Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 01, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | WIRELESS TELECOM GROUP INC | |
Entity Central Index Key | 0000878828 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 21,695,010 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash & cash equivalents | $ 2,203 | $ 4,245 |
Accounts receivable - net of reserves of $42 and $69, respectively | 8,040 | 6,152 |
Inventories - net of reserves of $1,082 and $969, respectively | 9,074 | 7,325 |
Prepaid expenses and other current assets | 2,074 | 1,871 |
TOTAL CURRENT ASSETS | 21,391 | 19,593 |
PROPERTY PLANT AND EQUIPMENT - NET | 1,898 | 2,147 |
OTHER ASSETS | ||
Goodwill | 15,881 | 10,069 |
Acquired intangible assets, net | 5,479 | 2,219 |
Deferred income taxes | 4,956 | 6,013 |
Right of use assets | 1,814 | 1,436 |
Other | 1,617 | 874 |
TOTAL OTHER ASSETS | 29,747 | 20,611 |
TOTAL ASSETS | 53,036 | 42,351 |
CURRENT LIABILITIES | ||
Short term debt | 84 | 2,696 |
Accounts payable | 1,894 | 2,227 |
Short term leases | 527 | 440 |
Accrued expenses and other current liabilities | 8,497 | 2,657 |
Deferred revenue | 170 | 42 |
TOTAL CURRENT LIABILITIES | 11,172 | 8,062 |
LONG TERM LIABILITIES | ||
Long term debt | 9,290 | |
Long term leases | 1,338 | 1,018 |
Other long term liabilities | 89 | 77 |
Deferred tax liability | 492 | 503 |
TOTAL LONG TERM LIABILITIES | 11,209 | 1,598 |
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 34,905,571 and 34,488,252 shares issued, 21,695,010 and 21,300,252 shares outstanding | 349 | 345 |
Additional paid in capital | 50,049 | 49,062 |
Retained earnings | 4,552 | 7,142 |
Treasury stock at cost, 13,210,561 and 13,188,000 shares | (24,540) | (24,509) |
Accumulated other comprehensive income | 245 | 651 |
TOTAL SHAREHOLDERS' EQUITY | 30,655 | 32,691 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 53,036 | $ 42,351 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, reserves | $ 42 | $ 69 |
Inventories, reserves | $ 1,082 | $ 969 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 34,905,571 | 34,488,252 |
Common stock, shares outstanding | 21,695,010 | 21,300,252 |
Treasury stock, shares | 13,210,561 | 13,188,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income/(Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Net revenues | $ 10,868 | $ 10,812 | $ 31,404 | $ 37,353 |
Cost of revenues | 5,214 | 5,987 | 15,655 | 20,668 |
Gross profit | 5,654 | 4,825 | 15,749 | 16,685 |
Operating expenses | ||||
Research and development | 1,826 | 1,343 | 5,080 | 4,556 |
Sales and marketing | 1,732 | 1,753 | 5,111 | 5,718 |
General and administrative | 2,444 | 2,407 | 7,322 | 7,341 |
Total operating expenses | 6,002 | 5,503 | 17,513 | 17,615 |
Operating loss | (348) | (678) | (1,764) | (930) |
Other income/(expense) | (43) | 108 | 252 | 273 |
Interest (expense) | (256) | (60) | (727) | (248) |
Loss before taxes | (647) | (630) | (2,239) | (905) |
Tax provision/(benefit) | 128 | (169) | 352 | (256) |
Net Loss | (775) | (461) | (2,591) | (649) |
Other comprehensive income/(loss): | ||||
Foreign currency translation adjustments | 565 | (491) | (406) | (566) |
Comprehensive loss | $ (210) | $ (952) | $ (2,997) | $ (1,215) |
Loss per share: | ||||
Basic | $ (0.04) | $ (0.02) | $ (0.12) | $ (0.03) |
Diluted | $ (0.04) | $ (0.02) | $ (0.12) | $ (0.03) |
Weighted average shares outstanding: | ||||
Basic | 21,703,000 | 20,866,000 | 21,643,000 | 20,854,000 |
Diluted | 21,703,000 | 20,866,000 | 21,643,000 | 20,854,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS USED BY OPERATING ACTIVITIES | ||
Net Loss | $ (2,591) | $ (649) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Depreciation and amortization | 1,631 | 1,671 |
Amortization of debt issuance fees | 215 | 47 |
Share-based compensation expense | 360 | 560 |
Deferred rent | (22) | (18) |
Deferred income taxes | 1,057 | (309) |
Provision for doubtful accounts | (28) | 20 |
Inventory reserves | 119 | 139 |
Changes in assets and liabilities, net of acquisition: | ||
Accounts receivable | (1,343) | 520 |
Inventories | (461) | (1,627) |
Prepaid expenses and other assets | (226) | 993 |
Accounts payable | (451) | (567) |
Payment of contingent consideration | (772) | |
Accrued expenses and other liabilities | 888 | (1,635) |
Net cash used by operating activities | (852) | (1,627) |
CASH FLOWS USED BY INVESTING ACTIVITIES | ||
Capital expenditures | (228) | (339) |
Acquisition of business, net of cash acquired | (7,189) | (426) |
Net cash used by investing activities | (7,417) | (765) |
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES | ||
Revolver borrowings | 27,432 | 27,408 |
Revolver repayments | (29,786) | (26,333) |
Term loan borrowings | 8,400 | |
Term loan repayments | (405) | (114) |
Debt issuance fees | (1,305) | |
Paycheck protection program loan | 2,045 | |
Payment of contingent consideration | (782) | |
Proceeds from exercise of stock options | 15 | |
Shares withheld for employee taxes | (31) | |
Net cash provided by financing activities | 6,365 | 179 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (138) | (67) |
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | (2,042) | (2,280) |
Cash and Cash Equivalents, at Beginning of Period | 4,245 | 5,015 |
CASH AND CASH EQUIVALENTS, AT END OF PERIOD | 2,203 | 2,735 |
SUPPLEMENTAL INFORMATION: | ||
Cash paid during the period for interest | 527 | 143 |
Cash paid during the period for income taxes | $ 53 | $ 69 |
Consolidated Statement of Share
Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income/(Loss) [Member] | Total |
Balance at Dec. 31, 2018 | $ 344 | $ 48,479 | $ 7,556 | $ (24,509) | $ 112 | $ 31,982 |
Balance, shares at Dec. 31, 2018 | 34,393,252 | |||||
Net income/(loss) | (344) | (344) | ||||
Issuance of restricted stock | $ 1 | (1) | ||||
Issuance of restricted stock, shares | 95,000 | |||||
Share-based compensation expense | 209 | 209 | ||||
Cumulative translation adjustment | 305 | 305 | ||||
Balance at Mar. 31, 2019 | $ 345 | 48,687 | 7,212 | (24,509) | 417 | 32,152 |
Balance, shares at Mar. 31, 2019 | 34,488,252 | |||||
Balance at Dec. 31, 2018 | $ 344 | 48,479 | 7,556 | (24,509) | 112 | 31,982 |
Balance, shares at Dec. 31, 2018 | 34,393,252 | |||||
Net income/(loss) | (649) | |||||
Shares withheld for employee taxes | ||||||
Balance at Sep. 30, 2019 | $ 345 | 49,038 | 6,907 | (24,509) | (454) | 31,327 |
Balance, shares at Sep. 30, 2019 | 34,488,252 | |||||
Balance at Mar. 31, 2019 | $ 345 | 48,687 | 7,212 | (24,509) | 417 | 32,152 |
Balance, shares at Mar. 31, 2019 | 34,488,252 | |||||
Net income/(loss) | 156 | 156 | ||||
Share-based compensation expense | 191 | 191 | ||||
Cumulative translation adjustment | (380) | (380) | ||||
Balance at Jun. 30, 2019 | $ 345 | 48,878 | 7,368 | (24,509) | 37 | 32,119 |
Balance, shares at Jun. 30, 2019 | 34,488,252 | |||||
Net income/(loss) | (461) | (461) | ||||
Share-based compensation expense | 160 | 160 | ||||
Cumulative translation adjustment | (491) | (491) | ||||
Balance at Sep. 30, 2019 | $ 345 | 49,038 | 6,907 | (24,509) | (454) | 31,327 |
Balance, shares at Sep. 30, 2019 | 34,488,252 | |||||
Balance at Dec. 31, 2019 | $ 345 | 49,062 | 7,142 | (24,509) | 651 | 32,691 |
Balance, shares at Dec. 31, 2019 | 34,488,252 | |||||
Net income/(loss) | (1,147) | (1,147) | ||||
Share-based compensation expense | 81 | 81 | ||||
Cumulative translation adjustment | (935) | (935) | ||||
Issuance of shares in connection with Holzworth acquisition | $ 3 | 462 | 465 | |||
Issuance of shares in connection with Holzworth acquisition, shares | 347,319 | |||||
Issuance of warrants in connection with term debt | 151 | 151 | ||||
Shares withheld for employee taxes | (26) | (26) | ||||
Balance at Mar. 31, 2020 | $ 348 | 49,756 | 5,995 | (24,535) | (284) | 31,280 |
Balance, shares at Mar. 31, 2020 | 34,835,571 | |||||
Balance at Dec. 31, 2019 | $ 345 | 49,062 | 7,142 | (24,509) | 651 | 32,691 |
Balance, shares at Dec. 31, 2019 | 34,488,252 | |||||
Net income/(loss) | (2,591) | |||||
Shares withheld for employee taxes | (31) | |||||
Balance at Sep. 30, 2020 | $ 349 | 50,049 | 4,552 | (24,540) | 245 | 30,655 |
Balance, shares at Sep. 30, 2020 | 34,905,571 | |||||
Balance at Mar. 31, 2020 | $ 348 | 49,756 | 5,995 | (24,535) | (284) | 31,280 |
Balance, shares at Mar. 31, 2020 | 34,835,571 | |||||
Net income/(loss) | (668) | (668) | ||||
Share-based compensation expense | 128 | 128 | ||||
Cumulative translation adjustment | (36) | (36) | ||||
Balance at Jun. 30, 2020 | $ 348 | 49,884 | 5,327 | (24,535) | (320) | 30,704 |
Balance, shares at Jun. 30, 2020 | 34,835,571 | |||||
Net income/(loss) | (775) | (775) | ||||
Issuance of restricted stock | $ 1 | (1) | ||||
Issuance of restricted stock, shares | 50,000 | |||||
Share-based compensation expense | 151 | 151 | ||||
Cumulative translation adjustment | 565 | 565 | ||||
Shares withheld for employee taxes | (5) | (5) | ||||
Issuance of shares in connection with stock options exercised | 15 | 15 | ||||
Issuance of shares in connection with stock options exercised, shares | 20,000 | |||||
Balance at Sep. 30, 2020 | $ 349 | $ 50,049 | $ 4,552 | $ (24,540) | $ 245 | $ 30,655 |
Balance, shares at Sep. 30, 2020 | 34,905,571 |
Summary of Significant Accounti
