Wireless Telecom (WTT) 10-Q 2009 Q1 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2009
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________________________ to ____________________________

Commission file number
1-11916
________________________

WIRELESS TELECOM GROUP, INC.
(Exact name of registrant as specified in its charter)
New Jersey	22-2582295
(State or Other Jurisdiction	(I.R.S. Employer
of Incorporation or Organization)	Identification No.)
25 Eastmans Road
Parsippany, New Jersey	07054
(Address of Principal Executive Offices)	(Zip Code)
(973) 386-9696
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
________________________

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesxNoo

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (see the definitions of “large accelerated filer, accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act). (Check one):

Large accelerated filero      Accelerated filero      Non-accelerated filero      Smaller reporting companyx

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesoNox

Number of shares of Common Stock outstanding as of May 12, 2009: 25,658,203
Number of non-affiliated shares of Common Stock outstanding as of May 12, 2009: 19,092,637

WIRELESS TELECOM GROUP, INC.

Table of Contents

			PART I. FINANCIAL INFORMATION	Page(s)
	Item 1	--	Consolidated Financial Statements:
			Condensed Balance Sheets as of March 31, 2009 (unaudited)
			and December 31, 2008	3
			Condensed Statements of Operations for the Three Months
			Ended March 31, 2009 (unaudited) and 2008 (unaudited)	4
			Condensed Statements of Cash Flows for the Three Months
			Ended March 31, 2009 (unaudited) and 2008 (unaudited)	5
			Notes to Interim Condensed Financial Statements (unaudited)	6 - 10
	Item 2	--	Management's Discussion and Analysis of Financial
			Condition and Results of Operations	11 - 14
	Item 3	--	Quantitative and Qualitative Disclosures About Market Risk	15
	Item 4	--	Controls and Procedures	15
PART II. OTHER INFORMATION
	Item 1	--	Legal Proceedings	16
	Item 1A	--	Risk Factors	16
	Item 2	--	Unregistered Sales of Equity Securities and Use of Proceeds	16
	Item 3	--	Defaults upon Senior Securities	16
	Item 4	--	Submission of Matters to a Vote of Security Holders	16
	Item 5	--	Other Information	16
	Item 6	--	Exhibits	16
Signatures				17
Exhibit Index				18

2

PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements

WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

- ASSETS -
		March 31,			December 31,
		2009			2008
		(unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	9,316,551		$	6,627,397
Investment in short-term U.S. Treasury securities, at cost		2,032,822			5,016,092
Accounts receivable - net of allowance for doubtful accounts of
$175,839 and $156,913 for 2009 and 2008, respectively		6,386,170			7,278,561
Income taxes recoverable		1,294,000			1,294,000
Inventories		9,416,037			10,028,314
Deferred income taxes-current		251,411			198,216
Prepaid expenses and other current assets		1,349,789			1,147,999
TOTAL CURRENT ASSETS		30,046,780			31,590,579
PROPERTY, PLANT AND EQUIPMENT - NET		5,601,547			5,835,178
OTHER ASSETS:
Goodwill		1,351,392			1,351,392
Deferred income taxes - non-current		478,585			527,599
Cash surrender value of foreign pension insurance and other assets		3,787,186			3,970,861
TOTAL OTHER ASSETS		5,617,163			5,849,852
TOTAL ASSETS	$	41,265,490		$	43,275,609
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable	$	2,515,449		$	3,893,436
Accrued expenses and other current liabilities		2,429,793			2,475,454
Current portion of note payable - bank		345,786			369,059
Current portion of mortgage payable		59,902			58,784
TOTAL CURRENT LIABILITIES		5,350,930			6,796,733
LONG TERM LIABILITIES:
Notes payable - bank		1,556,034			1,660,768
Mortgage payable		2,819,243			2,834,645
Deferred rent payable		100,672			101,666
Provision for pension liability and other long term liabilities		1,178,575			1,204,350
TOTAL LONG TERM LIABILITIES		5,654,524			5,801,429
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		37,348,660			37,259,386
Retained (deficit)		(333,544	)		(47,072	)
Accumulated other comprehensive income		504,195			724,408
Treasury stock at cost, 3,095,658 shares		(7,546,814	)		(7,546,814	)
TOTAL SHAREHOLDERS' EQUITY		30,260,036			30,677,447
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	41,265,490		$	43,275,609
See accompanying notes

