Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND
POLICIES
Basis of Presentation
Wireless Telecom Group, Inc., a
New Jersey corporation, together with its subsidiaries (“we”, “us”, “our” or the “Company”),
is a global designer and manufacturer of advanced radio frequency (“RF”) and microwave components, modules, systems
and instruments and currently markets its products and services worldwide under the Boonton, Microlab, Noisecom and CommAgility
brands. Serving the wireless, telecommunication, satellite, military, aerospace, and semiconductor industries, Wireless Telecom
Group products enable innovation across a wide range of traditional and emerging wireless technologies. With a unique set of high-performance
products including peak power meters, signal analyzers, signal processing modules, long term evolution (“LTE”) physical
layer (“PHY”) and stack software, power splitters and combiners, global positioning system (“GPS”) repeaters,
public safety monitors, noise sources, and programmable noise generators, Wireless Telecom Group supports the development, testing,
and deployment of wireless technologies around the globe.
The condensed consolidated balance
sheet as of March 31, 2018, the condensed consolidated statements of operations and comprehensive income/(loss) for the three months
ended March 31, 2018 and 2017, the condensed consolidated statements of cash flows for the three months ended March 31, 2018 and
2017 and the condensed consolidated statement of shareholders’ equity for the three months ended March 31, 2018 have been
prepared by the Company without audit. The condensed consolidated financial statements include the accounts of Wireless Telecom
Group, Inc., doing business as and operating under the trade name, Noisecom, and its wholly owned subsidiaries including Boonton
Electronics Corporation (“Boonton”), Microlab/FXR (“Microlab”), Wireless Telecommunications Ltd. and CommAgility
Limited (“CommAgility”). All intercompany transactions and balances have been eliminated in consolidation.
It is suggested that these interim
condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements, and the
notes thereto, included in the Company’s latest shareholders’ annual report (Form 10-K).
Condensed Consolidated Financial
Statements
In the opinion of management, the
accompanying condensed consolidated financial statements referred to above contain all necessary adjustments, consisting of normal
accruals and recurring entries, which are necessary to fairly present the Company’s results for the interim periods being presented.
The accounting policies followed
by the Company are set forth in Note 1 to the Company’s financial statements included in its annual report on Form 10-K for the
year ended December 31, 2017. Specific reference is made to that report since certain information and footnote disclosures normally
included in financial statements in accordance with accounting principles generally accepted in the United States of America (US
GAAP) have been reduced for interim periods in accordance with SEC rules.
The results of operations for the
three month period ended March 31, 2018 are not necessarily indicative of the results to be expected for the full year ending December
31, 2018.
Use of Estimates
The preparation of financial statements
in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities (including inventory valuation, accounts receivable valuation, valuation of deferred tax assets, intangible assets,
estimated fair values of stock options and estimated fair values of acquired assets and liabilities in business combinations) and
disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of net revenues and
expenses during the reporting period. Actual results could differ from those estimates.
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
Foreign
Currency Translation
Assets and liabilities of non-U.S.
subsidiaries that operate in a local currency environment, where the local currency is the functional currency, are translated
from foreign currencies into U.S. dollars at period-end exchange rates while income and expenses are translated at the weighted
average spot rate for the periods presented. Translation gains or losses related to net assets located outside the U.S. are shown
as a component of accumulated other comprehensive income in the Consolidated Statements of Shareholders’ Equity. Gains and
losses resulting from foreign currency transactions, which are denominated in currencies other than the Company’s functional
currency, are included in the Consolidated Statements of Operations and Comprehensive Loss.
Concentration Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable.
Credit evaluations are performed
on customers requiring credit over a certain amount. Credit risk is mitigated to a lesser extent through collateral such as letters
of credit, bank guarantees or payment terms like cash in advance.
For the three months ended March
31, 2018, one customer accounted for approximately 16% of the Company’s consolidated revenues. For the three months ended
March 31, 2017, one customer accounted for approximately 11% of the Company’s consolidated revenues. At March 31, 2018, one
customer exceeded 10% of consolidated gross accounts receivable at 23% of the Company’s gross accounts receivable. At December
31, 2017, two customers exceeded 10% of consolidated gross accounts receivable at 18% and 11%, respectively.
Fair Value of Financial Instruments
Fair value is defined 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 reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs
used in the valuation methodologies in measuring fair value:
Level 1—Quoted prices in active
markets for identical assets or liabilities.
Level 2—Inputs other than
Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs
that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs
that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The categorization of a financial
instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The carrying amounts of the Company’s
financial instruments, including cash, accounts receivable, accounts payable and accrued liabilities, approximate fair value due
to their relatively short maturities. The Company’s term loan and revolving credit facility bear interest at a variable interest
rate plus an applicable margin and, therefore, carrying amount approximates fair value.
Contingent Consideration
Under the terms of the CommAgility
Share Purchase Agreement the Company may be required to pay additional purchase price if certain financial targets are achieved
for the years ending December 31, 2017 and December 31, 2018 (“CommAgility Earn-Out”). The financial targets for 2017
were not achieved therefore there was no earn-out payment made in the three months ended March 31, 2018. As of December 31, 2017,
the Company estimated the fair value of the contingent consideration remaining to be paid based on the 2018 financial results to
be $630. The Company is required to reassess the fair value of the contingent consideration at each reporting period.
The significant inputs used in this
fair value estimate include gross revenues and Adjusted EBITDA, as defined, scenarios for the earn-out periods for which probabilities
are assigned to each scenario to arrive at a single estimated outcome. The estimated outcome is then discounted based on individual
risk analysis of the liability. Although the
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
Company believes its estimates and
assumptions are reasonable, different assumptions, including those regarding the operating results of CommAgility or changes in
the future, may result in different estimated amounts.
