| Significant Accounting Policies [Text Block] | NOTE 1
- DESCRIPTION OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Organization and 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 consolidated financial statements include the accounts of Wireless
Telecom Group, Inc., doing business as, and operating under the trade name, Noise Com, Inc. (“Noisecom”), and its wholly
owned subsidiaries including Boonton Electronics Corporation (“Boonton”), Microlab/FXR (“Microlab”), Wireless
Telecommunications Ltd. and CommAgility Limited (“CommAgility”). The accompanying Consolidated
Financial Statements include the accounts of the Company and its wholly owned subsidiaries. The Consolidated Financial Statements
have been prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) and include the
results of companies acquired by the Company from the date of each acquisition. All intercompany accounts and transactions have
been eliminated in consolidation. The Company presents its operations
in three reportable segments: (1) Network solutions, (2) Test and measurement and (3) Embedded solutions. The Network solutions
segment is comprised primarily of the operations of Microlab. The Test and measurement segment is comprised of the operations of
Boonton and Noisecom. The Embedded solutions segment is comprised of the operations of CommAgility. Use of Estimates The accompanying financial statements
have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements,
as well as the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ
from those estimates. The most significant estimates and assumptions include management’s analysis in support of inventory
valuation, accounts receivable valuation, valuation of deferred tax assets, intangible assets, estimated fair values of stock options
and vesting periods of performance-based stock options and restricted stock and estimated fair values of acquired assets and liabilities
in business combinations. Concentrations of Credit
Risk, Purchases and Fair Value Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of cash 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 year ended
December 31, 2017 one customer, from the Embedded solutions segment, accounted for 10.4% of the Company’s total
consolidated revenues. At December 31, 2017, two customers exceeded 10% of consolidated gross accounts receivable at 17.8%
and 11.2%, respectively. At December 31, 2016, one customer represented 16% of the Company’s gross accounts receivable
balance. For the years ended December
31, 2017 and 2016 no single third-party supplier accounted for 10% or more of the Company’s total consolidated inventory
purchases. Cash and Cash Equivalents The Company considers all highly
liquid investments purchased with maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash
equivalents consist of operating accounts. Accounts Receivable and
Allowance for Doubtful Accounts Trade accounts receivable are
recorded at the invoiced amount and do not bear interest. The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments. Estimated allowances for doubtful accounts are
reviewed periodically taking into account the customer’s recent payment history, the customer’s current financial statements
and other information regarding the customer’s credit worthiness. Account balances are charged off against the allowance
when it is determined the receivable will not be recovered. Inventories Inventories are stated
at the lower of cost (average cost) or market value. Market value is based upon an estimated average selling price reduced
by estimated costs of completion, disposal and transportation. Reductions in inventory valuation are included in cost of sales in the
accompanying Consolidated Statements of Operations and Comprehensive Loss. Finished goods and work-in-process include
material, labor and manufacturing expenses. The Company reviews inventory
for excess and obsolescence based on best estimates of future demand, product lifecycle status and product development plans. The
Company uses historical information along with these future estimates to reduce the inventory cost basis. Subsequent changes in
facts and circumstances do not result in the restoration or increase in that newly established cost basis. During the year ended 2017 the
Company recorded inventory adjustments totaling $1,930 comprised of an increase to the Company’s excess and obsolescence
reserve of $1,121 and the write off of gross inventory of $809. The charge was effected as a result
of a review of inventory balances and net realizable value of the inventory following the launch of the Company’s lean manufacturing
initiative and the adoption of a strategic product plan focused on product lifecycle acceleration. Inventory carrying value is
net of inventory reserves of $1,856 and $1,549 as of December 31, 2017 and 2016, respectively.