3

WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	For the Three Months
	Ended March 31,
		2009			2008
NET SALES	$	11,361,743		$	12,988,564
COST OF SALES		5,710,657			6,822,842
GROSS PROFIT		5,651,086			6,165,722
OPERATING EXPENSES
Research and development		1,890,862			1,872,203
Sales and marketing		2,425,935			2,833,890
General and administrative		1,685,360			2,017,031
TOTAL OPERATING EXPENSES		6,002,157			6,723,124
OPERATING (LOSS)		(351,071	)		(557,402	)
OTHER (INCOME) EXPENSE
Interest (income)		(25,924	)		(107,404	)
Interest expense		54,600			55,637
Other (income) expense		(84,680	)		(171,238	)
TOTAL OTHER (INCOME) EXPENSE		(56,004	)		(223,005	)
(LOSS) BEFORE INCOME TAXES		(295,067	)		(334,397	)
PROVISION (BENEFIT) FOR INCOME TAXES		(8,595	)		194,579
NET (LOSS)	$	(286,472	)	$	(528,976	)
NET (LOSS) PER COMMON SHARE:
BASIC	$	(0.01	)	$	(0.02	)
DILUTED	$	(0.01	)	$	(0.02	)

See accompanying notes 

4

WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

	For the Three Months
	Ended March 31,
		2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)	$	(286,472	)	$	(528,976	)
Adjustments to reconcile net (loss) to net cash
(used for) provided by operating activities:
Depreciation and amortization		229,542			474,987
Stock compensation expense		89,274			118,519
Deferred rent		(994	)		(994	)
Deferred income taxes		(4,181	)		104,365
Provision for losses on accounts receivable		22,338			29,763
Changes in assets and liabilities:
Accounts receivable		792,062			426,082
Inventory		408,537			1,245,513
Prepaid expenses and other assets		(208,297	)		12,150
Accounts payable and accrued expenses		(984,038	)		(1,606,498	)
Pension liability and other long-term liabilities		49,689			963
Income taxes payable		(244,413	)		(29,901	)
Net cash (used for) provided by operating activities		(136,953	)		245,973
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(31,945	)		(87,846	)
Proceeds from dispositions of property, plant and equipment		-			15,147
Proceeds from sale of short term securities		2,983,270			-
Net cash provided by (used for) investing activities		2,951,325			(72,699	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of mortgage note		(14,284	)		(13,246	)
Acquisition of treasury stock		-			(332,439	)
Net cash (used for) financing activities		(14,284	)		(345,685	)
Effect of foreign currency on cash and cash equivalents		(110,934	)		73,109
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,689,154			(99,302	)
Cash and cash equivalents, at beginning of period		6,627,397			10,387,250
CASH AND CASH EQUIVALENTS, AT END OF PERIOD	$	9,316,551		$	10,287,948
SUPPLEMENTAL INFORMATION:
Cash paid during the period for:
Taxes	$	240,000		$	120,000
Interest	$	56,071		$	55,955

See accompanying notes

5

WIRELESS TELECOM GROUP, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES

The condensed, consolidated balance sheet as of March 31, 2009 and the condensed, consolidated statements of operations for the three month periods ended March 31, 2009 and 2008 and the condensed, consolidated statements of cash flows for the three month periods ended March 31, 2009 and 2008 have been prepared by the Company without audit. 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, WTG Foreign Sales Corporation and NC Mahwah, Inc., collectively the “Company”. All significant intercompany transactions and balances have been eliminated in consolidation.

