|
The Company evaluates which portion, if any, will more likely than
not be realized by offsetting future taxable income, taking into
consideration any limitations that may exist on its use of its net operating
loss carryforwards.
|
F 12
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 1 -
|
DESCRIPTION OF COMPANY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued):
|
|
|
|
Under ASC 740, the Company must recognize the tax benefit from an
uncertain position only if it is more-likely-than-not the tax position will
be sustained on examination by the taxing authority, based on the technical
merits of the position. The tax benefits recognized in the financial
statements attributable to such position are measured based on the largest
benefit that has a greater than 50% likelihood of being realized upon the
ultimate resolution of the position.
|
|
|
|
The Company has analyzed its filing positions in all of the federal,
state and foreign jurisdictions where it is required to file income tax
returns. As of December 31, 2010 and 2009, the Company has identified its
federal tax return, its state tax return in New Jersey and its foreign return
in Germany as major tax jurisdictions, as defined, in which it is required
to file income tax returns. Based on the evaluations noted above, the Company
has concluded that there are no significant uncertain tax positions requiring
recognition in its consolidated financial statements.
|
|
|
|
Based on a review of tax positions for all open years and
contingencies as set out in Companys notes to the consolidated financial
statements, no reserves for uncertain income tax positions have been recorded
pursuant to ASC 740 during the years ended December 31, 2010 and 2009, and
the Company does not anticipate that it is reasonably possible that any
material increase or decrease in its unrecognized tax benefits will occur
within twelve months.
|
|
|
|
Income (Loss) Per
Common Share:
|
|
|
|
Basic income (loss) per share is calculated by dividing income
available to common shareholders by the weighted average number of shares of
common stock outstanding during the period. Diluted income (loss) per share
is calculated by dividing income available to common shareholders by the
weighted average number of common shares outstanding for the period and, when
dilutive, potential shares from stock options and warrants to purchase common
stock, using the treasury stock method. In accordance with ASC 260, Earnings
Per Share, the following table reconciles basic shares outstanding to fully
diluted shares outstanding.
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding Basic
|
|
|
25,658,203
|
|
|
25,658,203
|
|
Potentially dilutive stock options
|
|
|
27,088
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common and equivalent shares
outstanding-Diluted
|
|
|
25,685,291
|
|
|
25,658,203
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock options are included in the diluted income (loss) per
share calculation only when option exercise prices are lower than the average
market price of the common shares for the period presented. The weighted
average number of common stock equivalents not included in diluted income
(loss) per share, because the effects are anti-dilutive, was 2,753,472 and
3,317,778 for 2010 and 2009, respectively.
|
|
|
|
Subsequent events:
|
|
|
|
The Company has evaluated subsequent events and, except for the
events described with respect to the stock repurchase, the appointment of a
corporate officer and the granting of restricted stock (see Note 13), the
Company has determined that there were no other subsequent events or
transactions requiring recognition or disclosure in the consolidated
financial statements.
|
F 13
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 1 -
|
DESCRIPTION OF COMPANY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued):
|
|
|
|
Recent
Accounting Pronouncements Affecting the
Company:
|
|
|
|
In December 2010, the Financial Accounting Standards Board (FASB)
issued Accounting Standard Update (ASU) 2010-28, When to Perform Step 2 of
the Goodwill Impairment Test for Reporting Units with Zero or Negative
Carrying Amounts (amendments to FASB ASC Topic 350, Intangibles, Goodwill
and Other). The objective of this ASU is to address diversity in practice in
the application of goodwill impairment testing by entities with reporting
units with zero or negative carrying amounts, eliminating an entitys ability
to assert that a reporting unit is not required to perform Step 2 because the
carrying amount of the reporting unit is zero or negative despite the
existence of qualitative factors that indicate the goodwill is more likely
than not impaired. This ASU is effective for interim periods after January 1,
2011. The Company is in the process of evaluating the impact of adopting this
ASU on its consolidated financial statements.
|
|
|
|
In April 2010, the FASB issued ASU 2010-17, Revenue Recognition
Milestone Method (Topic 605). ASU 2010-17 provides guidance in applying the
milestone method of revenue recognition to research and development
arrangements. Under this guidance management may recognize revenue contingent
upon the achievement of a milestone in its entirety, in the period in which
the milestone is achieved, only if the milestone meets all the criteria
within the guidance to be considered substantive. This ASU is effective on a
prospective basis for research and development milestones achieved in fiscal
years, beginning on or after June 15, 2010. The Company does not expect the
adoption of this standard to have a material impact on its consolidated
financial statements as the Company has no material research and development
arrangements which will be accounted for under the milestone method.
|
|
|
|
In January 2010, the FASB issued ASU 2010-06, Improving Disclosures
about Fair Value Measurements. This update provides amendments to Subtopic
820-10 that requires new disclosure about recurring or nonrecurring
fair-value measurements including significant transfers into or out of Level
1 and Level 2 fair-value classifications. It also requires information on
purchases, sales, issuances and settlements on a gross basis in the
reconciliation of Level 3 fair-value assets and liabilities. These
disclosures are required for fiscal years beginning on or after December 15,
2009. The ASU also clarifies existing fair-value measurement disclosure
guidance about the level of disaggregation, inputs and valuation techniques,
which are required to be implemented in fiscal years and interim periods
beginning on or after December 15, 2010.