Summary of Significant Accounting Principles and Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Principles and Policies | NOTE 1 - Summary of Significant Accounting Principles and Policies Basis of Presentation and Preparation Wireless Telecom Group, Inc., a New Jersey corporation, together with its subsidiaries (“we”, “us”, “our” or the “Company”), specializes in the design and manufacture of advanced radio frequency and microwave devices which enable the development, testing and deployment of wireless technology. The Company provides unique, highly customized and configured solutions which drive innovation across a wide range of traditional and emerging wireless technologies. In 2019, Wireless Telecom Group was comprised of four brands – Microlab, Boonton, Noisecom, and CommAgility. Since our acquisition of Holzworth Instrumentation, Inc. (“Holzworth”) in February of 2020 (see Note 3), we are also offering the Holzworth brand. Our customers include wireless carriers, defense contractors, military and government agencies, satellite communication companies, network equipment manufacturers, tower companies, semiconductor device manufacturers, system integrators and medical device manufacturers. Our products include components, modules, systems and instruments used across the lifecycle of wireless connectivity and communication development, deployment and testing. Our customers use these products in relation to commercial infrastructure development, the expansion and upgrade of distributed antenna systems, deployment of small cell technology, use of medical devices and private long-term evolution (“LTE”) networks. In addition, the Company’s products are used in the development and testing of satellite communication systems, radar systems, semiconductor devices, automotive electronics and avionics. The consolidated balance sheet as of September 30, 2020, the consolidated statements of operations and comprehensive income/(loss) for the three and nine months ended September 30, 2020 and 2019, the consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019 and the consolidated statement of shareholders’ equity for the three and nine months ended September 30, 2020 and 2019 have been prepared by the Company without audit. The 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 LLC (“Microlab”), Holzworth Instrumentation, Inc. (“Holzworth”), Wireless Telecommunications Ltd. and CommAgility Limited (“CommAgility”). All intercompany transactions and balances have been eliminated in consolidation. In June of 2020 the Company completed an internal reorganization and now presents its operations as one reportable segment. Prior to the second quarter of 2020 the Company presented its operations in three reportable segments. The Company identifies segments in accordance with ASC 280 Segment Reporting It is suggested that these interim consolidated financial statements be read in conjunction with the audited consolidated financial statements, and the notes thereto, included in the Company’s latest annual report (Form 10-K). The Company’s fiscal periods are based on the calendar year. Except as otherwise specified, references to “third quarter(s)” or “three months” indicate the Company’s fiscal periods ending September 30, 2020 and September 30, 2019, and references to “year-end” indicate the fiscal year ended December 31, 2019. Consolidated Financial Statements In the opinion of management, the accompanying 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 consolidated financial statements included in its annual report on Form 10-K for the year ended December 31, 2019. 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 and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020. Critical Accounting Estimates The preparation of our consolidated financial statements requires the Company to make estimates and judgments that affect the reported amount 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. We base our assumptions, judgements and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. At least quarterly, we evaluate our assumptions, judgments and estimates, and make changes as deemed necessary. Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. As noted in our Form 10-K for the fiscal year ended December 31, 2019, due to declining demand of our digital signal processing hardware cards we performed a quantitative assessment of the CommAgility goodwill as of the fourth fiscal quarter of 2019. Our quantitative assessment did not identify any goodwill impairment. Furthermore, the Company applied a hypothetical 10% decrease to the fair value of the CommAgility reporting unit and compared those values to the carrying values which also did not result in a goodwill impairment. The Covid-19 pandemic has had an impact on our financial results for the three and nine months ended September 30, 2020. However, we believe the markets we serve and the industries in which we operate will recover in the long term. Accordingly, we are not aware of any specific event or circumstance related to the COVID-19 pandemic that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of November 13, 2020, the date of issuance of this Quarterly Report on Form 10-Q. It is, however, reasonably possible that changes in judgements, assumptions and estimates we made in assessing the fair value of goodwill could cause us to consider some portion of the remaining CommAgility goodwill to become impaired because of the evolving disruptions and uncertainties caused by Covid-19, as described below. Although disruptions related to the Covid-19 pandemic did not impact our estimates and judgements as of the date of this report, it is reasonably possible that the expected ongoing lack of sales of digital signal processing hardware cards and significant uncertainty around other sales, cash collections, and costs could impact our mediation efforts in the fourth quarter of the fiscal year and beyond. These uncertainties include the duration and severity of the pandemic and containment measures and how our compliance with these measures will impact our day-to-day operations as well as that of our key customers, suppliers (including contract manufacturers) and other counterparties. Our accounting estimates and judgements may change as new events occur and additional information becomes available or is obtained. Furthermore, actual results could differ materially from our estimates as of the date of issuance of this Quarterly Report on Form 10-Q under different assumptions or conditions. For further information about our critical accounting estimates, see the discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Critical Accounting Policies” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Concentration Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The majority of the Company’s cash balance is held outside of the United States. 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 September 30, 2020, one customer accounted for 13% of the Company’s consolidated revenues. For the nine months ended September 30, 2020 no one customer accounted for greater than 10% of the Company’s consolidated revenues. For the three and nine months ended September 30, 2019, one customer accounted for approximately 19% and 29% of the Company’s consolidated revenues, respectively. No customer accounted for more than 10% of consolidated accounts receivable as of September 30, 2020. At December 31, 2019, one customer accounted for 13% of consolidated accounts receivable. 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. We believe the carrying value of the loan obtained under the Paycheck Protection Program approximates fair value due to the expected short term nature of the loan. Contingent Consideration Under the terms of the Holzworth Share Purchase Agreement (See Note 3) the Company may be required to pay additional purchase price in the form of deferred purchase price payments and an earnout if certain financial targets are achieved for the years ending December 31, 2020 and December 31, 2021. See Note 3 for a discussion of the first deferred purchase price payment related to financial targets set for 2019. As of September 30, 2020, the Company estimated the fair value of the deferred purchase price and earnout remaining to be paid related to the 2020 and 2021 financial targets to be $660,000 and $2.4 million, respectively. The earnout may be paid in cash or common stock at the Company’s option. 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 estimated gross revenues and Adjusted EBITDA, as defined in the Holzworth Share Purchase Agreement, and scenarios for the earnout periods for which probabilities are assigned to each scenario to arrive at a single estimated outcome. 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 Holzworth or changes in the future, may result in different estimated amounts. The contingent consideration liability is considered a Level 3 fair value measurement. Subsequent Events There were no subsequent events or transactions requiring recognition or disclosure in the consolidated financial statements, and the notes thereto, through the date the financial statements were issued. |
Accounting Pronouncements
Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Accounting Pronouncements | NOTE 2 – Accounting Pronouncements Recently Adopted Accounting Standards In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software, Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. There have been no changes to our significant accounting policies as described in the 2019 Form 10-K that had a material impact on our consolidated financial statements and related notes. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, |
Acquisition of Holzworth
Acquisition of Holzworth | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisition of Holzworth | NOTE 3 – Acquisition of Holzworth On November 13, 2019 the Company entered into a Share Purchase Agreement with Holzworth Instrumentation Inc. (“Holzworth”), Jason Breitbarth, Joe Koebel, and Leyla Bly (collectively, the “Sellers”), and Jason Breitbarth, as the designated representative of the Sellers, as amended by a First Amendment to Share Purchase Agreement, dated January 31, 2020 (collectively, the “Share Purchase Agreement”). On February 7, 2020, the Company completed the acquisition (the “Acquisition”) of all of the outstanding shares of Holzworth, from the Sellers. Holzworth instruments which include signal generators and phased noise analyzers are used by government labs, the semiconductor industry, and network equipment providers, among others, in research and automated test environments. Holzworth is a complimentary business for our Boonton and Noisecom brands with a common customer base and channel partners. For the three and nine months ended September 30, 2020, net revenues of $2.8 million and $5.7 million, respectively and operating income of $744,000 and $1.2 million, respectively, was included in the consolidated statements of operations and comprehensive income/(loss) related to the Holzworth business, representing the results from the date of acquisition. For the three and nine months ended September 30, 2020, the Company recorded $15,000 and $243,000, respectively of transaction expenses related to the Acquisition and these expenses were recognized in general and administrative expenses in the consolidated statements of operations and comprehensive income/(loss). The aggregate purchase price for the Acquisition is a maximum of $17.0 million, consisting of payments in cash and stock, deferred purchase price payments and contingent consideration in the form of an earnout. At the closing, the Company issued a promissory note, which required the Company to pay on the next business day $465,000 of the purchase price by issuing 347,319 shares of its common stock (the “Stock Consideration”), and $8.0 million in cash (the “Cash Consideration”), reduced by an indemnification holdback of $800,000 and payment of certain of Sellers’ transaction expenses and indebtedness of Holzworth. Additionally, the final purchase price is subject to adjustment based on the closing working capital amounts, as defined in the Share Purchase Agreement, of Holzworth as of the closing balance sheet date as compared to a defined target. The parties intend to make a 338(h)(10) election to treat the Acquisition as a purchase and sale of assets, and the Company has agreed to pay any incremental taxes of Sellers resulting from that election. There are two deferred purchase price payments that total $1.5 million. Each deferred payment may be reduced as provided in the Share Purchase Agreement if Holzworth’s EBITDA (as defined in the Share Purchase Agreement) for each fiscal year ending December 31, 2019 and December 31, 2020, respectively, is less than $1.25 million. Holzworth met the EBITDA target for the fiscal year ended December 31, 2019, and thereby earned the first deferred purchase price payment of $750,000 which is payable in three equal quarterly installments on March 31, 2020, June 30, 2020 and September 30, 2020, respectively. Under the terms of the working capital adjustment definition the sellers owed the Company approximately $292,000. Accordingly, this amount was netted against the first deferred purchase price installment of $250,000 and a portion of the second deferred purchase price installment. The Company paid the second deferred purchase price installment in the net amount of approximately $208,000 on July 1 st The Company may also be required to pay additional amounts in cash and stock as earnout consideration. The first earnout payment will be equal to two times the amount, if any, by which Holzworth’s EBITDA for the fiscal year ending December 31, 2020 exceeds $1.25 million. The second earnout payment will be equal to two times the amount, if any, by which Holzworth’s EBITDA for the fiscal year ending December 31, 2021 exceeds the greater of $1.25 million or Holzworth’s EBITDA for the prior fiscal year. The aggregate earnout payments, if any, cannot exceed $7.0 million. Pursuant to the Share Purchase Agreement the Company entered into a lock-up and voting agreement (the “Lock-up and Voting Agreement”) with each of the Sellers. Pursuant to the Lock-up and Voting Agreement, each Seller agrees to restrict the sale, assignment, transfer, encumbrance or other disposition of its portion of the Stock Consideration (the “Lock-up Shares”). For a period commencing on the closing date of the Acquisition (the “Effective Date”) and ending on the date which is 36 calendar months following the Effective Date, each Seller agrees that, without the prior written consent by the Company, such Seller shall not sell, assign, transfer, encumber or otherwise dispose of the Lock-up Shares or enter into any swap, option or short sale, among other transactions. Upon the prior written consent of the Company, a Seller may transfer Lock-up Shares as a bona fide gift, by will or intestacy or to a family member or trust for the benefit of the Seller or a family member; provided In addition, each Seller, subject to certain limitations, agrees, among other things, to appear at each meeting of the shareholders of the Company and vote all of such Seller’s Lock-up Shares (a) in favor or against any proposal presented to the shareholders in the same manner that the Company’s Board of Directors (the “Board”) recommends shareholders vote on such proposal and (b) in favor of any proposal presented to the shareholders with respect to an action of the Company which the Board has approved, but as to which the Board has not made any recommendation, including in favor of any proposal to adjourn or postpone any meeting of the Company’s shareholders if such adjournment or postponement is conducted in accordance with the terms of the Lock-up and Voting Agreement. To the extent any shares of Company common stock are issued in payment of any Earnout Consideration (as defined in the Share Purchase Agreement) in accordance with the terms of the Share Purchase Agreement, such shares shall be subject to all applicable transfer restrictions, voting and other provisions set forth in the Lock-up and Voting Agreement, with the Effective Date with respect to such shares being the date such shares are issued; provided that, to the extent the portion of the first $1.5 million of Earnout Consideration that is paid in cash represents less than 30% of such Earnout Consideration, the portion of shares of Company common stock issued as Earnout Consideration constituting the difference between the cash percentage paid and 30% of the first $1.5 of Earnout Consideration shall not be considered Lock-Up Shares. The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC 805, “Business Combinations”. Accounting for acquisitions requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date our estimates are inherently uncertain and subject to refinement. Various valuation techniques were used to estimate the fair value of assets acquired and the liabilities assumed which use significant unobservable inputs, or Level 3 inputs as defined by the fair value hierarchy. Using these valuation approaches requires the Company to make significant estimates and assumptions. As of September 30, 2020, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed have been completed , including the validation of the underlying cash flows used to determine the fair value of the identified intangible assets and contingent consideration. The following amounts represent the determination of the fair value of identifiable assets acquired and liabilities assumed from the Acquisition along with measurement period adjustments recorded from the preliminary purchase price allocation to September 30, 2020 (in thousands): Amounts Measurement Amounts Cash at close $ 7,219 $ - $ 7,219 Equity issued at close 465 - 465 Purchase price holdback 800 - 800 Working capital adjustment (295 ) 3 (292 ) Deferred purchase price 1,300 110 1,410 Contingent consideration 555 1,885 2,440 Total purchase price 10,044 1,998 12,042 Cash 30 - 30 Accounts receivable 485 29 514 Inventory 1,218 220 1,438 Intangible assets 4,500 (240 ) 4,260 Other assets 960 7 967 Fixed assets 144 - 144 Accounts payable (129 ) - (129 ) Accrued expenses (425 ) (4 ) (429 ) Deferred revenue (13 ) - (13 ) Other long term liabilities (740 ) - (740 ) Net assets acquired 6,030 12 6,042 Goodwill $ 4,014 $ 1,986 $ 6,000 Goodwill is calculated as the excess of consideration paid over the net assets acquired and represents synergies, assembled workforce, organic growth and other benefits that are expected to arise from integrating Holzworth into our operations. The goodwill recorded in this transaction