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 present fairly the Company's results for the interim periods being presented.

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, accrued warranty expense and estimated fair values of stock options) and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of net revenue and expenses during the reporting period. Actual results could differ from those estimates.

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, 2008. 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 have been condensed or omitted from this report.

The results of operations for the three-month periods ended March 31, 2009 and 2008 are not necessarily indicative of the results to be expected for the full year.

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133,” which amends and expands the disclosure requirements of SFAS 133 to require qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. This statement became effective for the Company beginning in fiscal 2009 and did not have an impact on the Company’s condensed consolidated financial statements.

In December 2007, the FASB issued two new statements: (a.) SFAS No. 141 (revised 2007), “Business Combinations,” and (b.) No. 160 “Non-controlling Interests in Consolidated Financial Statements.” These statements became effective for fiscal years beginning after December 15, 2008. The application of these standards is intended to improve, simplify and converge internationally the accounting for business combinations and the reporting of non-controlling interests in consolidated financial statements. Effective January 2009, the Company adopted SFAS 141(R) and SFAS 160 and the adoption of these standards did not have any impact on its condensed consolidated financial statements.

6

WIRELESS TELECOM GROUP, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS (Continued)

(a.) SFAS No. 141(R) requires an acquiring entity in a business combination to: (i) recognize all (and only) the assets acquired and the liabilities assumed in the transaction, (ii) establish an acquisition-date fair value as the measurement objective for all assets acquired and the liabilities assumed, and (iii) disclose to investors and other users all of the information they will need to evaluate and understand the nature of, and the financial effect of, the business combination, and, (iv) recognize and measure the goodwill acquired in the business combination or a gain from bargain purchase.

(b.) SFAS No. 160 is intended to improve the relevance, comparability and transparency of financial information provided to investors by requiring all entities to: (i) report non-controlling (minority) interests in subsidiaries in the same manner, as equity but separate from the parent’s equity, in consolidated financial statements, (ii) net income attributable to the parent and to the non-controlling interest must be clearly identified and presented on the face of the consolidated statement of income, and (iii) any changes in the parent’s ownership interest while the parent retains the controlling financial interest in its subsidiary be accounted for consistently.

NOTE 3 – INCOME TAXES

The Company records deferred taxes in accordance with SFAS No. 109, “Accounting for Income Taxes”(“SFAS 109”). This statement requires recognition of deferred tax assets and liabilities for temporary differences between the tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted tax 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, which has been generated by a history of net operating losses 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.

The income tax provision for the quarter ended March 31, 2008 results from operating income derived from the Company’s U.S. business entities and the net reduction of certain deferred tax benefits.

NOTE 4 - INCOME (LOSS) PER COMMON SHARE

Basic earnings (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 earnings (loss) per share are calculated by using the weighted average number of shares of common stock outstanding and, when dilutive, potential shares from stock options and warrants to purchase common stock, using the treasury stock method.

	Three Months Ended
	March 31,
	2009	2008
Weighted average common shares outstanding	25,658,203	25,868,703
Potentially dilutive stock options	-	-
Weighted average common shares outstanding,
assuming dilution	25,658,203	25,868,703

Common stock options were not included in the diluted earnings (loss) per share calculation for the quarter ended March 31, 2009 and 2008 because the various option exercise prices were greater than the average market price of the common shares for the periods presented. The weighted average number of potentially dilutive shares not included in diluted earnings (loss) per share for the quarter ended March 31, 2009 and 2008 was 3,336,967 and 2,668,635, respectively.

7

WIRELESS TELECOM GROUP, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 5 – SHAREHOLDERS’ EQUITY

On January 17, 2008 the Board of Directors authorized the repurchase of up to 5% of the Company’s outstanding common stock. The stock repurchase authorization does not have an expiration date and the timing and amount of shares repurchased will be determined by a number of factors including the levels of cash generation from operations, cash requirements for investments, and current share price. As of March 31, 2009, the Company has repurchased 295,958 shares at a cost of $477,885. The Company did not repurchase shares during the three months ended March 31, 2009. The stock repurchase program may be modified or discontinued at any time.