|
|
|
|
Since the requirements of this ASU only relate to disclosure, the
adoption of the portion of this guidance that became effective January 1,
2010 did not have a material impact on the Companys consolidated financial
statements. Furthermore, we do not expect the portion of the guidance to
become effective January 1, 2011 to have a material impact in the Companys
consolidated financial statements.
|
|
|
|
In October 2009, the FASB issued ASU 2009-14, Certain Revenue
Arrangements that Include Software Elements. This update amends Accounting
Standards Codification Subtopic 985-605, Software Revenue Recognition, to
exclude from its scope tangible products that contain both software and
non-software components that function together to deliver a products
essential functionality. The ASU is effective prospectively for revenue
arrangements entered into or materially modified in fiscal years beginning on
or after June 15, 2010. Early adoption is permitted. The Company does not
expect the adoption of this standard to have a material impact on its
consolidated financial statements.
|
F 14
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 1 -
|
DESCRIPTION OF COMPANY AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued):
|
|
|
|
In October 2009, the FASB issued ASU 2009-13, Revenue Recognition
(Topic 605): Multiple Deliverable Revenue Arrangements A Consensus of the
FASB Emerging Issues Task Force. This update provides application guidance
on whether multiple deliverables exist, how the deliverables should be
separated and how the consideration should be allocated to one or more units
of accounting. This update establishes a selling price hierarchy for
determining the selling price of a deliverable. The selling price used for
each deliverable will be based on vendor-specific objective evidence, if
available, third-party evidence if vendor-specific evidence is not available,
or estimated selling price if neither vendor-specific nor third-party
evidence is available. The Company will be required to apply this guidance
prospectively for revenue arrangements entered into or materially modified
after January 1, 2011; however, earlier application is permitted. The Company
does not expect the adoption of this standard to have a material impact on
its consolidated financial statements.
|
|
|
NOTE
2
|
DISCONTINUED OPERATIONS:
|
|
|
|
In November 2009, in light of the market challenges facing Willtek
and the continuing deterioration of the Willtek operations, the Companys
board of directors made a decision to conclude efforts to seek strategic
alternatives regarding the operations, assets and intellectual property
relating to the Companys foreign subsidiary, so that the Company could focus
on growing its domestic based divisions. The board of directors authorized
management to begin negotiations with interested parties to sell
substantially all of the assets of Willtek or cease incurring costs related
to its development.
|
|
|
|
On April 9, 2010, the Company entered into an asset purchase
agreement to sell substantially all of the operating assets and certain
liabilities of Willtek and, on May 7, 2010, successfully completed this sale.
Although no longer included in its consolidated balance sheets as of December
31, 2010, the table below presents the Willtek assets and liabilities held
for sale as of the May 7, 2010 sale date and as of December 31, 2009.
|
|
|
|
Additionally, Willteks operating activities through the May 7, 2010
sale date are included in the Companys consolidated statement of operations
as discontinued operations. Included in accrued expenses and other current
liabilities at December 31, 2010 are remaining estimated unpaid costs and
fees of $1,052,074 associated with the disposition of Willtek.
|
|
|
|
Assets and liabilities held for sale as of the May 7, 2010 sale date
and as of December 31, 2009 consist of the following:
|
|
|
|
|
|
|
|
|
|
|
May 7,
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Assets held
for sale
|
|
|
|
|
|
Accounts
receivable -net
|
|
$
|
1,028,443
|
|
$
|
2,037,731
|
|
Inventory
net
|
|
|
968,019
|
|
|
1,284,005
|
|
Prepaid
expenses and other current assets net
|
|
|
314,722
|
|
|
235,457
|
|
Property,
plant and equipment - net
|
|
|
|
|
|
|
|
Pension
insurance and other long-term assets
|
|
|
2,670,873
|
|
|
3,420,970
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,982,057
|
|
$
|
6,978,163
|
|
|
|
|
|
|
|
|
|
Liabilities
held for sale
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,562,083
|
|
$
|
1,546,794
|
|
Accrued
expenses
|
|
|
1,180,434
|
|
|
1,332,607
|
|
Pension
liability
|
|
|
1,420,673
|
|
|
1,268,582
|
|
Other
long-term liabilities
|
|
|
|
|
|
345,426
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,163,190
|
|
$
|
4,493,409
|
|
|
|
|
|
|
|
|
|
F 15
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE
2
|
DISCONTINUED OPERATIONS (Continued):
|
|
|
|
As a result of the sale of Willtek, the Company recorded a loss on
sale of discontinued operations of $3,778,687, which represents the excess of
net assets, and the related realization of other comprehensive income, over
the net sales price. Of this amount, $430,565 was recognized during 2010 to
reflect a change in the estimate of the carrying value less the cost to
dispose Willtek. The loss on sale of discontinued operations has been
reflected as a reduction of assets held for sale in the May 7, 2010 and
December 31, 2009 columns in the table above.