As of March 31, 2018, the Company’s
contingent consideration liability has been estimated at $678 and is recorded in other current liabilities in the accompanying
condensed consolidated balance sheet. The Company will satisfy this obligation with a cash payment to the sellers of CommAgility
upon the achievement of the financial targets for 2018. The contingent consideration liability is considered a Level 3 fair value
measurement.
Subsequent Events
Management
has evaluated subsequent events and determined that there were no subsequent events or transactions requiring recognition or disclosure
in the consolidated financial statements through the date the financial statements were issued.
NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS
Adopted During The Three Months
Ended March 31, 2018
On January 1, 2018, the Company
adopted Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers
(Topic 606)”
(“Topic 606”) using the “modified retrospective” method, meaning the standard is applied only to the most
current period presented in the financial statements. Furthermore, we elected to apply the standard only to those contracts
which were not completed as of the date of the adoption. Results for reporting periods beginning on the date of adoption are presented
under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with accounting standards
in effect for those periods (see Note 3).
Upon adoption, a cumulative effect
adjustment of $421 was made and the impact resulted in an increase to retained earnings on the Condensed Consolidated Balance Sheet
as of January 1, 2018. The adjustment was based on customer-specific contracts in effect at December 31, 2017 and reflects revenue
that would have been recognized in 2018 in accordance with Accounting Standard Codification (“ASC”) 605 “Revenue
Recognition” and Subtopic 985 “Software” collectively referred to as “Topic 605”. The beginning balance
of deferred revenue decreased by $258 representing amounts that were invoiced to customers and not recognized and prepaid and other
current assets increased by $163 representing unbilled receivables recognized under Topic 606. Further, accounts receivable increased
$199 as the contra accounts receivable balance representing estimated product returns was reclassified to other current liabilities.
The most significant impact of Topic
606 relates to the Company’s accounting for software license agreements which have multiple deliverables. Under Topic 605
the Company could not establish vendor specific objective evidence of fair value (“VSOE”) for its undelivered elements
and therefore was not able to separate its delivered software licenses from its future undelivered software license releases. Topic
606 no longer requires separability of promised goods, such as software licenses, on the basis of VSOE. Rather, Topic 606 requires
the Company to identify the performance obligations in the contract — that is, those promised goods and services (or bundles
of promised goods or services) that are distinct — and allocate the transaction price of the contract to those performance
obligations on the basis of estimated standalone selling prices (“SSPs”). For these arrangements, the Company will
recognize revenue for each deliverable at a point in time when control is transferred to the customer since each deliverable has
standalone value.
The primary impact of adopting the
new standard results in an acceleration of revenues recognized for the aforementioned multiple deliverable software license arrangements,
which are primarily in the Embedded Solutions segment. These multiple deliverable arrangements represented less than 2% of total
consolidated revenues for the year ended December 31, 2017.
The timing of revenue recognition
for digital signal processing hardware in the Embedded Solutions segment, radio frequency solutions in the Network Solutions segment
and noise generators and components and power meters and analyzers and related services in the Test and Measurement segment remains
substantially unchanged.
The following line items in our
Condensed Consolidated Statement of Operations and Comprehensive Income for the current reporting period and Condensed Consolidated
Balance Sheet as of March 31, 2018 have been provided to reflect both the adoption of Topic 606 as well as a comparative presentation
in accordance with Topic 605 previously in effect:
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
|
|
Three Months Ended March 31, 2018
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
|
|
As Reported (in
Accordance with
ASC Topic 606)
|
|
|
Balances Without
Adoption of
ASC Topic 606
|
|
|
Impact of
Adoption
Higher/(Lower)
|
|
Net sales
|
|
$
|
13,264
|
|
|
$
|
12,958
|
|
|
$
|
306
|
|
Operating income
|
|
|
430
|
|
|
|
124
|
|
|
|
306
|
|
Net income
|
|
|
374
|
|
|
|
68
|
|
|
|
306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2018
|
CONDENSED CONSOLIDATED BALANCE SHEET
|
|
As Reported (in
Accordance with
ASC Topic 606)
|
|
|
Balances Without
Adoption of
ASC Topic 606
|
|
|
Impact of
Adoption
Higher/(Lower)
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
$
|
1,725
|
|
|
$
|
1,241
|
|
|
$
|
484
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
808
|
|
|
|
1,068
|
|
|
|
(260
|
)
|
SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings
|
|
|
7,971
|
|
|
|
7,665
|
|
|
|
306
|
|
In January 2017, the FASB issued
ASU No. 2017-01,
Business Combinations: Clarifying the Definition of a Business Topic 805
(“ASU 2017-01”). ASU
2017-01 clarifies the definition of a business for determining whether transactions should be accounted for as acquisitions (or
disposals) of assets or businesses. ASU 2017-01 is effective for annual periods and interim periods within those annual periods
beginning after December 15, 2017, and early adoption is permitted. The Company adopted this standard on January 1, 2018 and
will apply the standard to any future business combinations.
In August 2016, the FASB issued
ASU 2016-15,
Statement of Cash Flows (Topic 230); Classification of Certain Cash Receipts and Cash Payments
, to address
some questions about the presentation and classification of certain cash receipts and payments in the statement of cash flows. The
update addresses eight specific issues, including contingent consideration payments made after a business combination, distribution
received from equity method investees and the classification of cash receipts and payments that have aspects of more than one class
of cash flows. This standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within
those fiscal years. Early adoption is permitted. The Company adopted this standard on January 1, 2018, and it had no material
impact on our financial statements.
Except for the change in accounting
policies for revenue recognition as a result of adopting Topic 606, there have been no other changes to our significant accounting
policies as described in the 2017 Form 10-K that had a material impact on our condensed consolidated financial statements and related
notes.