Comprehensive income (loss) represents changes in equity during a period, except those resulting from investments by owners and distributions to owners. During the three months ended March 31, 2009 and 2008, other comprehensive income (loss) consisted of foreign currency translation gains and losses. The net amounts recognized in other comprehensive income (loss) for the quarters ended March 31, 2009 and 2008 was $(220,213) and $(11,408), respectively.

NOTE 6 – INVENTORIES

Inventory carrying value is net of inventory reserves of $2,633,109 and $2,729,259 at March 31, 2009 and December 31, 2008, respectively.

Inventories consist of:

		March 31,		December 31,
		2009		2008
Raw materials	$	4,843,085	$	4,969,592
Work-in-process		1,854,219		2,223,859
Finished goods		2,718,733		2,834,863
	$	9,416,037	$	10,028,314

NOTE 7 - GOODWILL AND OTHER INTANGIBLE ASSETS

The Company reviews its goodwill and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable, and also reviews goodwill annually in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 142. 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. In the second step, the impairment is computed by estimating the fair values 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 unit’s goodwill. At March 31, 2009 and December 31, 2008, goodwill is attributable to one of the Company’s reporting unit’s, Microlab/FXR.

Intangible assets are evaluated for impairment when events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. The Company considers various valuation methods to evaluate recoverability, such as discounted cash flows, comparable companies and comparable transactions. When such an impairment exists, the related assets are reduced to their net realizable value.

8

WIRELESS TELECOM GROUP, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 8 - ACCOUNTING FOR STOCK OPTIONS

The Company follows the provisions of SFAS 123(R), “Share-Based Payment”. The Company's results for the three-month periods ended March 31, 2009 and 2008 include share-based compensation expense totaling $89,274 and $118,519, respectively. Such amounts have been included in the Condensed Consolidated Statements of Operations within operating expenses.

Stock option compensation expense relative to serviced-based options is the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period. Stock option compensation expense relating to performance-based options is the estimated fair value of options granted, recognized when stated performance targets are achieved.

The fair value of options is estimated at the date of grant using the Black-Scholes option pricing model. For the options granted, the Company took into consideration guidance under SFAS 123(R) 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 of three years. 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 Company did not grant stock options during either of the three-months ended March 31, 2009 or 2008. Additionally, no stock options were exercised, forfeited or canceled during either of the three-months ended March 31, 2009 or 2008. At March 31, 2009, the total number of stock option shares outstanding, which includes both service-based and performance-based options, was 3,336,967.

The following table represents our service-based stock options granted, exercised, forfeited and canceled during the first three months of 2009:

				Weighted
			Weighted	Average
			Average	Remaining	Aggregate
	Number of		Exercise	Contractual	Intrinsic
	Shares		Price per share	Term	Value
Service-based Stock Options
Outstanding at January 1, 2009	2,456,967	$	2.55
Granted
Exercised	-
Forfeited	-
Canceled	-
Outstanding at March 31, 2009	2,456,967	$	2.55	4.8	-
Exercisable at March 31, 2009	1,845,467	$	2.55	3.9	-

9

WIRELESS TELECOM GROUP, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 8 - ACCOUNTING FOR STOCK OPTIONS (Continued)

The following table represents our performance-based stock options granted, exercised, forfeited and canceled during the first three months of 2009:

				Weighted
			Weighted	Average
			Average	Remaining	Aggregate
	Number of		Exercise	Contractual	Intrinsic
	Shares		Price per share	Term	Value
Performance-based Stock Options
Outstanding at January 1, 2009	880,000	$	1.42
Granted	-
Exercised	-
Forfeited	-
Canceled	-
Outstanding at March 31, 2009	880,000	$	1.42	9.0	-
Exercisable at March 31, 2009	-		-	-	-

The unearned compensation related to Company granted performance-based and service-based incentive stock options as of March 31, 2009, is $556,766 and $608,807, respectively.