|
|
|
|
The following table summarizes the components of discontinued
operations:
|
|
|
|
|
|
|
|
|
|
|
For the Year
Ended December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
6,642,152
|
|
$
|
25,860,848
|
|
Gross profit
|
|
|
2,609,331
|
|
|
12,982,522
|
|
(Loss) from
discontinued operations before taxes
|
|
|
(1,313,032
|
)
|
|
(73,961
|
)
|
Provision
(benefit) for income taxes
|
|
|
(744
|
)
|
|
5,986
|
|
(Loss) from
discontinued operations
|
|
|
(1,312,288
|
)
|
|
(79,947
|
)
|
(Loss) from
sale of discontinued operations
|
|
|
(430,565
|
)
|
|
(3,348,122
|
)
|
|
|
|
|
|
|
|
|
Net (loss)
from discontinued operations
|
|
$
|
(1,742,853
|
)
|
$
|
(3,428,069
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from discontinued operations for the years ended December
31, 2010 and 2009 are combined with the cash flows from operations within
each of the three categories presented. Cash flows from discontinued
operations are as follows:
|
|
|
|
|
|
|
|
|
|
|
For the Year
Ended December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Cash flows
from operating activities
|
|
$
|
94,064
|
|
$
|
612,305
|
|
Cash flows
from investing activities
|
|
|
(3,136
|
)
|
|
(153,317
|
)
|
Cash flows
from financing activities
|
|
$
|
(415,211
|
)
|
$
|
(365,114
|
)
|
|
|
NOTE 3 -
|
PROPERTY, PLANT AND EQUIPMENT:
|
|
|
|
Property,
plant and equipment, consists of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Building and
improvements
|
|
$
|
3,557,185
|
|
$
|
3,557,186
|
|
Machinery
and equipment
|
|
|
3,067,771
|
|
|
2,789,085
|
|
Furniture
and fixtures
|
|
|
99,282
|
|
|
145,218
|
|
Transportation
equipment
|
|
|
145,867
|
|
|
103,541
|
|
Leasehold
improvements
|
|
|
1,072,810
|
|
|
1,061,605
|
|
|
|
|
|
|
|
|
|
|
|
|
7,942,915
|
|
|
7,656,635
|
|
|
|
|
|
|
|
|
|
Less:
accumulated depreciation
|
|
|
4,404,900
|
|
|
3,920,296
|
|
|
|
|
|
|
|
|
|
|
|
|
3,538,015
|
|
|
3,736,339
|
|
Add: land
|
|
|
700,000
|
|
|
700,000
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,238,015
|
|
$
|
4,436,339
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense from continuing operations of $529,448 and
$540,694 was recorded for the years ended December 31, 2010 and 2009
respectively.
|
F 16
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 4 -
|
OTHER ASSETS:
|
|
|
|
Other assets
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Product demo
assets
|
|
$
|
618,674
|
|
$
|
592,094
|
|
Building
escrow reserve
|
|
|
222,720
|
|
|
208,448
|
|
Software
license
|
|
|
95,675
|
|
|
|
|
Security
deposit
|
|
|
50,000
|
|
|
50,000
|
|
Miscellaneous
|
|
|
1,039
|
|
|
12,481
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
988,108
|
|
$
|
863,023
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 5 -
|
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES:
|
|
|
|
Accrued
expenses and other current liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Accrued
disposition costs
|
|
$
|
1,052,074
|
|
$
|
|
|
Payroll and
related benefits
|
|
|
590,735
|
|
|
460,689
|
|
Accrued taxes
|
|
|
|
|
|
264,731
|
|
Accrued
severance
|
|
|
|
|
|
81,994
|
|
Warranty
reserve
|
|
|
315,000
|
|
|
315,000
|
|
Goods
received not invoiced
|
|
|
91,214
|
|
|
183,824
|
|
Professional
fees
|
|
|
25,739
|
|
|
104,623
|
|
Interest
|
|
|
|
|
|
75,000
|
|
Commissions
|
|
|
44,394
|
|
|
42,565
|
|
Other
|
|
|
202,979
|
|
|
401,799
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,322,135
|
|
$
|
1,930,225
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 6 -
|
MORTGAGE AND NOTE PAYABLE LONG TERM:
|
|
|
|
The Company has a mortgage payable secured by certain properties in
the amount of $2,771,259. This note bears interest at an annual rate of
7.45%, requires monthly payments of principal and interest of $23,750 and
matures in August 2013.
|
|
|
|
Maturities of mortgage principal payments for the next two years are
$68,347 and $73,697, respectively, with a balloon payment due in the third
and final year of $2,629,215.
|
|
|
|
At December 31, 2009, Willtek carried a bank loan in the amount of
Euro 1,178,100 (U.S. $1,688,571), which had been bearing interest at the
annual rate of 4% and required semi-annual payments to be made. This bank loan
was not part of the sale of Willtek and accordingly the Company continued to
assume responsibility for repayment. In 2010, the Company satisfied the
entire outstanding principal and interest due through payment of $1,475,149
to the bank. 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.