Inventories consist of: December 31, December 31,
Raw materials $ 3,231 $ 3,559
Work-in-process 631 531
Finished goods 2,664 4,363
$ 6,526 $ 8,453 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 includes $3,599 contingent asset representing the fair value of
consideration shares issued in connection with the CommAgility acquisition (see Note 2) that are expected to be returned to the
Company under the claw back provision of the Share Purchase Agreement. Upon execution of the claw back provisions the Company will
reduce prepaid expenses and other current assets and shareholders’ equity by $3,599 and the share will no longer be considered
outstanding. Property, Plant and Equipment Property, plant and equipment
are reflected at cost, less accumulated depreciation. Depreciation and amortization are provided on a straight-line basis over
the estimated useful lives of the assets. The estimated useful lives for the property, plant and equipment are:
Machinery and computer equipment 3-8 years
Furniture and fixtures 5-7 years
Transportation equipment 4 years Leasehold improvements are amortized
over the shorter of the remaining term of the lease or the estimated economic life of the improvement. Repairs and maintenance
are charged to operations as incurred; renewals and betterments are capitalized. Goodwill Goodwill represents the excess
of the aggregate purchase price over the fair value of the net assets acquired in a purchase business combination. Goodwill is
evaluated for impairment annually by first performing a qualitative assessment to determine whether a quantitative goodwill test
is necessary. After assessing the totality of events or circumstances, if we determine it is more likely than not that the fair
value of a reporting unit is less than its carrying amount, then we perform additional quantitative tests to determine the magnitude
of any impairment. The Company’s goodwill
balance of $10,260 at December 31, 2017 relates to two of the Company’s reporting units, Embedded solutions and Network solutions.
The Company’s goodwill balance of $1,351 at December 31, 2016 relates to Network solutions. Management’s qualitative
assessment performed in the fourth quarters of 2017 and 2016 did not indicate any impairment of goodwill as each reporting units
fair value is estimated to be in excess of its carrying value. Intangible and Long-lived
Assets Intangible assets include patents,
non-competition agreements, customer relationships and trademarks. Intangible assets with finite lives are amortized using the
straight-line method over the estimated economic lives of the assets, which range from five to seven years. Long-lived assets,
including intangible assets with finite lives, are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted
future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived
assets that management expects to hold and use is based on the estimated fair value of the asset. Long-lived assets to be disposed
of are reported at the lower of carrying amount or estimated fair value less costs to sell. The estimated useful lives of intangible
and long-lived assets are based on many factors including assumptions regarding the effects of obsolescence, demand, competition
and other economic factors, expectations regarding the future use of the asset, and our historical experience with similar assets.
The assumptions used to determine the estimated useful lives could change due to numerous factors including product demand, market
conditions, technological developments, economic conditions and competition. Intangible assets determined to have indefinite useful
lives are not amortized but are tested for impairment annually and more frequently if events occur or circumstances change that
indicate an asset may be impaired. 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 (See Note 2) 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”). As of the acquisition
date, the Company estimated the fair value of the contingent consideration to be $754 (see Note 2) and 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, and scenarios for the earn-out periods for
which probabilities are assigned to each scenario to arrive at a single estimated outcome (Level 3). The estimated outcome is then
discounted based on the individual risk analysis of the liability. Although the 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. The contingent consideration
is included in other long term liabilities in the accompanying Consolidated Balance Sheets. The Company will satisfy this obligation
with a cash payment to the sellers of CommAgility upon the achievement of the respective milestone discussed above. Revenue Recognition Revenue from product shipments,
including shipping and handling fees, is recognized once delivery has occurred, provided that persuasive evidence of an arrangement
exists, the price is fixed or determinable, and collectability is reasonably assured. Delivery is considered to have occurred when
title and risk of loss have transferred to the customer. Revenues from international distributors are recognized in the same manner.
If title does not pass until the product reaches the customer’s delivery site, then revenue recognition 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. Standalone sales of software
or software-related items are recognized in accordance with the software revenue recognition guidance. For multiple deliverable
arrangements that only include software items, the Company generally uses the residual method to allocate the arrangement consideration.