is expected to be tax deductible. The Company’s post acquisition consolidated goodwill is shown below (in thousands): Holzworth Microlab CommAgility Total Balance as of December 31, 2019 $ - $ 1,351 $ 8,718 $ 10,069 Holzworth acquisition 6,000 - - 6,000 Foreign currency translation - - (188 ) (188 ) Balance as of September 30, 2020 $ 6,000 $ 1,351 $ 8,530 $ 15,881 The following unaudited pro forma information presents the Company’s operations as if the Holzworth acquisition and related financing activities had occurred on January 1, 2019. The pro forma information includes the following adjustments (i) amortization of acquired intangible assets; (ii) interest expense incurred in connection with the Term Loan Facility (described in further detail in Note 4) used to finance the acquisition of Holzworth; and (iii) inclusion of acquisition-related expenses in the earliest period presented. The amounts related to Holzworth included in the following unaudited pro forma information are based on their historical results and, therefore, may not be indicative of the actual results when operated as part of the Company. The pro forma adjustments represent management’s best estimates based on information available at the time the pro forma information was prepared and may differ from the adjustments that may actually have been required. Accordingly, the unaudited pro forma financial information should not be relied upon as being indicative of the results that would have been realized had the Acquisition occurred as of the date indicated or that may be achieved in the future. The following table presents the unaudited pro forma consolidated results of operations for the Company for the three months ended September 30, 2019 and nine months ended September 30, 2020 and 2019 as though the Acquisition had been completed as of January 1, 2019 (in thousands, except per share amounts): Q3 2019 WTG Pro Forma Year to Date September 2020 Pro-forma Year to Date September 2019 Pro-forma Net revenues $ 12,917 $ 31,502 $ 41,689 Net income/(loss) $ (431 ) $ (2,714 ) $ (1,700 ) Earnings per diluted share $ (0.02 ) $ (0.13 ) $ (0.08 ) |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 4 – Debt Debt consists of the following (in thousands): September 30, 2020 Revolver at LIBOR plus margin $ - Term loan at LIBOR plus margin 8,337 Less: Debt issuance costs, net of amortization (877 ) Less: Fair value of warrants, net of amortization (131 ) Paycheck Protection Program loan 2,045 Total Debt 9,374 Less: Debt maturing within one year (84 ) Non-current portion of long term debt $ 9,290 Term loan payments by period (in thousands): Remainder of 2020 $ 21 2021 84 2022 2,130 2023 84 2024 84 Thereafter 7,979 Total $ 10,382 In connection with the Holzworth Acquisition, on February 7, 2020, the Company, as borrower, and its subsidiaries, as guarantors, and Muzinich BDC, Inc., as lender (“Muzinich”), entered into a Term Loan Facility, which provides for a term loan in the principal amount of $8.4 million (the “Initial Term Loan”). All proceeds of the Initial Term Loan were used to fund the cash portion of the purchase price for the Holzworth acquisition. Principal payments on the Initial Term Loan are $21,000 per quarter with a balloon payment at maturity which is February 7, 2025. The term loan bears interest at LIBOR (subject to a floor of 1.0%) plus a margin of 7.25%. The Term Loan Facility includes an upfront fee of 2.50% of the aggregate principal amount of the Initial Term Loan. In connection with the Term Loan Facility, the Company incurred costs of $1.0 million, including the aforementioned 2.5% upfront fee to Muzinich, which were recorded as a reduction of the carrying amount of the debt and are being amortized over the term of the loan. The Company may prepay the Initial Term Loan at any time. Prepayments made prior to (a) February 7, 2022 are subject to a prepayment premium in the amount of 2.0% of the prepaid principal amount and (b) February 7, 2023 are subject to a prepayment premium in the amount of 1.0% of the prepaid principal amount. The Company is required to make prepayments of the Initial Term Loan with the proceeds of certain asset dispositions, insurance recoveries and extraordinary receipts, subject to specified reinvestment rights. The Company is also required to make prepayments of the Initial Term Loan upon the issuance of certain indebtedness and to make an annual prepayment based upon the Company’s excess cash flow. Mandatory prepayments with asset sale, insurance or condemnation proceeds and excess cash flow may be made without penalty. Mandatory prepayments with the proceeds of indebtedness are subject to the same prepayment penalties as are applicable to voluntary prepayments. The Term Loan Facility provides for an additional $11.6 million term loan (the “Second Term Loan”) to be used for a second unannounced acquisition opportunity (the “Additional Acquisition”). There can be no assurance that the Additional Acquisition will be completed. In the event the Additional Acquisition is completed, the Second Term Loan will be made available to the Company on the same terms and conditions as the Initial Term Loan, including interest rate, amortization schedule and financial covenants, subject to the payment of an additional upfront fee and satisfaction of customary conditions to funding. The Term Loan Facility is secured by liens on substantially all of the Company’s and its subsidiaries’ assets including a pledge of the equity interests in the Company’s subsidiaries. The Term Loan 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. In addition, the Company must maintain certain financial covenants typical for this type of arrangement, including a consolidated leverage ratio, a consolidated fixed charge coverage ratio and minimum liquidity of its foreign subsidiaries. The consolidated leverage ratio is defined as the ratio of total consolidated indebtedness, as defined, to consolidated EBITDA, as defined. The required leverage ratio starts at 4.75 to 1.0 for the twelve month periods ended March 31, 2020 and June 30, 2020, and decreases in various increments to 4.0 to 1.0 for the twelve months ended September 30, 2020, 3.75 to 1.0 for the twelve months ended December 31, 2020, 2.75 to 1.0 for the twelve months ended December 31, 2021 and 2.0 to 1.0 for the twelve months ended December 31, 2022 and thereafter. The consolidated fixed charge coverage ratio is the ratio of consolidated EBITDA, as defined, less consolidated capital expenditures and cash income taxes paid to consolidated fixed charges, as defined, calculated on a twelve-month basis. The consolidated fixed charge coverage ratio for the twelve month periods ended March 31, 2020, June 30, 2020 and September 30, 2020 must be 1.35 to 1 and increases in various increments on a quarterly basis to 1.5 to 1.0 for the twelve month period ended December 31, 2020 and 2021, and to 1.75 to 1.0 for the 12 months ending December 31, 2022 and thereafter. Lastly, the Company must maintain minimum liquidity, defined as cash and availability under the UK borrowing base, as defined, of $1.0 million over any trailing four-week period until such time as the foreign subsidiary has positive EBITDA, as defined, for three consecutive quarters and the Holzworth deferred purchase price has been paid in full. The Term Loan Facility also provides for a number of events of default, including, among others, nonpayment, bankruptcy, inaccuracy of representations and warranties, breach of covenant, change in control, entry of final judgement or order, breach of material contracts, and as long as the Company’s consolidated leverage ratio is greater than 1.0 to 1.0 (as calculated in accordance with the terms of the Term Loan Facility), the cessation of service of any two of Tim Whelan, Michael Kandell or Daniel Monopoli as Chief Executive Officer, Chief Financial Officer or Chief Technology Officer, respectively, of the Borrower without a satisfactory replacement within 60 days. Any exercise of remedies by Muzinich is subject to compliance with the intercreditor agreement entered into at the closing of the Term Loan Facility among the Company, Muzinich and Bank of America, N.A., as lender under the Credit Facility referenced below. The disruptions caused by Covid-19 and the significantly decreased and ongoing lack of demand for our digital signal processing cards is reasonably likely to have an impact on our ability to comply with our financial debt covenants which could result in a default under either or both of our Credit Facility and Term Loan for the twelve months ended December 31, 2020. Management is discussing these issues with lenders and believes the risk can be mitigated and potentially managed through appropriate cash flow management, including with respect to potential earn out payments and possible amendments of credit agreements. The Company entered into a Credit Facility with Bank of America, N.A. (the “Lender”) on February 16, 2017 (the “Credit Facility”), which provided for a term loan in the aggregate principal amount of $760,000 (the “Term Loan”) and an asset based revolving loan (the “Revolver”), which is subject to a Borrowing Base Calculation (as defined in the Credit Facility) of up to a maximum availability of $9.0 million (“Revolver Commitment Amount”). The