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
Recent Accounting Pronouncements
Not Yet Adopted
In February 2016, the FASB issued
ASU 2016-02,
Leases (Topic 842)
, which creates new accounting and reporting guidelines for leasing arrangements. The new
guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights
and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with
current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will
depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement
users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for
annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early
application permitted.
The Company is currently evaluating
its population of leases and is continuing to assess all potential impacts of ASU 2016-02. The Company does anticipate recognition
of additional assets and corresponding liabilities related to leases upon adoption, but has not yet quantified these at this time.
The Company plans to adopt the standard effective January 1, 2019, but has not yet selected a transition method.
NOTE 3 – REVENUE
Revenue is recognized upon transfer
of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects
to be entitled in exchange for promised goods or services. The Company’s performance obligations are satisfied either over
time or at a point in time. Revenue from performance obligations that transferred at a point in time accounted for approximately
94% of the Company’s total revenue for the three months ended March 31, 2018.
Nature of Products and Services
Hardware
The Company
generally has one performance obligation in its arrangements involving the sales of radio frequency solutions in the Network Solutions
segment, digital signal processing hardware in the Embedded Solutions segment and noise generators and components and power meter
and analyzers in the Test and Measurement segment. When the terms of a contract include the transfer of multiple products, each
distinct product is identified as a separate performance obligation. Generally, satisfaction occurs when control of the promised
goods is transferred to the customer in exchange for consideration in an amount for which we expect to be entitled. Generally,
control is transferred when legal title of the asset moves from the Company to the customer.
We sell our products to a customer
based on a purchase order, and the shipping terms per each individual order are primarily used to satisfy the single performance
obligation. However, in order to determine control has transferred to the customer, the Company also considers:
|
·
|
when the Company has a present right to payment for the asset
|
|
·
|
when the Company has transferred physical possession of the asset to the customer
|
|
·
|
when the customer has the significant risks and rewards of ownership of the asset
|
|
·
|
when the customer has accepted the asset
|
Software
Arrangements involving licenses
of software in the Embedded Solutions segment may involve multiple performance obligations, most notably subsequent releases of
the software. The Company has concluded that each software release in a multiple deliverable arrangement in the Embedded Solutions
segment is a distinct performance obligation and, accordingly, transaction price is allocated to each release when the customer
obtains control of the software.
Performance
obligations that are not distinct at contract inception are combined. Specifically, with the Company’s sales of software,
contracts that include customization may result in the combination of the customization services with the license as one distinct
performance obligat
ion and recognized over time. The duration of these performance obligations are typically one year or
less.
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
Services
Arrangements involving calibration and repair services
in the Company’s Test and Measurement segment are generally considered a single performance obligation and are recognized
as the services are rendered.
Shipping and Handling
Shipping and handling activities performed after the
customer obtains control are accounted for as fulfillment activities and recognized as cost of revenues.
Significant Judgments
For the Company’s more complex
software and services arrangements significant judgment is required in determining whether licenses and services are distinct performance
obligations that should be accounted for separately, or, are not distinct, and thus accounted for together. Further, in cases where
we determine that performance obligations should be accounted for separately, judgement is required to determine the standalone
selling price for each distinct performance obligation.
Certain of the Company shipments
include a limited return right. In accordance with Topic 606 the Company recognizes revenue net of expected returns.
Contract Balances
The timing of revenue recognition
may differ from the timing of invoicing to customers and these timing differences result in contract assets or contract liabilities
(deferred revenue) on the Company’s condensed consolidated balance sheet. The Company records a contract asset when revenue
is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Contract assets are recorded
in prepaid expenses and other current assets and are $484 and $162 as of March 31, 2018 and December 31, 2017 (as adjusted), respectively.
The increase in contract assets from December 31, 2017 is due to contract assets recognized in the current period. Deferred revenue
is $808 and $371 as of March 31, 2018 and December 31, 2017 (as adjusted), respectively. Revenue recognized in the current period
that was included in the opening deferred revenue balance was $163.
Disaggregated Revenue
We disaggregate our revenue from
contracts with customers by product family and geographic location for each of our segments as we believe it best depicts how the
nature, timing and uncertainty of our revenue and cash flows are affected by economic factors. See details in the tables below.