NOTE 9 – SEGMENT INFORMATION: REGIONAL ASSETS AND SALES

The Company, in accordance with SFAS No. 131 “Disclosures about Segments of an Enterprise and Related Information”, has disclosed the following segment information:

Property, Plant and Equipment - net		As of March 31,		As of December 31,
		2009		2008
United States	$	4,732,867	$	4,858,059
Europe		868,680		977,119
	$	5,601,547	$	5,835,178
	For the Three Months
	Ended March 31,
Revenues by region		2009		2008
Americas	$	7,612,972	$	6,682,274
Europe, Middle East, Africa (EMEA)		2,825,406		5,109,893
Asia		923,365		1,196,397
	$	11,361,743	$	12,988,564

Net sales are attributable to a geographic area based on the destination of the product shipment.

NOTE 10 - COMMITMENTS AND 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 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 loss it suffers as a result. However, corporate counsel has informed management that, in their opinion, the owner would not prevail in any lawsuit filed due to the imposition by law of the statute of limitations. 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.

The Company is subject to contingent liabilities for employee notice and severance payments for any actions taken by management to restructure or reduce employees in Germany, the United States or other worldwide locations. These payments could have a significantly negative impact on the Company’s cash flow and results of operations.

10

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

Wireless Telecom Group, Inc., and its operatingsubsidiaries, Boonton Electronics Corporation, Microlab/FXR and Willtek Communications GmbH, (collectively, the "Company"), develop, manufacture and market a wide variety of electronic noise sources, electronic testing and measuring instruments including power meters, voltmeters and modulation meters, high-power passive microwave components and handset production testers for wireless products. The Company’s products have historically been primarily used to test the performance and capability of cellular/PCS and satellite communication systems and to measure the power of RF and microwave systems. Other applications include radio, radar, wireless local area network (WLAN) and digital television.

The financial information presented herein includes:
(i) Condensed Consolidated Balance Sheets as of March 31, 2009 (unaudited) and as of December 31, 2008 (ii) Condensed Consolidated Statements of Operations for the three month periods ended March 31, 2009 (unaudited) and 2008 (unaudited) and (iii) Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 2009 (unaudited) and 2008 (unaudited).

FORWARD LOOKING STATEMENTS

The statements contained in this Quarterly Report on Form 10-Q that are not historical facts, including, without limitation, the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,” “intends,” “plans,” “may,” “will,” “should,” “anticipates” or “continues” or the negative thereof of other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. These statements are based on the Company’s current expectations of future events and are subject to a number of risks and uncertainties that may cause the Company’s actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, product demand and development of competitive technologies in our market sector, the impact of competitive products and pricing, the loss of any significant customers, the effects of adoption of newly announced accounting standards, the effects of economic conditions and trade, legal and other economic risks, among others. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. These risks and uncertainties are disclosed from time to time in the Company’s filings with the Securities and Exchange Commission, the Company’s press releases and in oral statements made by or with the approval of authorized personnel. The Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments.

CRITICAL ACCOUNTING POLICIES

Management’s discussion and analysis of the financial condition and results of operations are based upon the Company’s condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses for each period. The following represents a summary of the Company’s critical accounting policies, defined as those policies that the Company believes are: (a) the most important to the portrayal of its financial condition and results of operations, and (b) that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

11

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Share-Based Compensation

The Company follows the provisions of SFAS 123(R), “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 2008, the Company took into consideration guidance under SFAS 123(R) 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 of three years. 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. Due to the Company’s history with respect to incentive stock options, the estimate of forfeitures included in the option valuation was zero.

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 collectibility 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 customer’s delivery site, then recognition of revenue is deferred until that time. There are no formal sales incentives offered to any of the Company’s 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.

Valuation of Inventory

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.