|
F 17
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 7 -
|
SHAREHOLDERS EQUITY:
|
|
|
|
During fiscal year 2000, shareholders approved the Companys 2000
Stock Option Plan (the 2000 Plan). The 2000 Plan provides for the grant of
Incentive Stock Options (ISOs) and Non-Qualified Stock Options (NQSOs) in
compliance with the Code to employees, officers, directors, consultants and
advisors of the Company who are expected to contribute to the Companys
future growth and success. 1,500,000 shares of common stock were reserved for
issuance upon the exercise of options under the original 2000 Plan. On July
6, 2006, the Companys shareholders approved by vote to amend and restate the
2000 Plan (the Amended and Restated 2000 Plan), authorizing the grant of an
additional 2,000,000 shares of common stock options. On September 17, 2008,
shareholders further approved an amendment to the Companys Amended and
Restated 2000 Plan providing for an additional 1,000,000 shares of the Companys
common stock that may be available for future grants under the plan.
|
|
|
|
All service-based options granted have 10-year terms and, from the
date of grant, vest annually and become fully exercisable after a maximum of
five years. Performance-based options granted have 10-year terms and vest and
become fully exercisable when determinable performance targets are achieved.
Performance targets are agreed to, and approved by, the Companys board of
directors.
|
|
|
|
Under the Companys stock option plans, options may be granted to
purchase shares of the Companys common stock exercisable at prices generally
equal to or above the fair market value on the date of the grant.
|
|
|
|
On December 21, 2010, upon the unanimous recommendation of the
Compensation Committee, the Board of Directors approved the grant of
performance-based stock options to certain employees of the Company.
Accordingly, the Company entered into stock option agreements dated as of
December 21, 2010, pursuant to which certain employees of the Company were
awarded options to purchase collectively up to 300,000 shares of the
Companys common stock at an exercise price of $0.78 per share, representing
a 5% premium over the closing price of the Companys common stock reported on
the NYSE Amex on December 21, 2010, the date of grant.
|
|
|
|
On November 8, 2010, upon the unanimous recommendation of the
Compensation Committee, the Board of Directors approved the grant of
performance-based stock options to the Companys Acting Chief Financial
Officer (Acting CFO). Accordingly, the Company entered into stock option
agreements dated as of November 8, 2010, pursuant to which the Companys
Acting CFO was awarded options to purchase up to 50,000 shares of the
Companys common stock at an exercise price of $0.75 per share, representing
a 5% premium over the closing price of the Companys common stock reported on
the NYSE Amex (formerly the American Stock Exchange) on November 8, 2010, the
date of grant.
|
|
|
|
On April 15, 2010, upon the unanimous recommendation of the
Compensation Committee, the Board of Directors approved the grant of
performance-based stock options to the Companys Vice President of Global
Sales and Marketing. Accordingly, the Company entered into stock option
agreements dated as of April 15, 2010, pursuant to which the Companys
executive was awarded options to purchase up to 300,000 shares of the
Companys common stock at an exercise price of $0.96 per share, representing
a 5% premium over the average closing bid and asked prices of the Companys
common stock for the five trading days previous to the date of grant, as
reported on the NYSE Amex.
|
|
|
|
On November 24, 2009, upon the unanimous recommendation of the
Compensation Committee, the Board of Directors approved the grant of
performance-based stock options to the Companys Chief Executive Officer
(CEO). Accordingly, the Company entered into stock option agreements dated as
of November 24, 2009, pursuant to which the Companys CEO was awarded options
to purchase up to 500,000 shares of the Companys common stock at an exercise
price of $0.78 per share, representing a 5% premium over the closing price of
the Companys common stock reported on the NYSE Amex on November 24, 2009,
the date of grant.
|
F 18
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 7 -
|
SHAREHOLDERS EQUITY (Continued):
|
|
|
|
Under the terms of the performance-based stock option agreements,
provided the employee remains in the continuous service of the Company at
such times, the options will fully vest and become exercisable upon the
earlier to occur of (a) the date on which the Board shall have determined
that specific revenue and operating income targets have been met or (b) the
date on which a Change-of-Control (as defined in the option agreements) of
the Company is consummated, provided that all consideration in exchange
therefore to which the employee may become entitled as a result of such
Change-of-Control of the Company shall not be delivered to the employee until
the earlier of (i) the date on which the employees employment with the
Company is Involuntarily Terminated (as defined in the option agreements)
following the consummation of such Change-of-Control or (ii) the date that is
six months next following the date on which such Change-of-Control is
consummated. The Company has not incurred expense relating to these
performance-based options as, at December 31, 2010, it is more likely that
not that the performance targets will not be achieved.