|
|
Three Months Ended March 31, 2018
|
|
Total Net Revenues
by Revenue Type
|
|
Network
Solutions
|
|
|
Test
and
Measurement
|
|
|
Embedded
Solutions
|
|
|
Total
|
|
RF Solutions
|
|
$
|
5,511
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,511
|
|
Noise Generators and Components
|
|
|
-
|
|
|
|
1,499
|
|
|
|
-
|
|
|
|
1,499
|
|
Power Meters and Analyzers
|
|
|
-
|
|
|
|
1,980
|
|
|
|
-
|
|
|
|
1,980
|
|
Signal Processing Hardware
|
|
|
-
|
|
|
|
-
|
|
|
|
2,906
|
|
|
|
2,906
|
|
Software Licenses
|
|
|
-
|
|
|
|
-
|
|
|
|
483
|
|
|
|
483
|
|
Services
|
|
|
-
|
|
|
|
284
|
|
|
|
601
|
|
|
|
885
|
|
Total Net Revenue
|
|
$
|
5,511
|
|
|
$
|
3,763
|
|
|
$
|
3,990
|
|
|
$
|
13,264
|
|
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
Total Net Revenues
By Geographic Areas
|
|
Network
Solutions
|
|
|
Test and
Measurement
|
|
|
Embedded
Solutions
|
|
|
Total
|
|
Americas
|
|
$
|
4,159
|
|
|
$
|
2,515
|
|
|
$
|
1,423
|
|
|
$
|
8,097
|
|
EMEA
|
|
|
941
|
|
|
|
449
|
|
|
|
2,370
|
|
|
|
3,760
|
|
APAC
|
|
|
411
|
|
|
|
799
|
|
|
|
197
|
|
|
|
1,407
|
|
Total Net Revenue
|
|
$
|
5,511
|
|
|
$
|
3,763
|
|
|
$
|
3,990
|
|
|
$
|
13,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2017
|
Total Net Revenues
By Revenue Type
|
|
Network Solutions
|
|
|
Test and
Measurement
|
|
|
Embedded
Solutions
|
|
|
Total
|
|
RF Solutions
|
|
$
|
5,515
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,515
|
|
Noise Generators and Components
|
|
|
-
|
|
|
|
1,217
|
|
|
|
-
|
|
|
|
1,217
|
|
Power Meters and Analyzers
|
|
|
-
|
|
|
|
1,536
|
|
|
|
-
|
|
|
|
1,536
|
|
Signal Processing Hardware
|
|
|
-
|
|
|
|
-
|
|
|
|
382
|
|
|
|
382
|
|
Software Licenses
|
|
|
-
|
|
|
|
-
|
|
|
|
85
|
|
|
|
85
|
|
Services
|
|
|
-
|
|
|
|
284
|
|
|
|
530
|
|
|
|
814
|
|
Total Net Revenue
|
|
$
|
5,515
|
|
|
$
|
3,037
|
|
|
$
|
997
|
|
|
$
|
9,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Net Revenues
by Geographic Areas
|
|
Network
Solutions
|
|
|
Test and
Measurement
|
|
|
Embedded
Solutions
|
|
|
Total
|
|
Americas
|
|
|
4,710
|
|
|
|
1,690
|
|
|
|
565
|
|
|
|
6,965
|
|
EMEA
|
|
|
572
|
|
|
|
554
|
|
|
|
397
|
|
|
|
1,523
|
|
APAC
|
|
|
233
|
|
|
|
793
|
|
|
|
35
|
|
|
|
1,061
|
|
Total Net Revenue
|
|
|
5,515
|
|
|
|
3,037
|
|
|
|
997
|
|
|
|
9,549
|
|
NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current
assets generally consist of income tax receivables, prepaid insurance, prepaid maintenance agreements and the short term portion
of debt issuance costs. As of December 31, 2017, prepaid and other current assets included a $3,599 contingent asset representing
the fair value of consideration shares issued in connection with the CommAgility acquisition. Under the claw back provision of
the Share Purchase Agreement (see Note 5) the consideration shares were forfeited in March 2018 and are no longer outstanding.
Accordingly, prepaid expenses and other current assets decreased by $3,599 from December 31, 2017. The forfeited shares are recorded
as treasury stock in the condensed consolidated statement of shareholders’ equity as of March 31, 2018.
NOTE 5 – ACQUISITION OF COMMAGILITY
On February 17, 2017, Wireless
Telecommunications, Ltd. (the “Acquisition Subsidiary”), a company incorporated in England and Wales which is a wholly
owned subsidiary of Wireless Telecom Group, Inc., completed the acquisition of all the issued shares in CommAgility Limited, (“CommAgility”)
a company incorporated in England and Wales (the “Acquisition”) from CommAgility’s founders. The Acquisition
was completed pursuant to the terms of a Share Purchase Agreement, dated February 17, 2017, and entered into by and among the Company,
the Acquisition Subsidiary and the founders. The Company paid $11,318 in cash on acquisition date and issued 3,488 shares of
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
newly issued Company common stock
(“Consideration Shares”) with an acquisition date fair value of $6,000.
In addition
to the acquisition date cash purchase price the sellers were paid an additional $2,500 in the form of deferred purchase price payable
in installments beginning in March 2017 through January 2019 and were paid an additional purchase price adjustment based on working
capital and cash levels of $1,400. Lastly, the sellers could have earned an additional £10,000 in purchase price if certain
financial targets were met for the years ending December 31, 2017 and December 31, 2018. (See Note 1).
Pursuant to the Share Purchase
Agreement, 2,093 of the Consideration Shares were subject to forfeiture and return to the Company if (a) 2017 Adjusted EBITDA,
as defined, generated by CommAgility is less than £2,400; or (b) 2018 Adjusted EBITDA, as defined, generated by CommAgility
is less than £2,400 (in each case as determined by an audit of CommAgility conducted by the accountants of the Acquisition
Subsidiary in accordance with the terms of the Share Purchase Agreement). During the three months ended March 31, 2018 all consideration
shares were forfeited as the 2017 EBITDA threshold was not achieved. The fair value of these shares of $3,599 is recorded in treasury
stock as of March 31, 2018.
The following table summarizes
the activity related to contingent consideration and deferred purchase price for the three months ended March 31, 2018:
|
|
|
Contingent Consideration
|
|
|
Deferred Purchase
Price
|
|
|
Balance at December 31, 2017
|
|
$
|
630
|
|
|
$
|
1,230
|
|
|
Accretion of Interest
|
|
|
24
|
|
|
|
-
|
|
|
Payment
|
|
|
-
|
|
|
|
(811
|
)
|
|
Foreign Currency Translation
|
|
|
24
|
|
|
|
48
|
|
|
Balance as of March 31, 2018
|
|
$
|
678
|
|
|
$
|
467
|
|
As of March 31, 2018, contingent
consideration liability and deferred purchase price are included in accrued expenses and other current liabilities on the condensed
consolidated balance sheet.
NOTE 6 – INCOME TAXES
The Company records deferred taxes
in accordance with Accounting Standards Codification (“ASC”) 740, “
Accounting for Income Taxes
.”
ASC 740 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 assets and determines the
necessity for a valuation allowance.
Realization of the Company’s
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. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future
taxable income are changed.