borrowing base is calculated as a percentage of eligible accounts receivable and inventory, as defined, subject to certain caps and limits. The borrowing base is calculated on a monthly basis and interest is calculated at LIBOR plus a margin. The proceeds of the Term Loan and Revolver were used to finance the acquisition of CommAgility in 2017. In connection with the Acquisition, on February 7, 2020, the Company and certain of its subsidiaries (the “Borrowers”), and Bank of America, N.A. entered into Amendment No. 5 (the “Amendment”) to the Credit Facility. By entering into the Amendment, Holzworth, together with CommAgility Limited, became borrowers under the Credit Facility. The obligations of the Borrowers under the Credit Facility are guaranteed by Wireless Telecom Group, Ltd. CommAgility Limited and Wireless Telecom Group, Ltd. are both wholly owned subsidiaries of the Company. The Amendment (a) effected certain modifications to the Credit Facility to accommodate the Acquisition, the Company’s incurrence of the Initial Term Loan and the granting of the related liens and security interests, (b) subject to the satisfaction of certain conditions precedent, made available to CommAgility an asset based revolving loan, subject to a borrowing base calculation applicable to CommAgility’s assets, of up to a maximum availability of $5.0 million (the “UK Revolver Commitment”), (c) reduced the interest rate margin applicable to revolving loans made under the Credit Facility from a range of 2.75% to 3.25% to a range of 2.00% to 2.50%, based on the Borrowers’ Fixed Charge Coverage Ratio (as defined in the Credit Facility) of the most recently completed fiscal quarter, (d) extended the Revolver Termination Date to March 31, 2023 and (e) conditioned the Borrowers’ ability to make certain debt payments under the Term Loan Facility (described above) upon compliance with a liquidity test. In all other material respects, the Credit Facility remains unchanged. Effectiveness of the Amendment was conditioned upon, among other things, the prepayment of the remaining principal balance ($304,000) of the $760,000 term loan made available under the Credit Facility and the payment of a closing fee in the amount of $25,000. The Borrowers satisfied all such conditions on February 7, 2020. In connection with the Amendment the Company incurred costs of $270,000 which are capitalized as other current and non-current assets in the Consolidated Balance Sheets and are being amortized over the term of the revolver. As of September 30, 2020, the interest rate on the Term Loan Facility was 8.25% and the interest rate on the Revolver was 2.25%. As of September 30, 2020, and the date hereof the Company is in compliance with all covenants of Credit Facility and the Term Loan Facility. On May 4, 2020, the Company received $2.0 million pursuant to a loan from Bank of America N.A. under the Paycheck Protection Program (“PPP”) of the 2020 Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) administered by the Small Business Association (“SBA”). The loan has an interest rate of 1% and a term of 24 months. A repayment schedule has not yet been provided by Bank of America. Accordingly, the full amount of the term loan has been shown as due in May 2022. Funds from the loan may only be used for certain purposes, including payroll, benefits, rent and utilities. The CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount of the loan upon application to the SBA for forgiveness by the Company. The loan is evidenced by a promissory note, which contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. The Company may prepay the loan at any time prior to maturity with no prepayment penalties. The Company expects to apply for forgiveness of the loan, however, has elected to account for the loan in accordance with Accounting Standard Codification 470 Debt On May 4, 2020 the Company also entered into Amendment No. 6 to the Credit Facility with Bank of America N.A. and Amendment No. 1 to the Term Loan facility with Muzinich. The amendments allowed the Company to accept the PPP loan and provide that the PPP loan shall not be deemed to constitute “Debt” or “Indebtedness”, as defined, under the Credit Facility and the Term Loan Facility, respectively, as long as the proceeds of the PPP loan are used for allowable purposes under the provisions of the CARES Act and the PPP in order to permit the Company to obtain forgiveness of substantially all of the PPP loan. The amendments to the Credit Facility and Term Loan Facility also contain certain representations and warranties of the Company. Issuance of Stock Warrants Pursuant to the Term Loan Facility, the Company issued a Warrant, dated February 7, 2020 (the “Warrant”), to Muzinich. Under the Warrant, Muzinich has the right to purchase 266,167 shares of common stock of the Company at an exercise price of $1.3923 per share (an aggregate value of approximately $370,588), based on a 90-day volume weighted average price for shares of stock of the Company (the “Warrant Stock”). The Warrant is exercisable for an indefinite period from the date of the Warrant and may be exercised on a cashless basis. The number of shares of common stock deliverable upon exercise of the Warrant is subject to adjustment for subdivision or consolidation of shares and other standard dilutive events. In connection with the issuance of the Warrant, the Company granted Muzinich one demand registration right and piggyback registration rights with respect to the Warrant Stock, subject to certain exceptions. If the Additional Acquisition is consummated, the Company has agreed to issue to Muzinich at the closing of the Additional Acquisition an additional Warrant for the right to purchase 367,564 shares of common stock of the Company at an exercise price of $1.3923 per share (an aggregate value of approximately $511,765), based upon a 90-day volume weighted average price for shares of stock of the Company as of February 7, 2020 (the “Additional Warrant”). The Additional Warrant will contain the same terms and conditions as the Warrant, except that Muzinich will have only one demand registration right, subject to certain exceptions, with respect to shares of common stock of the Company issued under the Warrant and the Additional Warrant. The stock warrants issued to Muzinich are classified as equity. The fair value of the warrants, as calculated using the Black Scholes model as of the issuance date, was approximately $150,000 and was recorded as a reduction to the carrying value of the debt. The significant inputs included in the Black Scholes calculation were a risk free rate of 1.41%, volatility of 48.7% and the stock price on date of grant of $1.34. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | NOTE 5 – Leases The Company’s lease agreements consist of building leases for its operating locations and office equipment leases for printers and copiers with lease terms that range from less than 12 months to 8 years. At inception, the Company determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. The Company’s leases for office equipment such as printers and copiers contain lease and non-lease components (i.e. maintenance). The Company accounts for lease and non-lease components of office equipment as a single lease component. All of the Company’s leases are operating leases and are presented as right of use lease asset, short term lease liability and long term lease liability on the consolidated balance sheets as of September 30, 2020 and December 31, 2019. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s incremental borrowing rate. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the lease term and is included in cost of revenues and general and administrative expenses on the consolidated statement of operations and comprehensive income/(loss). Operating lease costs for the three and nine months ended September 30, 2020 were $296,000 and $791,000, respectively. Operating lease costs for the three and nine months ended September 30, 2019 were $222,000 and $669,000, respectively. The following table presents information about the amount and timing of cash flows arising from the Company’s leases as of September 30, 2020: (in thousands) September 30, 2020 Maturity of Lease Liabilities Remainder of 2020 $ 157 2021 619 2022 637 2023 276 2024 158 Thereafter 231 Total Undiscounted operating lease payments 2,078 Less: imputed interest (213 ) Present value of operating lease liabilities $ 1,865 Balance sheet classification Current lease liabilities $ 527 Long-term lease liabilities 1,338 Total operating lease liabilities $ 1,865 Other information Weighted-average remaining term (months) for operating leases 46 Weighted-average discount rate for operating leases 5.87 % |
Disaggregated Revenue