|
|
|
|
A summary of combined service and performance-based stock option
activity, and related information for the years ended December 31, follows:
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
Weighted Average
Exercise Price
|
|
|
|
|
|
|
|
Outstanding,
December 31, 2008
|
|
|
3,336,967
|
|
|
2.25
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
500,000
|
|
|
0.78
|
|
Exercised
|
|
|
|
|
|
|
|
Forfeited/Expired
|
|
|
(1,528,000
|
)
|
|
2.07
|
|
Canceled
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding,
December 31, 2009
|
|
|
2,308,967
|
|
|
2.05
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
650,000
|
|
|
0.86
|
|
Exercised
|
|
|
|
|
|
|
|
Forfeited/Expired
|
|
|
(445,300
|
)
|
|
2.36
|
|
Canceled
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2010
|
|
|
2,513,667
|
|
|
1.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable:
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
1,337,467
|
|
|
2.52
|
|
December 31, 2010
|
|
|
1,082,917
|
|
|
2.58
|
|
The options outstanding and
exercisable as of December 31, 2010 are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of
exercise prices
|
|
Weighted average
exercise price
|
|
Options
Outstanding
|
|
Options
Exercisable
|
|
Weighted average
remaining life
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.75 - $1.42
|
|
$
|
0.74
|
|
|
1,370,000
|
|
|
|
|
|
9.1 years
|
|
|
$1.69 - $2.25
|
|
$
|
1.92
|
|
|
50,000
|
|
|
50,000
|
|
|
1.9 years
|
|
|
$2.28 - $3.13
|
|
$
|
2.63
|
|
|
1,093,667
|
|
|
1,032,917
|
|
|
4.0 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,513,667
|
|
|
1,082,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2010, the unearned compensation related to Company granted
service-based incentive stock options is $52,004 which will continue to be
amortized over the next year. The fair value, and unamortized amount, of
performance-based options granted by the Company as of December 31, 2010 is
$836,959. This unearned compensation will not be recognized until the
performance conditions described above are considered by management to be
achievable.
|
F 19
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 7 -
|
SHAREHOLDERS EQUITY (Continued):
|
|
|
|
The fair value of performance-based options awarded during 2010 was
estimated on the date of grant using the Black-Scholes option-pricing model
and included the following range of assumptions; dividend yield of 0%,
risk-free interest rates of 1.13% to 2.57%, and expected option lives of 4
years. Volatility assumption was 118%. The forfeiture rate was assumed to be
0%. For 2009, the fair value of options awarded was also estimated on the
date of grant using the Black-Scholes option-pricing model and included the
following range of assumptions; dividend yield of 0%, risk-free interest rate
of 2.15%, and expected option lives of 4 years. Volatility assumption was
113%. The forfeiture rate was assumed to be 0%.
|
|
|
|
The per share weighted average fair value of performance-based
options granted in the years 2010 and 2009 were $0.60 and $0.58,
respectively.
|
|
|
|
On June 8, 2010, the Company granted 40,000 shares of restricted
common stock to select members of its board of directors. The shares were
granted at the June 8
th
closing market price of $0.84 per share
and will vest on the date of the Companys next annual shareholders meeting,
a vesting period of approximately one year. The total compensation expense to
be recognized over the vesting period will be $33,600 of which $16,800 has
been realized in 2010.
|
|
|
NOTE 8 -
|
OPERATIONAL INFORMATION AND EXPORT SALES:
|
|
|
|
Sales:
|
|
|
|
The Company and its subsidiaries develop and manufacture various
types of electronic test equipment and are aggregated into a single operating
segment based on similar economic characteristics, products, services,
customers, U.S. Government regulatory requirements, manufacturing processes
and distribution channels.
|
|
|
|
For the years ended December 31, 2010 and 2009, no customer accounted
for more than 5% and 7% of total sales, respectively.
|
|
|
|
In addition to its in-house sales staff, the Company uses various
manufacturers representatives to sell its products. For the years ended
December 31, 2010 and 2009, no representative accounted for more than 10% of
total sales.
|
|
|
|
Regional Sales:
|
|
|
|
The Company, in accordance with ASC 280, Disclosures about Segments
of an Enterprise and Related Information, has disclosed the following
segment information:
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months
Ended December 31,
|
|
Revenues
from continuing operations by Region
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
17,027,598
|
|
$
|
15,633,581
|
|
Europe, Middle East, Africa (EMEA)
|
|
|
4,932,729
|
|
|
5,072,513
|
|
Asia Pacific (APAC)
|
|
|
2,603,899
|
|
|
2,122,234
|
|
|
|
|
|
|
|
|
|
|
$
|
24,564,226
|
|
$
|
22,828,328
|
|
|
|
|
|
|
|
|
F 20
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 8 -
|
OPERATIONAL INFORMATION AND EXPORT SALES
(Continued):
|
|
|
|
Net sales are attributable to a geographic area based on the
destination of the product shipment. The majority of shipments in the
Americas are to customers located within the United States. For the years
ended December 31, 2010 and 2009, sales in the United States amounted to
$15,999,539 and $14,686,491, respectively. Shipments to the remaining regions
presented above were largely concentrated in Germany (EMEA) and China (APAC).