The effective rate of income tax
provision of 13% for the three months ended March 31, 2018 was lower than the statutory rates in the United States and United Kingdom
primarily due to research and development deductions in the United Kingdom and non-qualified stock option deductions offset by
nondeductible expenses and U.S. state income taxes.
NOTE 7 - INCOME (LOSS) PER COMMON SHARE
Basic income (loss) per share
is calculated by dividing income (loss) available to common shareholders by the weighted average number of shares of common stock
outstanding during the period. Diluted income (loss) per share
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
is calculated by dividing income
(loss) available to common shareholders by the weighted average number of common shares outstanding for the period and, when dilutive,
potential shares from stock options using the treasury stock method and unvested restricted shares. In periods with a net loss,
the basic loss per share equals the diluted loss per share as all common stock equivalents are excluded from the per share calculation
because they are anti-dilutive. In accordance with ASC 260, “Earnings Per Share”, the following table reconciles basic
shares outstanding to fully diluted shares outstanding.
|
|
|
For the Three Months
Ended March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
20,644
|
|
|
|
20,386
|
|
|
Potentially dilutive stock options
|
|
|
989
|
|
|
|
780
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, assuming dilution
|
|
|
21,633
|
|
|
|
21,166
|
|
Common stock equivalents 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
options to purchase common stock not included in diluted loss per share, because the effects are anti-dilutive, was 0 and 1,413
for the three months ended March 31, 2018 and 2017, respectively.
NOTE 8 – INVENTORIES
Inventory carrying value is net
of inventory reserves of $1,732 and $1,856 at March 31, 2018 and December 31, 2017, respectively.
|
Inventories consist of:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
Raw materials
|
|
$
|
3,678
|
|
|
$
|
3,231
|
|
|
Work-in-process
|
|
|
592
|
|
|
|
631
|
|
|
Finished goods
|
|
|
2,783
|
|
|
|
2,664
|
|
|
|
|
$
|
7,053
|
|
|
$
|
6,526
|
|
NOTE 9 – GOODWILL AND INTANGIBLE ASSETS
The Company’s goodwill balance
of $10,598 at March 31, 2018 relates to two of the Company’s reporting units, Microlab ($1,351) and Embedded Solutions ($9,247).
Management’s qualitative assessment performed in the fourth quarter of 2017 did not indicate any impairment of Microlab’s
goodwill as its fair value was estimated to be in excess of its carrying value. Furthermore, no events have occurred since then
that would change this assessment.
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
Goodwill consists of the following:
|
|
|
March 31, 2018
|
|
|
Beginning Balance
|
|
$
|
10,260
|
|
|
Foreign Currency Translation
|
|
|
338
|
|
|
Ending Balance
|
|
$
|
10,598
|
|
Intangible assets consist
of the following:
|
|
|
March 31, 2018
|
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Foreign Exchange
Translation
|
|
|
Net Carrying
Amount
|
|
|
Customer Relationships
|
|
$
|
2,766
|
|
|
$
|
(646
|
)
|
|
$
|
268
|
|
|
$
|
2,388
|
|
|
Patents
|
|
|
615
|
|
|
|
(143
|
)
|
|
|
59
|
|
|
|
531
|
|
|
Non Compete Agreements
|
|
|
1,107
|
|
|
|
(436
|
)
|
|
|
100
|
|
|
|
771
|
|
|
Tradename
|
|
|
629
|
|
|
|
-
|
|
|
|
72
|
|
|
|
701
|
|
|
Total
|
|
$
|
5,117
|
|
|
$
|
(1,225
|
)
|
|
$
|
499
|
|
|
$
|
4,391
|
|
|
|
|
December 31, 2017
|
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Foreign Exchange
Translation
|
|
|
Net Carrying
Amount
|
|
|
Customer Relationships
|
|
$
|
2,766
|
|
|
$
|
(494
|
)
|
|
$
|
178
|
|
|
$
|
2,450
|
|
|
Patents
|
|
|
615
|
|
|
|
(109
|
)
|
|
|
39
|
|
|
|
545
|
|
|
Non Compete Agreements
|
|
|
1,107
|
|
|
|
(334
|
)
|
|
|
69
|
|
|
|
842
|
|
|
Tradename
|
|
|
629
|
|
|
|
-
|
|
|
|
45
|
|
|
|
674
|
|
|
Total
|
|
$
|
5,117
|
|
|
$
|
(937
|
)
|
|
$
|
331
|
|
|
$
|
4,511
|
|
Amortization of acquired intangible
assets was $287 and $200 for the three months ended March 31, 2018 and 2017, respectively. Amortization of acquired intangible
assets is included as part of general and administrative expenses in the accompanying condensed consolidated statements of operations
and comprehensive income/(loss).
The estimated future amortization
expense related to intangible assets is as follows as of March 31, 2018:
|
Remainder 2018
|
|
$
|
873
|
|
|
2019
|
|
|
1,165
|
|
|
2020
|
|
|
805
|
|
|
2021
|
|
|
754
|
|
|
2022
|
|
|
94
|
|
|
Total
|
|
$
|
3,691
|
|
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
NOTE 10 – DEBT
Debt consists of the following:
|
|
|
March 31, 2018
|
|
|
Revolver at LIBOR Plus Margin
|
|
$
|
2,595
|
|
|
Term Loan at LIBOR Plus Margin
|
|
|
608
|
|
|
Total Debt
|
|
|
3,203
|
|
|
Debt Maturing within one year
|
|
|
(2,747)
|
|
|
Non-current portion of long term debt
|
|
$
|
456
|
|
In connection with the acquisition
of CommAgility, the Company entered into a Credit Agreement with Bank of America, N.A. (the “Lender”) on February 16,
2017 (the “New Credit Facility”), which provided for a term loan in the aggregate principal amount of $760 (the “Term
Loan”) and an asset based revolving loan (the “Revolver”), which is subject to a Borrowing Base Calculation (as
defined in the New Credit Facility) of up to a maximum availability of $9,000 (“Revolver Commitment Amount”). The borrowing
base is calculated as 85% of Eligible accounts receivable and inventory, as defined, subject to certain caps and limits. The borrowing
base is calculated on a monthly basis. The proceeds of the term loan and revolver were used to finance the acquisition of CommAgility.