Disaggregated Revenue | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregated Revenue | NOTE 6 – Disaggregated Revenue We disaggregate our revenue from contracts with customers by product family and geographic location as we believe it best depicts how the nature, timing and uncertainty of our revenue and cash flows are affected by economic factors. For the three and nine months ended September 30, 2020 and 2019, 99% of our revenue is recognized at a point in time. See details in the tables below (in thousands). Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Total net revenues by revenue type Passive and active RF components $ 4,407 $ 5,185 $ 14,527 $ 16,518 Signal generators and components 3,970 1,337 8,598 4,362 Signal analyzers and power meters 1,451 1,323 4,297 3,946 Signal processing hardware 106 2,506 1,471 11,154 Software licenses 443 5 1,157 11 Services 491 456 1,354 1,362 Total net revenue $ 10,868 $ 10,812 $ 31,404 $ 37,353 Total net revenues by geographic areas Americas $ 8,958 $ 7,177 $ 23,598 $ 21,623 EMEA 1,145 3,184 4,793 14,103 APAC 765 451 3,013 1,627 Total net revenue $ 10,868 $ 10,812 $ 31,404 $ 37,353 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 7 – Income Taxes The Company records deferred taxes in accordance with ASC 740, “ Accounting for Income Taxes 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. As of September 30, 2020, the Company’s net deferred tax asset of approximately $4.5 million is net of a valuation allowance of approximately $7.1 million which is associated with the Company’s foreign net operating loss carryforward from an inactive foreign entity, state net operating loss carryforward and a state research and development credit. The Company recorded a tax provision of $352,000 for the nine months ended September 30, 2020 due to estimated taxable income in the U.S. as qualified expenses under the PPP loan are not deductible for tax purposes. In recording the tax provision for the nine months ended September 30, 2020, the Company has assumed that the PPP loan will be forgiven and, therefore, all PPP qualified expenses are being treated as non-deductible. This was offset somewhat by estimated losses as well as research and development deductions in the UK. The effective rate of income tax benefit of 28.3% for the nine months ended September 30, 2019 was higher than the statutory rates in the United States and United Kingdom primarily due to the impact of research and development deductions in the UK. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Loss per share: | |
Earnings (Loss) Per Share | NOTE 8 – Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is calculated by dividing net 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, the weighted average number of unvested restricted shares, the weighted-average number of restricted stock units and the weighted average number of warrants to purchase common stock outstanding for the period. Shares from stock options are included in the diluted earnings per share calculation only when options exercise prices are lower than the average market value of the common shares for the period presented. 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 September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 Weighted average common shares outstanding 21,703,268 20,865,751 21,642,955 20,854,244 Potentially dilutive equity awards 388,366 655,351 295,186 654,239 Weighted average common shares outstanding, assuming dilution 22,091,634 21,521,102 21,938,141 21,508,483 For the three and nine months ended September 30, 2020, the weighted average number of options and warrants to purchase common stock not included in diluted loss per share because the effects are anti-dilutive, or the performance condition was not met was 3,246,167 and 2,924,650, respectively. The estimated maximum number of shares issuable under the terms of the Holzworth earnout, if all paid in shares of common stock, (see Note 3) for the three and nine months ended September 30, 2020 are 1,468,374 and 367,094, respectively. For the three and nine months ended September 30, 2019 the weighted-average number of options to purchase common stock not included in diluted loss per share because the effects are anti-dilutive or the performance condition was not met was 1,445,000 and 1,275,000, respectively. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 9 – Inventories Inventory carrying value is net of inventory reserves of $1.1 million at September 30, 2020 and $1.0 million at December 31, 2019. Inventories consist of (in thousands): September 30, December 31, Raw materials $ 4,911 $ 4,024 Work-in-process 716 406 Finished goods 3,447 2,895 $ 9,074 $ 7,325 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Accrued Expenses And Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 10 – Accrued Expenses and Other Current Liabilities As of September 30, 2020, and December 31, 2019 accrued expenses and other current liabilities consisted of the following: September 30, December 31 Contingent consideration $ 2,440 $ - Deferred purchase price 1,510 - Professional fees 1,047 513 Payroll and related benefits 908 308 Commissions 535 430 Goods received not invoiced 478 346 Bonus 279 126 Sales and use and VAT tax 262 355 Returns reserve 219 199 Warranty Reserve 160 160 Severance 3 102 Other 656 118 Total $ 8,497 $ 2,657 |
Accounting for Stock Based Comp
Accounting for Stock Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Accounting for Stock Based Compensation | NOTE 11 - Accounting for Stock Based Compensation The Company’s results for the three and nine month periods ended September 30, 2020 include $151,000 and $360,000, respectively, related to stock based compensation expense. The Company’s results for the three and nine month periods ended September 30, 2019 include $160,000 and $560,000, respectively, related to stock based compensation expense. Such amounts have been included in the consolidated statement of operations and comprehensive income/(loss) within general and administrative expenses in 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, restricted stock units, 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 million 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 1.6 million 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 September 30, 2020, there are approximately 243,000 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. Outstanding Stock Options On August 4, 2020 the Company granted 150,000 performance-based stock options to our Chief Revenue Officer under the 2012 Plan. On April 7, 2020 the Company granted 970,000 performance-based stock options to various employees under the 2012 Plan. The performance options granted on both August 4 th th Consolidated annualized gross revenues $55.0 million – 25% vesting Consolidated annualized gross revenues $61.5 million – 50% vesting Consolidated annualized gross revenues $69.0 million – 75% vesting Consolidated annualized gross revenues $77.5 million – 100% vesting Consolidated annualized gross revenues include revenue from Holzworth from acquisition date (February 7, 2020) forward, but do not include any additional acquisitions from February 7, 2020 forward. Consolidated annualized gross revenues is calculated on a calendar year basis (i.e. twelve months ended December 31). The grant price of the August 4 th th The grant price of the April 7 th th In accordance with ASC 718 Compensation-Stock Compensation, As of September 30, 2020, there were 1,925,000 service based stock options outstanding and 1,205,000 performance based stock options outstanding. The range of exercise prices of outstanding stock options is $1.20 to $1.92. For the nine months ended September 30, 2020 there were no potentially dilutive common shares from the stock options as all options outstanding had an exercise price higher than the average market value of common shares. Restricted Stock Units On June 4, 2020 the Company granted 25,000 Restricted Stock Units (“RSU”) to each of our six independent board members under the 2012 Plan. Each RSU represents the Company’s obligation to issue one share of the Company’s common stock subject to the RSU award agreement and 2012 Plan. The grant date fair value was $1.18 per share and the RSU’s vest on the day before the first anniversary of the grant date or, if earlier, the effective date of a separation of service due to death or disability, provided the board member has rendered continuous service to the Company as a member of the board of directors from grant date to vesting date. Once vested the RSU will be settled by delivery of shares to the board member no later than 30 days following: 1) the third anniversary of the grant date, 2) separation from service following, or coincident with, a vesting date, or 3) a change in control. As of September 30, 2020, there were 272,917 vested RSU’s and 150,000 unvested RSU’s. Unvested Restricted Share Awards On August 4 th As of September 30, 2020, there were 238,170 unvested restricted share awards outstanding. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 12 – SEGMENT INFORMATION In June 2020, as a result of certain internal reorganizations completed over the prior six to nine months, the Company concluded it now operates as one reportable segment in accordance with ASC 280 Segment Reporting. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 13 – COMMITMENTS AND CONTINGENCIES Legal Proceeding As previously disclosed, on June 5, 2019 Harris Corporation (“Harris”) filed a request for arbitration before the American Arbitration Association in accordance with the terms of an executed purchase order, statement of work and software license agreement (collectively referred to as “Agreements”) with CommAgility entered into in 2014. Harris claims that CommAgility breached the Agreements and infringed Harris’ copyrighted “Work Product” (as defined in the Agreements) by offering for sale, marketing, and promoting techniques, capabilities, products and services that incorporate Work Product owned by Harris. In its arbitration demand, Harris claims that CommAgility has caused Harris significant monetary damages, the sum of which cannot be determined until such time as discovery has been conducted but is estimated by Harris to be less than $250,000. Harris did not include a request for monetary damages in its Statement of Claim, which was filed with the arbitration panel on May 22, 2020. Harris is seeking a declaration of ownership and an injunction against CommAgility’s use of the Work Product which includes rights to certain technology used for air-to-ground communications. The Company believes the claims are without merit and intends to defend all of the claims vigorously. The Company has not accrued any amounts in respect of this matter and cannot estimate the possible loss, if any, that the Company may incur with respect to it. The arbitration proceedings have been suspended by consent as the parties engage in settlement discussions. The ultimate outcome of this matter is unknown but, in the opinion of management, we do not believe this proceeding will have a material adverse effect upon our financial condition, cash flows or future results of operations. Legal expenses incurred in connection with the arbitration from August 2019 are covered by our professional indemnity insurance policy. There have been no other material changes in our commitments and contingencies and risks and uncertainties as of September 30, 2020 from that previously disclosed in our annual report on Form 10-K for the year ended December 31, 2019. |
Summary of Significant Accoun_2
Summary of Significant Accounting Principles and Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Preparation | Basis of Presentation and Preparation Wireless Telecom Group, Inc., a New Jersey corporation, together with its subsidiaries (“we”, “us”, “our” or the “Company”), specializes in the design and manufacture of advanced radio frequency and microwave devices which enable the development, testing and deployment of wireless technology. The Company provides unique, highly customized and configured solutions which drive innovation across a wide range of traditional and emerging wireless technologies. In 2019, Wireless Telecom Group was comprised of four brands – Microlab, Boonton, Noisecom, and CommAgility. Since our acquisition of Holzworth Instrumentation, Inc. (“Holzworth”) in February of 2020 (see Note 3), we are also offering the Holzworth brand. Our customers include wireless carriers, defense contractors, military and government agencies, satellite communication companies, network equipment manufacturers, tower companies, semiconductor device manufacturers, system integrators and medical device manufacturers. Our products include components, modules, systems and instruments used across the lifecycle of wireless connectivity and communication development, deployment and testing. Our customers use these products in relation to commercial infrastructure development, the expansion and upgrade of distributed antenna systems, deployment of small cell technology, use of medical devices and private long-term evolution (“LTE”) networks. In addition, the Company’s products are used in the development and testing of satellite communication systems, radar systems, semiconductor devices, automotive electronics and avionics. The consolidated balance sheet as of September 30, 2020, the consolidated statements of operations and comprehensive income/(loss) for the three and nine months ended September 30, 2020 and 2019, the consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019 and the consolidated statement of shareholders’ equity for the three and nine months ended September 30, 2020 and 2019 have been prepared by the Company without audit. The 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 LLC (“Microlab”), Holzworth Instrumentation, Inc. (“Holzworth”), Wireless Telecommunications Ltd. and CommAgility Limited (“CommAgility”). All intercompany transactions and balances have been eliminated in consolidation. In June of 2020 the Company completed an internal reorganization and now presents its operations as one reportable segment. Prior to the second quarter of 2020 the Company presented its operations in three reportable segments. The Company identifies segments in accordance with ASC 280 Segment Reporting It is suggested that these interim consolidated financial statements be read in conjunction with the audited consolidated financial statements, and the notes thereto, included in the Company’s latest annual report (Form 10-K). The Company’s fiscal periods are based on the calendar year. Except as otherwise specified, references to “third quarter(s)” or “three months” indicate the Company’s fiscal periods ending September 30, 2020 and September 30, 2019, and references to “year-end” indicate the fiscal year ended December 31, 2019. |
Consolidated Financial Statements | Consolidated Financial Statements In the opinion of management, the accompanying 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 consolidated financial statements included in its annual report on Form 10-K for the year ended December 31, 2019. 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 and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020. |
Critical Accounting Estimates | Critical Accounting Estimates The preparation of our consolidated financial statements requires the Company to make estimates and judgments that affect the reported amount 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. We base our assumptions, judgements and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. At least quarterly, we evaluate our assumptions, judgments and estimates, and make changes as deemed necessary. Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. As noted in our Form 10-K for the fiscal year ended December 31, 2019, due to declining demand of our digital signal processing hardware cards we performed a quantitative assessment of the CommAgility goodwill as of the fourth fiscal quarter of 2019. Our quantitative assessment did not identify any goodwill impairment. Furthermore, the Company applied a hypothetical 10% decrease to the fair value of the CommAgility reporting unit and compared those values to the carrying values which also did not result in a goodwill impairment. The Covid-19 pandemic has had an impact on our financial results for the three and nine months ended September 30, 2020. However, we believe the markets we serve and the industries in which we operate will recover in the long term. Accordingly, we are not aware of any specific event or circumstance related to the COVID-19 pandemic that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of November 13, 2020, the date of issuance of this Quarterly Report on Form 10-Q. It is, however, reasonably possible that changes in judgements, assumptions and estimates we made in assessing the fair value of goodwill could cause us to consider some portion of the remaining CommAgility goodwill to become impaired because of the evolving disruptions and uncertainties caused by Covid-19, as described below. Although disruptions related to the Covid-19 pandemic did not impact our estimates and judgements as of the date of this report, it is reasonably possible that the expected ongoing lack of sales of digital signal processing hardware cards and significant uncertainty around other sales, cash collections, and costs could impact our mediation efforts in the fourth quarter of the fiscal year and beyond. These uncertainties include the duration and severity of the pandemic and containment measures and how our compliance with these measures will impact our day-to-day operations as well as that of our key customers, suppliers (including contract manufacturers) and other counterparties. Our accounting estimates and judgements may change as new events occur and additional information becomes available or is obtained. Furthermore, actual results could differ materially from our estimates as of the date of issuance of this Quarterly Report on Form 10-Q under different assumptions or conditions. For further information about our critical accounting estimates, see the discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Critical Accounting Policies” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. |
Concentration Risk | Concentration Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The majority of the Company’s cash balance is held outside of the United States. 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 September 30, 2020, one customer accounted for 13% of the Company’s consolidated revenues. For the nine months ended September 30, 2020 no one customer accounted for greater than 10% of the Company’s consolidated revenues. For the three and nine months ended September 30, 2019, one customer accounted for approximately 19% and 29% of the Company’s consolidated revenues, respectively. No customer accounted for more than 10% of consolidated accounts receivable as of September 30, 2020. At December 31, 2019, one customer accounted for 13% of consolidated accounts receivable. |