For the years ended December 31, 2010 and 2009, sales to Germany amounted to
$1,006,454, or 20% of all shipments to the EMEA region, and $1,077,772, or
21% of all shipments to the EMEA region, respectively. Sales to China, for
the years ended December 31, 2010 and 2009, amounted to $1,508,282, or 58% of
all shipments to the APAC region, and $1,154,850, or 54% of all shipments to
the APAC region, respectively. There were no other shipments significantly
concentrated in one country.
|
|
|
|
Purchases
|
|
|
|
In 2010 and 2009, no third-party supplier accounted for more than 8%
and 6% of the Companys total inventory purchases, respectively.
|
|
|
NOTE 9 -
|
RETIREMENT PLANS:
|
|
|
|
The Company has a 401(k) profit sharing plan covering all eligible
U.S. employees. Company contributions to the plan for the years ended
December 31, 2010 and 2009 aggregated $297,308 and $313,298, respectively.
|
|
|
|
The Company also maintained a non-contributory, defined benefit
pension plan covering 15 active and 30 former employees of its German
subsidiary. As a result of the May 7, 2010 sale of certain assets and
liabilities of Willtek, the Company is no longer obligated to maintain such
defined benefit plan as the ongoing responsibility was assumed by the buyer.
|
|
|
NOTE 10 -
|
INCOME TAXES:
|
|
|
|
The components of income tax expense (benefit) related to income from
continuing operations are as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
Federal
|
|
$
|
461,845
|
|
$
|
(2,351,789
|
)
|
State
|
|
|
115,170
|
|
|
283,627
|
|
Deferred:
|
|
|
|
|
|
|
|
Federal
|
|
|
(568,552
|
)
|
|
(3,395,964
|
)
|
State
|
|
|
(100,333
|
)
|
|
(902,725
|
)
|
|
|
|
|
|
|
|
|
|
|
$
|
(91,870
|
)
|
$
|
(6,366,851
|
)
|
|
|
|
|
|
|
|
|
F 21
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 10 -
|
INCOME TAXES (Continued):
|
|
|
|
The following is a reconciliation of the maximum statutory federal
tax rate to the Companys effective tax relative to continuing operations:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
% of
Pre Tax
Earnings
|
|
% of
Pre Tax
Earnings
|
|
|
|
|
|
|
|
Statutory
federal income tax rate
|
|
|
34.0
|
%
|
|
(34.0
|
)%
|
Change in
valuation allowance on deferred taxes
|
|
|
(30.0
|
)
|
|
|
|
Investment
in foreign subsidiary
|
|
|
(64.2
|
)
|
|
(736.8
|
)
|
State income
tax net of federal tax benefit
|
|
|
12.5
|
|
|
39.6
|
|
Income tax
recoverable adjustment
|
|
|
33.2
|
|
|
|
|
Permanent
differences
|
|
|
(8.0
|
)
|
|
11.9
|
|
Over/under
accruals
|
|
|
3.2
|
|
|
|
|
Other
|
|
|
9.3
|
|
|
17.0
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.0
|
)%
|
|
(702.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
In 2010 and 2009, the difference between the statutory and the
effective tax rate is due mainly to the disposition of Willtek.
|
|
|
|
The components of deferred income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
Deferred tax
assets:
|
|
|
|
|
|
|
|
Uniform capitalization of inventory costs
for tax purposes
|
|
$
|
185,024
|
|
$
|
185,322
|
|
Allowances for doubtful accounts
|
|
|
29,528
|
|
|
62,069
|
|
Accruals
|
|
|
242,663
|
|
|
216,800
|
|
Tax effect of goodwill
|
|
|
(116,228
|
)
|
|
(13,524
|
)
|
Book depreciation over tax
|
|
|
23,494
|
|
|
(7,644
|
)
|
Net operating loss carryforward
|
|
|
18,709,159
|
|
|
18,572,869
|
|
|
|
|
|
|
|
|
|
|
|
|
19,073,640
|
|
|
19,015,892
|
|
Valuation allowance for deferred tax assets
|
|
|
(13,380,250
|
)
|
|
(13,991,388
|
)
|
|
|
|
|
|
|
|
|
|
|
$
|
5,693,390
|
|
$
|
5,024,504
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has a domestic net operating loss carryforward at
December 31, 2010 of approximately $29,200,000 which expires in 2029. The
Company also has a foreign net operating loss carryforward at December 31,
2010 of approximately $23,400,000 which has no expiration.
|
|
|
|
As a result of the disposition of the assets of Willtek (see Note 2),
the Company benefited from a tax deduction on its 2009 tax return equal to
its outside basis in its investment in, and advances to, Willtek.
Accordingly, the Company realized a tax benefit, net of valuation allowance,
of approximately $6,400,000 in 2009. Earnings per share of $0.21 from
continuing operations in 2009, includes $0.25 per share relating to this tax
benefit.
|
|
|
|
Realization of the Companys deferred tax assets is dependent upon
the Company generating sufficient taxable income in the appropriate tax
jurisdictions in future years to obtain benefit from the reversal of net
deductible temporary differences and from utilization of net operating losses
and tax credit carryforwards. The Company has recorded a valuation allowance
due to the uncertainty related to the realization of certain deferred tax
assets existing at December 31, 2010. The amount of deferred tax assets
considered realizable is subject to adjustment in future periods if estimates
of future taxable income are changed. Management believes that is more likely
than not that the Company will realize the benefits of its deferred tax
assets, net of valuation allowances as of December 31, 2010.
|
F 22
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 10
-
|
INCOME TAXES (Continued):
|
|
|
|
The Company files income tax returns in the U.S. (federal and various
states), German and French taxing jurisdictions. With few exceptions, the
Company is no longer subject to U.S. federal and state tax examinations in
its major tax jurisdictions for periods before 2006.
|
|
|
|
The Company does not have any significant unrecognized tax benefits
and does not anticipate significant increase or decrease in unrecognized tax
benefits within the next twelve months. Amounts recognized for income tax
related interest and penalties as a component of the provision for income
taxes are immaterial for the years ended December 31, 2010 and 2009.
|
|
|
NOTE 11
-
|
COMMITMENTS AND CONTINGENCIES:
|
|
|
|
Warranties:
|
|
|
|
The Company typically provides one-year warranties on all of its
products covering both parts and labor. The Company, at its option, repairs
or replaces products that are defective during the warranty period if the
proper preventive maintenance procedures have been followed by its customers.