Allowances for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. A key consideration in estimating the allowance for doubtful accounts has been, and will continue to be, our customer’s payment history and aging of its accounts receivable balance. If the financial condition of any of its customers were to decline, additional allowances might be required.

Income Taxes

As part of the process of preparing the condensed consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. The process incorporates an assessment of the current tax exposure together with temporary differences resulting from different treatment of transactions for tax and financial statement purposes. Such differences result in deferred tax assets and liabilities, which are included within the condensed consolidated balance sheet. The recovery of deferred tax assets from future taxable income must be assessed and, to the extent that recovery is not likely, the Company establishes a valuation allowance. Increases in valuation allowances result in the recording of additional tax expense. Further, if the ultimate tax liability differs from the periodic tax provision reflected in the condensed consolidated statements of operations, additional tax expense may be recorded.

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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Valuation of goodwill and other intangible assets

The Company reviews its goodwill and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable, and also reviews goodwill annually in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 142. 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. In the second step, the impairment is computed by estimating the fair values 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 unit’s goodwill. At March 31, 2009 and December 31, 2008, goodwill is attributable to one of the Company’s reporting unit’s, Microlab/FXR.

RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our interim condensed consolidated financial statements and the notes to those statements included in Part I, Item I of this Quarterly Report on Form 10-Q and in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2008.

For the three months ended March 31, 2009 as compared to the corresponding period of the previous year, net sales decreased to approximately $11,362,000 from approximately $12,989,000 a decrease of approximately $1,627,000 or 12.5% . The decrease is primarily due an overall softness in the wireless handset market.

Gross profit on net sales for the three months ended March 31, 2009 was approximately $5,651,000 or 49.7% as compared to approximately $6,166,000 or 47.5% of net sales for the three months ended March 31, 2008. Gross profit margins are higher primarily due to favorable product mix, particularly in the Company’s foreign subsidiary, and lower manufacturing labor and overhead costs. The Company can experience variations in gross profit based upon the mix of products sold as well as variations due to revenue volume and economies of scale. The Company continues to carefully monitor costs associated with material acquisition, manufacturing and production.

Operating expenses for the three months ended March 31, 2009 were approximately $6,002,000 or 53% of net sales as compared to approximately $6,723,000 or 52% of net sales for the three months ended March 31, 2008. Operating expenses are lower due to decreases in both sales and marketing expenses and general and administrative expenses, partially off-set by an increase in research and development expenses. During the first quarter of 2009, the Company made a decision to shift some of its research and development to a technical partner in the U.S. The objective of this decision is both to improve our competitive position and to further improve operating results in future periods. Additionally, during the first quarter of 2008, the Company implemented a cost reduction plan to bring operations spending more closely in line with near-term market conditions.

Interest income decreased by approximately $81,000 for the three months ended March 31, 2009 as compared to the corresponding period of the previous year. This decrease was primarily due to a lower interest rates, and consequently lower returns, in a working capital management account.

For the three months ended March 31, 2009, other income decreased by approximately $87,000. This decrease was primarily due to lower non-operating income relating to foreign currency gains and losses.

For the three months ended March 31, 2009, the Company realized a net (loss) of approximately $(286,000), or $(.01) per share basic and diluted, as compared to a net (loss) of approximately $(529,000), or $(.02) per share basic and diluted for the three months ended March 31, 2008. The explanation of the change in net (loss) can be derived from the operations analysis given above for the three-month periods ending March 31, 2009 and 2008, respectively.

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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

LIQUIDITY AND CAPITAL RESOURCES:

The Company's working capital has decreased by approximately $98,000 to approximately $24,696,000 at March 31, 2009, from approximately $24,794,000 at December 31, 2008. At March 31, 2009 the Company had a current ratio of 5.6 to 1, and a ratio of debt to tangible net worth of .4 to 1. At December 31, 2008, the Company had a current ratio of 4.6 to 1, and ratio of debt to tangible net worth of .4 to 1.