In connection with the issuance
of the New Credit Facility, the Company
paid lender and legal fees of $215 which were primarily
related to the Revolver and are capitalized and presented as other current and non-current assets in the Consolidated Balance Sheets.
These costs are recognized as additional interest expense over the term of the related debt instrument using the straight line
method.
The Company must repay the Term
Loan in installments of $38 per quarter due on the first day of each fiscal quarter
beginning April
1, 2017 and continuing until the term loan maturity date, on which the remaining balance is due in a final installment.
The future principal payments under the term loan are $114 in 2018 and $494 in 2019.
The
Term Loan and Revolver are both scheduled to mature on
November 16, 2019.
The Term and Revolver Loans
bear interest at the LIBOR rate plus a margin. The margin on the outstanding balance of the Company’s Term Loans and
Revolver Loans were fixed at
3.50% and 3.00%
per annum,
respectively, through September 30, 2017. Thereafter, the margins were subject to increase or decrease by Lender on the first
day of each of the Borrowers’ fiscal quarters based upon the Fixed Charge Coverage Ratio (as defined in the New Credit
Facility) as of the most recently ended fiscal quarter falling into three levels. If the Company’s Fixed Charge
Coverage Ratio is greater than or equal to 1.25 to 1.00, a margin of 3.25% and 2.75%, respectively, is added to LIBOR rate
with a step up to 3.50% and 3.00%, respectively, if the ratio is greater than or equal to 1.00 to 1.00 but less than 1.25 to
1.00 and another step up to 3.75% and 3.25%, respectively, if the ratio is less than 1.00 to 1.00.
The
Company is also required to pay a commitment fee on the unused commitments under the Revolver at a rate equal to 0.50% per
annum and early termination fee of (a) 2% of the Revolver Commitment Amount and Term Loan if termination occurs before the
first anniversary of the New Credit Facility or (b) 1% of the Revolver Commitment Amount and Term Loan if termination occurs
after the first anniversary of the New Credit Facility but before the second anniversary of the New Credit Facility. The
Company’s interest rate plus margin as of March 31, 2018 on the New Credit Facility was 4.75% and 5.25% for the
Revolver and Term Loan, respectively. The Company’s interest rate plus margin as of December 31, 2017 on the New Credit
Facility was 4.38% and 4.88% for the Revolver and Term Loan, respectively.
The New Credit Facility is secured
by liens on substantially all of the Company’s and its domestic subsidiaries’ assets including a pledge of 66 2/3%
of the equity interests in the Company’s Foreign Subsidiaries (as defined in the New Credit Facility). The New Credit Facility
contains customary affirmative and negative covenants for a transaction of this type, including, among others, the provision of
annual, quarterly and monthly financial statements and compliance certificates, maintenance of property, insurance, compliance
with laws and environmental matters, restrictions on incurrence of indebtedness, granting of liens, making investments and acquisitions,
paying dividends, entering into affiliate transactions and asset sales. Events of default under the New Credit Facility include
but are not limited to: failure to pay obligations when due, breach or failure of any covenant, insolvency or bankruptcy, materially
misleading representations or warranties, occurrence of a Change in Control (as defined) or occurrence of conditions that have
a Material Adverse Effect (as defined).
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
On August 3, 2017 the Company
entered into Amendment No. 1 to the New Credit Facility, effective June 30, 2017, which amended the definition of “EBITDA”
to exclude the non-cash inventory adjustment of $1,930 recorded during the three months ended June 30, 2017 and to reduce the pledge
of equity interests in the Company’s Foreign Subsidiaries from 66 2/3% to 66 1/3%.
As of March 31, 2018, and the
date hereof, the Company is in compliance with the covenants of the New Credit Facility.
NOTE 11 - ACCOUNTING FOR SHARE BASED COMPENSATION
The Company’s results for
the three months ended March 31, 2018 and 2017 include share-based compensation expense totaling $188 and $301, respectively. Such
amounts have been included in the consolidated statement of operations and comprehensive income/loss within operating expenses.
The Company accounts for forfeitures when they occur.
Incentive Compensation Plan:
In 2012, the Company’s Board
of Directors and shareholders approved the 2012 Incentive Compensation Plan (the “Initial 2012 Plan”), which provides
for the grant of equity, including restricted stock awards, non-qualified stock options and incentive stock options in compliance
with the Internal Revenue Code of 1986, as amended, to employees, officers, directors, consultants and advisors of the Company
who are expected to contribute to the Company’s future growth and success. When originally approved, the Initial 2012 Plan provided
for the grant of awards relating to 2,000 shares of common stock, plus those shares subject to awards previously issued under the
Company’s 2000 Stock Option Plan that expire, are canceled or are terminated after adoption of the Initial 2012 Plan without
having been exercised in full and would have been available for subsequent grants under the 2000 Stock Option Plan. In June 2014,
the Company’s shareholders approved the Amended and Restated 2012 Incentive Compensation Plan (the “2012 Plan”)
allowing for an additional 1,658 shares of the Company’s common stock to be available for future grants under the 2012 Plan.