Historically, warranty expense within the Company has been minimal. In 2009,
there was a onetime increase of $240,000 in warranty costs due to the
potential rework of specific product shipped in 2008. This product is no
longer being produced at original specifications and this amount represents
the maximum potential warranty related to these shipments.
|
|
|
|
Leases:
|
|
|
|
The Company leases a 45,700 square foot facility located in Hanover
Township, Parsippany, New Jersey, which is currently being used as its
principal corporate headquarters and manufacturing plant. The term of the
lease agreement is for ten years beginning on October 1, 2001 and ending
September 30, 2011 and can be renewed at the tenants option for one five-year
period at fair market value to be determined at term expiration.
|
|
|
|
The Company is also responsible for its proportionate share of the
cost of utilities, repairs, taxes, and insurance. The future minimum lease
payments are aligned with the lease expiration date of September 30, 2011.
The future minimum lease payments through this period are $335,133.
|
|
|
|
Additionally, the Company leased a 36,000 square foot facility
located in Ismaning, Germany, which was being used as Willteks headquarters
and manufacturing plant. Due to the May 7, 2010 sale of Willtek, the lease
was assumed by the buyer and is no longer an obligation of the Company.
|
|
|
|
Rent expense included in continuing operations for the years ended
December 31, 2010 and 2009 was $535,194 and $533,905, respectively.
|
|
|
|
The Company owns a 44,000 square foot facility located in Mahwah, New
Jersey which is leased to an unrelated third party. This lease, which
terminates in 2013, provides for annual rental income of $385,991 throughout
the lease term. The current tenant has an exclusive option to purchase the
property, at a predetermined purchase price of approximately $3,500,000, up
through August 1, 2012.
|
F 23
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 11 -
|
COMMITMENTS AND CONTINGENCIES (Continued):
|
|
|
|
The Company leases certain equipment under operating lease arrangements.
These operating leases expire in various years through 2015. All leases may
be renewed at the end of their respective leasing periods. Future payments
relative to continuing operations consist of the following at December 31,
2010:
|
|
|
|
|
|
2011
|
|
$
|
75,514
|
|
2012
|
|
|
74,267
|
|
2013
|
|
|
74,267
|
|
2014
|
|
|
74,267
|
|
2015
|
|
|
55,700
|
|
|
|
|
|
|
|
|
$
|
354,015
|
|
|
|
|
|
|
|
|
|
Environmental
Contingencies:
|
|
|
|
Following an investigation by the New Jersey Department of
Environmental Protection (NJDEP) in 1982, of the waste disposal practices at
a certain site formerly leased by Boonton, the Company put a ground water
management plan into effect as approved by the NJDEP. Costs associated with
this site are charged directly to income as incurred. The owner of this site
has previously notified the Company that if the NJDEP investigation proves to
have interfered with a sale of the property, the owner may seek to hold the
Company liable for any resulting damages. Since May 1983, the owner has been
on notice of this problem and has failed to institute any legal proceedings
with respect thereto. While this does not bar the owner from instituting a
suit, it is the opinion of the Companys legal counsel that it is unlikely
that the owner would prevail on any claim.
|
|
|
|
Costs charged to operations in connection with the water management
plan amounted to approximately $50,000 and $70,000 for the years ended
December 31, 2010 and 2009, respectively. The Company estimates that
expenditures in this regard, including the costs of operating the wells and
analyzing soil and water samples, will continue until the NJDEP determines
that testing is complete. Recently, the Company has hired a new environmental
consultant to evaluate the results of the current remediation plan that has
been in effect since 1982. The Company is diligently pursuing efforts to
satisfy the requirements of the original plan and receive a new determination
from the NJDEP. While management anticipates that the expenditures in
connection with this site will not be substantial in future years, the
Company could be subject to significant future liabilities and may incur
significant future expenditures if further contaminants from Boontons
testing are identified and the NJDEP requires additional remediation
activities. Management is unable to estimate future remediation costs, if
any, at this time. The Company will continue to be liable under the plan, in
all future years, until such time as the NJDEP releases it from all
obligations applicable thereto.
|
|
|
|
Software license:
|
|
|
|
In September 2010, the Company entered into a software license and
support agreement with an accounting and business software supplier as part
of an investment to upgrade the Companys business and systems
infrastructure. The costs associated with the systems migration are expected
not to exceed $350,000.
|
|
|
|
Line of Credit:
|
|
|
|
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.
|
F 24
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wireless Telecom Group, Inc.
|
|
|
NOTE 11 -
|
COMMITMENTS AND CONTINGENCIES (Continued):
|
|
|
|
As of December 31, 2010, the Company had no borrowings outstanding
under the facility and approximately $6,000,000 of borrowing availability.