Under the residual method, the amount of consideration allocated to the delivered items equals the total arrangement consideration,
less the fair value of the undelivered items. Where vendor-specific objective evidence (“VSOE”) of fair value for the
undelivered items cannot be determined, the Company generally defers revenue until all items are delivered and services have been
performed, or until such evidence of fair value can be determined for the undelivered items. Software arrangements that require
significant customization or modification of software are accounted for under percentage of completion accounting. The Company
uses the input method to measure progress for arrangements accounted for under percentage of completion accounting. Shipping and Handling Freight
billed to customers is recorded as revenue. The Company classifies shipping and handling costs associated with the distribution
of finished product to our customers as cost of sales. 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. Other Comprehensive
Income (Loss) Other comprehensive income (loss)
is recorded directly to a separate section of shareholders’ equity in accumulated other comprehensive income and primarily
includes unrealized gains and losses excluded from the Consolidated Statements of Operations and Comprehensive Loss. These unrealized
gains and losses consist of changes in foreign currency translation. Research and Development
Costs Research and development costs
are charged to operations when incurred. The amounts charged to operations for the years ended December 31, 2017 and 2016 were
$4,395 and $4,046, respectively. Advertising Costs Advertising expenses are charged
to operations during the year in which they are incurred and aggregated $87 and $150 for the years ended December 31, 2017 and
2016, respectively. Stock-Based Compensation The Company follows the
provisions of Accounting Standards Codification (“ASC”) 718, “Compensation-Stock Compensation” which requires
that compensation expense be recognized, based on the fair value of the stock awards. The fair value of the stock awards is
equal to the fair value of the Company’s stock on the date of grant. The fair value of options at the date of grant was
estimated using the Black-Scholes option pricing model. When performance-based options are granted, the Company takes into
consideration guidance under ASC 718 and SEC Staff Accounting Bulletin No. 107 (SAB 107) when determining assumptions. The
expected option life is derived from assumed exercise rates based upon historical exercise patterns and represents the period
of time that options granted are expected to be outstanding. The expected volatility is based upon historical volatility of
our shares using weekly price observations over an observation period that approximates the expected life of the options. The
risk-free rate is based on the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the
expected option life. The Company accounts for forfeitures when they occur. Management estimates are necessary
in determining compensation expense for stock options with performance-based vesting criteria. Compensation expense for this type
of stock-based award is recognized over the period from the date the performance conditions are determined to be probable of occurring
through the implicit service period, which is the date the applicable conditions are expected to be met. If the performance conditions
are not considered probable of being achieved, no expense is recognized until such time as the performance conditions are considered
probable of being met, if ever. If the award is forfeited because the performance condition is not satisfied, previously recognized
compensation cost is reversed. Management evaluates performance conditions on a quarterly basis. Income Taxes The Company records deferred
taxes in accordance with ASC 740, “Accounting for Income Taxes”. This ASC requires recognition of deferred tax assets
and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which they are carried
in the financial statements, based upon the enacted rates in effect for the year in which the differences are expected to reverse.