The 2012 Plan provides that if awards are forfeited, expire or otherwise terminate without issuance of the shares underlying the
awards, or if the award does not result in issuance of all or part of the shares underlying the award, the unissued shares are
again available for awards under the 2012 Plan. As a result of certain award forfeitures and cancellations, as of March 31, 2018,
there are approximately 2,500 shares available for issuance under the 2012 Plan.
All service-based (time vesting)
options granted have ten-year terms from the date of grant and typically vest annually and become fully exercisable after a maximum
of five years. However, vesting conditions are determined on a grant by grant basis. Performance-based options granted have ten-year
terms and vest and become fully exercisable when determinable performance targets are achieved. Performance targets are approved
by the Company’s compensation committee of the Board of Directors. Under the 2012 Plan, options may be granted to purchase
shares of the Company’s common stock exercisable only at prices equal to or above the fair market value on the date of the
grant.
The following summarizes the components
of share-based compensation expense by equity type for the respective periods:
|
|
|
Three Months Ended
March 31
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Service-based Restricted Common Stock
|
|
$
|
63
|
|
|
$
|
57
|
|
|
Performance-based Restricted Common Stock
|
|
|
-
|
|
|
|
5
|
|
|
Performance-based Stock Options
|
|
|
12
|
|
|
|
59
|
|
|
Service-based Stock Options
|
|
|
113
|
|
|
|
180
|
|
|
|
|
$
|
188
|
|
|
$
|
301
|
|
As
of March 31, 2018, $444 of unrecognized compensation costs related to unvested stock options is expected to be recognized over
a remaining weighted average period of 2.6 years and $37 of unrecognized compensation costs related to unvested restricted shares
is expected to be recognized over a remaining weighted average period of 0.6 years.
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
Restricted Common
Stock Awards:
A summary of the status of the
Company’s non-vested restricted common stock, granted under the Company’s shareholder approved equity compensation
plans, as of March 31, 2018, and changes during the three months ended March 31, 2018, are presented below:
|
|
Shares
|
|
|
Weighted Average
Grant Date
Fair Value
|
|
Non-vested as of December 31, 2017
|
|
|
159
|
|
|
|
$1.64
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Vested and Issued
|
|
|
-
|
|
|
|
$1.34
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
Non-vested as of March 31, 2018
|
|
|
159
|
|
|
|
$1.64
|
|
Performance-Based Stock Option
Awards:
A summary of performance-based
stock option activity, and related information for the three months ended March 31, 2018 follows:
|
|
Shares
|
|
|
Weighted Average
Option Exercise
Price per Share
|
|
Outstanding as of December 31, 2017
|
|
|
605
|
|
|
|
$1.21
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
(300
|
)
|
|
|
$0.96
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
Expired
|
|
|
-
|
|
|
|
-
|
|
Outstanding as of March 31, 2018
|
|
|
305
|
|
|
|
$1.45
|
|
|
|
|
|
|
|
|
|
|
Exercisable at March 31, 2018
|
|
|
20
|
|
|
|
$0.78
|
|
The aggregate intrinsic value of
performance-based stock options outstanding (regardless of whether or not such options are exercisable) as of March 31, 2018 was
$303 and the weighted average remaining contractual life was 7.4 years. The aggregate intrinsic value of performance-based stock
options exercisable as of March 31, 2018 was $33 and the weighted average remaining contractual life was 2.7 years. The intrinsic
value of options exercised during the three months ended March 31, 2018 was $444.
Under the terms of the performance-based
stock option agreements, the awards will fully vest and become exercisable on the date on which the Company’s Board of Directors
shall have determined that specific financial performance milestones have been met, provided the employee remains in the employ
of the Company at such time; provided, however, upon a Change in Control (as defined in the stock option agreements and the 2012
Plan), the stock options shall automatically vest as permitted by the 2012 Plan. As of December 31, 2017, the Company has determined
that the performance conditions on 285 options granted in 2013 and later are probable of being achieved by the year ending 2021.
The Company’s performance-based stock options granted prior to 2013 (consisting of 20 options) are fully amortized.
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
Service-Based Stock Option
Awards:
A summary of service-based stock
option activity and related information for the three months ended March 31, 2018 follows:
|
|
Shares
|
|
|
Weighted Average
Option Exercise
Price per Share
|
|
Outstanding as of December 31, 2017
|
|
|
1,815
|
|
|
|
$1.53
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
Expired
|
|
|
-
|
|
|
|
-
|
|
Outstanding as of March 31, 2018
|
|
|
1,815
|
|
|
|
$1.53
|
|
|
|
|
|
|
|
|
|
|
Exercisable at March 31, 2018
|
|
|
658
|
|
|
|
$1.42
|
|
The aggregate intrinsic value of
service-based stock options (regardless of whether or not such options are exercisable) as of March 31, 2018 was $1,660 and the
weighted average remaining contractual life was 8.6 years. The aggregate intrinsic value of service-based stock options exercisable
as of March 31, 2018 was $675 and the weighted average remaining contractual life was 8.2 years.
NOTE 12 – SEGMENT INFORMATION
The operating businesses of the
Company are segregated into three reportable segments: (i) Network Solutions, (ii) Test and Measurement and (iii) Embedded Solutions.
Network Solutions
The Network Solutions segment is
comprised primarily of the operations of the Company’s subsidiary, Microlab. Network Solutions designs and manufactures a
wide selection of RF passive components and integrated subsystems for signal conditioning and distribution in the wireless infrastructure
markets, particularly for small cell deployments, DAS, the in-building wireless solutions industry and radio base-station market.
Network Solutions also offers active solution sets to assist in network timing for tunnels and in-building wireless signaling.
Network Solutions external customers include telecommunications service providers, systems integrators, neutral host operators
and distributors.
Test and Measurement
The Test and Measurement segment
is comprised primarily of the Company’s operations of the Noisecom product line and the operations of its subsidiary, Boonton.