The Company has no current plans to borrow from this credit facility as it
believes cash generated from operations will adequately meet near-term
working capital requirements.
|
|
|
|
Risks and
Uncertainties:
|
|
|
|
Proprietary information and know-how are important to the Companys
commercial success. There can be no assurance that others will not either
develop independently the same or similar information or obtain and use
proprietary information of the Company. Certain key employees have signed
confidentiality and non-compete agreements regarding the Companys
proprietary information.
|
|
|
|
The Company believes that its products do not infringe the
proprietary rights of third parties. There can be no assurance, however, that
third parties will not assert infringement claims in the future.
|
|
|
NOTE 12 -
|
SELECTED QUARTERLY FINANCIAL DATA
(UNAUDITED):
|
|
|
|
The following is a summary of selected quarterly financial data from
continuing operations (in thousands, except per share amounts).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
Quarter
|
|
|
|
|
|
|
|
1
st
|
|
2
nd
|
|
3
rd
|
|
4
th
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
6,137
|
|
$
|
6,081
|
|
$
|
5,710
|
|
$
|
6,636
|
|
Gross profit
|
|
|
2,803
|
|
|
2,956
|
|
|
2,696
|
|
|
3,100
|
|
Operating income (loss)
|
|
|
312
|
|
|
321
|
|
|
(40
|
)
|
|
213
|
|
Net income from continuing operations
|
|
|
320
|
|
|
298
|
|
|
39
|
|
|
358
|
|
Diluted net income per share from continuing
operations
|
|
$
|
.01
|
|
$
|
.01
|
|
$
|
.00
|
|
$
|
.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
Quarter
|
|
|
|
|
|
|
|
1
st
|
|
2
nd
|
|
3
rd
|
|
4
th
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
5,528
|
|
$
|
5,156
|
|
$
|
6,240
|
|
$
|
5,905
|
|
Gross profit
|
|
|
2,626
|
|
|
2,223
|
|
|
2,929
|
|
|
2,851
|
|
Operating (loss)
|
|
|
(196
|
)
|
|
(619
|
)
|
|
(62
|
)
|
|
(35
|
)
|
Net income (loss) from continuing operations
|
|
|
(223
|
)
|
|
(198
|
)
|
|
(18
|
)
|
|
5,912
|
|
Diluted net income (loss) per share from continuing operations
|
|
$
|
(.01
|
)
|
$
|
(.01
|
)
|
$
|
(.00
|
)
|
$
|
.23
|
|
|
|
NOTE 13 -
|
SUBSEQUENT EVENTS:
|
|
|
|
On January 2, 2011, the Company closed on an agreement, entered into
during the fourth quarter of 2010, to repurchase 692,917 shares of its common
stock for a price of $0.66 per share, or an aggregate price of $457,325. The
number of shares repurchased represents 2.7% of the Companys outstanding
common stock. In 2008, the Companys Board of Directors authorized the
repurchase of up to 5% of the Companys outstanding common stock. Although
the Company does not expect to repurchase additional shares in the
near-future, the authorized repurchase program does not have an expiration
date.
|
|
|
|
On March 22, 2011, the Companys Board of Directors appointed its
current Senior Vice President of Global Sales and Marketing to serve as an
officer of the Company.
|
|
|
|
Additionally, on March 22, 2011, the Companys Board of Directors
approved the granting of 50,000 shares of restricted stock to the Companys
Chief Executive Officer. The shares will vest over a one-year period.
|
F 25
|
WIRELESS TELECOM GROUP, INC.
|
S
CHEDULE II
|
VALUATION AND QUALIFYING ACCOUNTS
FOR EACH OF THE TWO YEARS ENDED DECEMBER 31,
|
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
Beginning of
year
|
|
Provisions
|
|
Deductions
|
|
Translation
adjustment
|
|
Balance at
end of year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
$
|
155,173
|
|
$
|
73,647
|
|
$
|
(155,001
|
)
|
|
|
|
$
|
73,819
|
|
|
2009
|
|
|
101,386
|
|
|
90,867
|
|
|
(37,080
|
)
|
|
|
|
|
155,173
|
|
|
|
|
Allowance for deferred tax valuation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
beginning of
year
|
|
Provisions
|
|
Reductions
|
|
Translation
adjustment
|
|
Balance at
end of year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
$
|
13,991,388
|
|
|
|
|
$
|
(611,138
|
)
|
|
|
|
$
|
13,380,250
|
|
|
2009
|
|
|
14,846,140
|
|
|
|
|
|
(885,521
|
)
|
|
30,769
|
|
|
13,991,388
|
|
|
|
|
Reserves for inventories:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
beginning of
year
|
|
Provisions
|
|
Reductions
|
|
Translation
adjustment
|
|
Balance at
end of year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
$
|
810,904
|
|
$
|
183,480
|
|
$
|
(542,074
|
)
|
|
|
|
$
|
452,310
|
|
|
2009
|
|
|
787,441
|
|
|
76,161
|
|
|
(52,698
|
)
|
|
|
|
|
810,904
|
|
F 26
Wireless Telecom (AMEX:WTT)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Wireless Telecom (AMEX:WTT)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024