The Company had a combined cash and short-term investment balance of approximately $11,349,000 at March 31, 2009, compared to approximately $11,643,000 at December 31, 2008. The Company believes its current level of cash and short-term investments is sufficient enough to fund the current operating, investing and financing activities. The Company believes the full benefit of the cost actions taken over the past twelve months, along with additional productivity initiatives in process, will further reduce our cost structure and will bring expenses in-line with the near-term market dynamics.

The Company used cash for operating activities of approximately $137,000 for the three-month period ending March 31, 2009. The use of this cash for operations was primarily due to a decrease in accounts payable and accrued expenses, a decrease in income taxes payable and an increase in prepaid expenses and other current assets, partially off-set by, a decrease in accounts receivable and a decrease in inventory.

The Company has historically been able to collect its account receivables approximately every two months. This average collection period has been sufficient to provide the working capital and liquidity necessary to operate the Company. The Company continues to monitor production requirements and delivery times while maintaining manageable levels of goods on hand.

The Company realized cash from operating activities of approximately $246,000 for the three-month period ending March 31, 2008. The primary source of this cash was due to a decrease in inventory and a decrease in accounts receivable, partially offset by a decrease in accounts payable and accrued expenses and a decrease in income taxes payable.

Net cash provided by investing activities for the three months ended March 31, 2009 was approximately $2,951,000. The primary source of these funds was from the sale of short-term securities, off-set by capital expenditures. For the three months ended 2008, net cash used for investing activities was approximately $73,000. The use of these funds was for capital expenditures, off-set by proceeds from the dispositions of property, plant and equipment.

Cash used for financing activities for the three months ended March 31, 2009 was approximately $14,000. The use of these funds was for the periodic payment of a mortgage note. Cash used for financing activities for the three months ended March 31, 2008 was approximately $346,000. The use of these funds was for the acquisition of treasury stock and the periodic payment of a mortgage note.

On January 17, 2008, the Company’s Board of Directors authorized the repurchase of up to 5% of the Company’s common stock. The stock repurchase authorization does not have an expiration date and the timing and amount of shares will be determined by a number of factors including the levels of cash generation from operations, cash requirements for investments, and current share price. As of March 31, 2009, the Company has repurchased 295,958 shares at a cost of $477,885. The Company did not repurchase shares during the three months ended March 31, 2009. The stock repurchase program may be modified or discontinued at any time.

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.

INFLATION AND SEASONALITY

The Company does not anticipate that inflation will significantly impact its business or its results of operations nor does it believe that its business is seasonal.

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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4 - CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, as of the end of the period covered by this report, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be included in our Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, relating to Wireless Telecom Group, Inc., including our consolidated subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the period covered by this report, our disclosure controls and procedures are effective at these reasonable assurance levels.

(b) Changes in Internal Controls over Financial Reporting

In connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act, there was no change identified in our internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS
		The Company is not aware of any material legal proceeding against the Company or in which any of their property is subject.
Item 1A.	RISK FACTORS
		The Company is not aware of any material changes from risk factors as previously disclosed in its Form 10-K for the year ended December 31, 2008.
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
		None.
Item 3.	DEFAULTS UPON SENIOR SECURITIES
		None.
Item 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
		None.
Item 5.	OTHER INFORMATION
		None.
Item 6.	EXHIBITS
Exhibit No.		Description
31.1		Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (Principal Executive Officer)
31.2		Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (Principal Financial Officer)
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (Principal Executive Officer)
32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (Principal Financial Officer)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	WIRELESS TELECOM GROUP, INC.
	(Registrant)
Date: May 14, 2009	/S/James M. Johnson
	James M. Johnson
	Chief Executive Officer
Date: May 14, 2009	/S/Paul Genova
	Paul Genova
	President, Chief Financial Officer

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EXHIBIT LIST
Exhibit No.	Description
31.1	Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (Principal Executive Officer)
31.2	Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (Principal Financial Officer)
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (Principal Executive Officer)
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (Principal Financial Officer)

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