Noisecom designs and produces noise generation equipment and instruments, calibrated noise sources, noise modules and diodes. Noise
components and instruments are used as a method to provide wide band signals for sophisticated telecommunication and defense applications,
and as a stable reference standard for instruments and systems, including radar and satellite communications. Boonton products
are also used to test terrestrial and satellite communications, radar and telemetry. Certain power meter products are designed
for measuring signals based on wideband modulation formats, allowing a variety of measurements to be made, including maximum power,
peak power, average power and minimum power. Customers of the Test and Measurement segment include large defense contractors and
the U.S. and foreign governments.
Embedded Solutions
The Embedded Solutions segment
is comprised of the operations of CommAgility Limited which was acquired on February 17, 2017. Embedded Solutions supplies signal
processing technology for network validation systems supporting LTE and emerging 5G networks. Additionally, this segment licenses,
implements and configures LTE PHY layer and stack software for private LTE networks supporting satellite communications, the military
and
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
aerospace industries. Customers
include wireless communication test equipment companies, defense subcontractors and global technology and services companies.
The accounting policies of the
reportable segments are the same as those described in the summary of significant accounting policies. The Company allocates resources
and evaluates the performance of segments based on income or loss from operations, excluding interest, corporate expenses and other
income (expenses).
Financial information by reportable
segment for the respective periods is set forth below:
|
|
For the three months ended March 31,
|
|
|
2018
|
|
2017
|
Net sales by segment:
|
|
|
|
|
|
|
|
|
Network Solutions
|
|
$
|
5,511
|
|
|
$
|
5,515
|
|
Test and Measurement
|
|
|
3,763
|
|
|
|
3,037
|
|
Embedded Solutions
|
|
|
3,990
|
|
|
|
997
|
|
Total consolidated net sales of reportable segments
|
|
$
|
13,264
|
|
|
$
|
9,549
|
|
|
|
|
|
|
|
|
|
|
Segment income (loss):
|
|
|
|
|
|
|
|
|
Network Solutions
|
|
$
|
813
|
|
|
$
|
908
|
|
Test and Measurement
|
|
|
510
|
|
|
|
25
|
|
Embedded Solutions
|
|
|
611
|
|
|
|
(229
|
)
|
Income (loss) from reportable segments
|
|
|
1,934
|
|
|
|
704
|
|
|
|
|
|
|
|
|
|
|
Other unallocated amounts:
|
|
|
|
|
|
|
|
|
Corporate expenses
|
|
|
(1,413
|
)
|
|
|
(2,422
|
)
|
Other (expenses) income - net
|
|
|
(91
|
)
|
|
|
(51
|
)
|
Consolidated income/(loss) before Income tax provision/(benefit)
|
|
$
|
430
|
|
|
$
|
(1,769
|
)
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization by segment:
|
|
|
|
|
|
|
|
|
Network Solutions
|
|
$
|
136
|
|
|
$
|
102
|
|
Test and Measurement
|
|
|
175
|
|
|
|
93
|
|
Embedded Solutions
|
|
|
315
|
|
|
|
219
|
|
Total depreciation and amortization for reportable segments
|
|
$
|
626
|
|
|
$
|
414
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures by segment:
|
|
|
|
|
|
|
|
|
Network Solutions
|
|
$
|
78
|
|
|
$
|
84
|
|
Test and Measurement
|
|
|
102
|
|
|
|
66
|
|
Embedded Solutions
|
|
|
19
|
|
|
|
42
|
|
Total consolidated capital expenditures by reportable segment
|
|
$
|
199
|
|
|
$
|
192
|
|
WIRELESS TELECOM GROUP, INC.
Notes to Condensed Consolidated Financial
Statements (Unaudited)
(In thousands, unless otherwise noted)
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
Total assets by segment:
|
|
|
|
|
|
|
Network Solutions
|
|
$
|
11,046
|
|
|
$
|
10,442
|
|
Test and Measurement
|
|
|
6,559
|
|
|
|
6,163
|
|
Embedded Solutions
|
|
|
19,628
|
|
|
|
21,733
|
|
Total assets for reportable segments
|
|
|
37,233
|
|
|
|
38,338
|
|
|
|
|
|
|
|
|
|
|
Corporate assets, principally cash and cash equivalents and deferred income taxes
|
|
|
8,890
|
|
|
|
8,583
|
|
Total consolidated assets
|
|
$
|
46,123
|
|
|
$
|
46,921
|
|
Consolidated net sales by region
were as follows:
|
|
Three Months Ended
March 31
|
|
|
2018
|
|
2017
|
Sales by region
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
8,097
|
|
|
$
|
6,965
|
|
Europe, Middle East, Africa (EMEA)
|
|
|
3,760
|
|
|
|
1,523
|
|
Asia Pacific (APAC)
|
|
|
1,407
|
|
|
|
1,061
|
|
Total sales
|
|
$
|
13,264
|
|
|
$
|
9,549
|
|
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 three months ended March 31, 2018 and 2017, revenues in the
United States for all reportable segments amounted to $7,946 and $6,465, respectively.
Shipments for the three months
ended March 31, 2108 to the EMEA region for all reportable segments were largely concentrated in the UK and Luxembourg at $2,261
and $313, respectively. For the three months ended March 31, 2017 shipments were largely concentrated in United Kingdom and Germany
amounting to $596 and $212 , respectively.
The largest concentration of shipments
in the APAC region is to China. For the three month period ending March 31, 2018 and 2017, shipments to China amounted to $956
and $650, respectively.
NOTE 13 – COMMITMENTS AND CONTINGENCIES
There have been no material changes in our commitments
and contingencies and risks and uncertainties as of March 31, 2018 from that as previously disclosed in our Annual Report on Form
10-K for the year ended December 31, 2017.