The Company establishes a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. The Company periodically assesses
the value of its deferred tax asset, a majority of which has been generated by 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
carry-forwards. Under ASC 740, the Company must
recognize and disclose uncertain tax positions only if it is more-likely-than-not the tax position will be sustained on examination
by the taxing authority, based on the technical merits of the position. The amounts recognized in the financial statements attributable
to such position, if any, are recorded if there is a greater than 50% likelihood of being realized upon the ultimate resolution
of the position. Based on the evaluations noted above, the Company has concluded that there are no significant uncertain tax positions
requiring recognition or disclosure in its consolidated financial statements. On December 22, 2017, the United
States enacted the Tax Cuts and Jobs Act (“TCJA”), which instituted fundamental changes to the taxation of multinational
corporations, including a reduction the U.S. corporate income tax rate to 21% beginning in 2018. As a result, the Company re-measured
its U.S. deferred tax assets at the new lower corporate income tax rate. The TCJA also requires a one-time transition tax on the
mandatory deemed repatriation of the cumulative earnings of the Company’s foreign subsidiary as of December 31, 2017. To
determine the amount of this transition tax, the Company must determine the amount of earnings generated since inception by the
relevant foreign subsidiary, as well as the amount of non-U.S. income taxes paid on such earnings, in addition to potentially other
factors. See Note 12 for a discussion of the impact the TCJA. 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 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 Years Ended December 31,
2017 2016
Weighted average common shares outstanding 19,984 18,464
Potentially dilutive stock options 878 706
Weighted average common shares outstanding, assuming dilution 20,862 19,170 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 848 and
1,189 for 2017 and 2016, respectively. Recent Accounting Pronouncements
Affecting the Company In January 2017, the Financial
Accounting Standards Board (“FASB”) issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying
the Accounting for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 removes the requirement to perform a hypothetical
purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s
carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for annual periods
and interim periods within those annual periods beginning after December 15, 2019, and early adoption is permitted. The Company
early adopted this standard as of January 1, 2017. In January 2017, the FASB issued
ASU No. 2017-01, “Business Combinations: Clarifying the Definition of a Business” In August 2016, the FASB issued
ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”), 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 does not expect the adoption of ASU 2016-15 to have a material impact on
its consolidated financial statements. In March 2016, the FASB issued
ASU 2016-09, “Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting”
(“ASU 2016-09”). Under ASU 2016-09, companies will no longer record excess tax benefits and certain tax deficiencies
in additional paid in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income
tax expense or benefit in the income statement and the APIC pools will be eliminated. In addition, ASU 2016-09 eliminates the requirement
that excess tax benefits be realized before companies can recognize them. ASU 2016-09 also requires companies to present excess
tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. Furthermore, ASU 2016-09
will increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability
classification for shares used to satisfy the employer’s statutory income tax withholding obligation. An employer with a
statutory income tax withholding obligation will now be allowed to withhold shares with the fair value up to the amount of taxes
owed using the maximum statutory rate in the employee’s applicable jurisdiction(s). ASU 2016-09 requires a company to classify
the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing
activity on the statement of cash flows. Under current U.S. GAAP, it is not specified how these cash flows should be classified.
In addition, companies will now have to elect whether to account for forfeitures on share-based payments by (1) recognizing forfeiture
awards as they occur or (2) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely
to change, as is currently required. The amendments of this ASU are effective for reporting periods beginning after December 15,
2016, with early adoption permitted but all of the guidance must be adopted in the same period. The adopted standard did not have
a material impact on the Company’s financial statements. In February 2016, the FASB issued
ASU 2016-02, “Leases” (“ASU 2016-02”), 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 new standard is to be applied using a modified retrospective approach.
The Company is in the process of evaluating the impact of ASU 2016-02 on its consolidated financial statements. In May 2014, the FASB issued
ASU 2014-09, “Revenue from Contracts with Customers The most significant
impact of ASU 2014-09, relates to the Company’s accounting for software license agreements which have multiple
deliverables. 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 stand-alone value and the criteria to establish VSOE of fair value
has been eliminated. Under the existing guidance the Company recognized revenue at the delivery of the final software
deliverable when VSOE did not exist for the undelivered element. Adoption of the new standard will generally result in an
acceleration of revenues recognized for certain multiple deliverable software license arrangements 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. Based on customer-specific contracts in effect at December 31, 2017, the Company expects to
recognize a cumulative effect adjustment of approximately $400 to $425 that increases retained earnings on the Consolidated
Balance Sheet. The adjustment reflects revenue that would have been recognized in 2018. For the Company’s Consolidated
Balance Sheet, the adoption of ASU 2014-09 will result is some reclassifications among financial statement accounts, but
these reclassifications will not materially change the total amount of net assets at December 31, 2017. Management does not believe
there are any other recently issued, but not yet effective accounting pronouncements, if adopted, that would have a material effect
on the accompanying consolidated financial statements. |