Fair Value of Financial Instruments | 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. We believe the carrying value of the loan obtained under the Paycheck Protection Program approximates fair value due to the expected short term nature of the loan. |
Contingent Consideration | Contingent Consideration Under the terms of the Holzworth Share Purchase Agreement (See Note 3) the Company may be required to pay additional purchase price in the form of deferred purchase price payments and an earnout if certain financial targets are achieved for the years ending December 31, 2020 and December 31, 2021. See Note 3 for a discussion of the first deferred purchase price payment related to financial targets set for 2019. As of September 30, 2020, the Company estimated the fair value of the deferred purchase price and earnout remaining to be paid related to the 2020 and 2021 financial targets to be $660,000 and $2.4 million, respectively. The earnout may be paid in cash or common stock at the Company’s option. 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 estimated gross revenues and Adjusted EBITDA, as defined in the Holzworth Share Purchase Agreement, and scenarios for the earnout periods for which probabilities are assigned to each scenario to arrive at a single estimated outcome. 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 Holzworth or changes in the future, may result in different estimated amounts. The contingent consideration liability is considered a Level 3 fair value measurement. |
Subsequent Events | Subsequent Events There were no subsequent events or transactions requiring recognition or disclosure in the consolidated financial statements, and the notes thereto, through the date the financial statements were issued. |
Acquisition of Holzworth (Table
Acquisition of Holzworth (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Business Consideration | The following amounts represent the determination of the fair value of identifiable assets acquired and liabilities assumed from the Acquisition along with measurement period adjustments recorded from the preliminary purchase price allocation to September 30, 2020 (in thousands): Amounts Measurement Amounts Cash at close $ 7,219 $ - $ 7,219 Equity issued at close 465 - 465 Purchase price holdback 800 - 800 Working capital adjustment (295 ) 3 (292 ) Deferred purchase price 1,300 110 1,410 Contingent consideration 555 1,885 2,440 Total purchase price 10,044 1,998 12,042 Cash 30 - 30 Accounts receivable 485 29 514 Inventory 1,218 220 1,438 Intangible assets 4,500 (240 ) 4,260 Other assets 960 7 967 Fixed assets 144 - 144 Accounts payable (129 ) - (129 ) Accrued expenses (425 ) (4 ) (429 ) Deferred revenue (13 ) - (13 ) Other long term liabilities (740 ) - (740 ) Net assets acquired 6,030 12 6,042 Goodwill $ 4,014 $ 1,986 $ 6,000 |
Schedule of Post Acquisition Consolidated Goodwill | The Company’s post acquisition consolidated goodwill is shown below (in thousands): Holzworth Microlab CommAgility Total Balance as of December 31, 2019 $ - $ 1,351 $ 8,718 $ 10,069 Holzworth acquisition 6,000 - - 6,000 Foreign currency translation - - (188 ) (188 ) Balance as of September 30, 2020 $ 6,000 $ 1,351 $ 8,530 $ 15,881 |
Schedule of Pro-Forma for Operation | The following table presents the unaudited pro forma consolidated results of operations for the Company for the three months ended September 30, 2019 and nine months ended September 30, 2020 and 2019 as though the Acquisition had been completed as of January 1, 2019 (in thousands, except per share amounts): Q3 2019 WTG Pro Forma Year to Date September 2020 Pro-forma Year to Date September 2019 Pro-forma Net revenues $ 12,917 $ 31,502 $ 41,689 Net income/(loss) $ (431 ) $ (2,714 ) $ (1,700 ) Earnings per diluted share $ (0.02 ) $ (0.13 ) $ (0.08 ) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt consists of the following (in thousands): September 30, 2020 Revolver at LIBOR plus margin $ - Term loan at LIBOR plus margin 8,337 Less: Debt issuance costs, net of amortization (877 ) Less: Fair value of warrants, net of amortization (131 ) Paycheck Protection Program loan 2,045 Total Debt 9,374 Less: Debt maturing within one year (84 ) Non-current portion of long term debt $ 9,290 |
Schedule of Term Loan Payments | Term loan payments by period (in thousands): Remainder of 2020 $ 21 2021 84 2022 2,130 2023 84 2024 84 Thereafter 7,979 Total $ 10,382 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of Maturity of Operating Lease Liabilities | The following table presents information about the amount and timing of cash flows arising from the Company’s leases as of September 30, 2020: (in thousands) September 30, 2020 Maturity of Lease Liabilities Remainder of 2020 $ 157 2021 619 2022 637 2023 276 2024 158 Thereafter 231 Total Undiscounted operating lease payments 2,078 Less: imputed interest (213 ) Present value of operating lease liabilities $ 1,865 Balance sheet classification Current lease liabilities $ 527 Long-term lease liabilities 1,338 Total operating lease liabilities $ 1,865 Other information Weighted-average remaining term (months) for operating leases 46 Weighted-average discount rate for operating leases 5.87 % |
Disaggregated Revenue (Tables)
Disaggregated Revenue (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregated Revenue | For the three and nine months ended September 30, 2020 and 2019, 99% of our revenue is recognized at a point in time. See details in the tables below (in thousands). Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Total net revenues by revenue type Passive and active RF components $ 4,407 $ 5,185 $ 14,527 $ 16,518 Signal generators and components 3,970 1,337 8,598 4,362 Signal analyzers and power meters 1,451 1,323 4,297 3,946 Signal processing hardware 106 2,506 1,471 11,154 Software licenses 443 5 1,157 11 Services 491 456 1,354 1,362 Total net revenue $ 10,868 $ 10,812 $ 31,404 $ 37,353 Total net revenues by geographic areas Americas $ 8,958 $ 7,177 $ 23,598 $ 21,623 EMEA 1,145 3,184 4,793 14,103 APAC 765 451 3,013 1,627 Total net revenue $ 10,868 $ 10,812 $ 31,404 $ 37,353 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Loss per share: | |
Schedule of Weighted Average Common Shares Outstanding | For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 Weighted average common shares outstanding 21,703,268 20,865,751 21,642,955 20,854,244 Potentially dilutive equity awards 388,366 655,351 295,186 654,239 Weighted average common shares outstanding, assuming dilution 22,091,634 21,521,102 21,938,141 21,508,483 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories consist of (in thousands): September 30, December 31, Raw materials $ 4,911 $ 4,024 Work-in-process 716 406 Finished goods 3,447 2,895 $ 9,074 $ 7,325 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accrued Expenses And Other Current Liabilities | |
Schedule of Accrued Expenses and Other Current Liabilities | As of September 30, 2020, and December 31, 2019 accrued expenses and other current liabilities consisted of the following: September 30, December 31 Contingent consideration $ 2,440 $ - Deferred purchase price 1,510 - Professional fees 1,047 513 Payroll and related benefits 908 308 Commissions 535 430 Goods received not invoiced 478 346 Bonus 279 126 Sales and use and VAT tax 262 355 Returns reserve 219 199 Warranty Reserve 160 160 Severance 3 102 Other 656 118 Total $ 8,497 $ 2,657 |
Summary of Significant Accoun_3
Summary of Significant Accounting Principles and Policies (Details Narrative) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020USD ($)Integer | Sep. 30, 2019 | Dec. 31, 2019 | |
Number of reportable segments | Integer | 1 | ||||
Estimated fair value of deferred purchase price and earn-out for 2020 financial targets | $ 660 | ||||
Estimated fair value of deferred purchase price and earn-out for 2021 financial targets | $ 2,400 | ||||
One Customer [Member] | Revenues [Member] | |||||
Concentration credit risk, percentage | 13.00% | 19.00% | 29.00% | ||
One Customer [Member] | Accounts Receivable [Member] | |||||
Concentration credit risk, percentage | 13.00% | ||||
No One Customer [Member] | Revenues [Member] | |||||
Concentration credit risk, percentage | 10.00% | ||||
No Customer [Member] | Accounts Receivable [Member] | |||||
Concentration credit risk, percentage | 10.00% |
Acquisition of Holzworth (Detai
Acquisition of Holzworth (Details Narrative) - USD ($) $ in Thousands | Feb. 07, 2020 | Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2020 | Oct. 01, 2020 | Jul. 02, 2020 | Dec. 31, 2019 |
Net revenues | $ 10,868 | $ 10,812 | $ 31,404 | $ 37,353 | ||||||
Operating income | (348) | $ (678) | (1,764) | $ (930) | ||||||
Stock issued during period for acquisition | $ 465 | |||||||||
Deferred purchase price payment | 1,510 | 1,510 | ||||||||
Holzworth Instrumentation Inc [Member] | ||||||||||
Cash consideration | $ 10,044 | 12,042 | ||||||||
Working capital adjustment | 295 | 292 | ||||||||
Aggregate earnout payments | 555 | 2,440 | ||||||||
Share Purchase Agreement [Member] | Holzworth Instrumentation Inc [Member] | ||||||||||
Net revenues | 2,800 | 5,700 | ||||||||
Operating income | 744 | 1,200 | ||||||||
Incidental transaction expenses paid | $ 15 | 243 | ||||||||
Expected deferred purchase price payment | $ 1,500 | |||||||||
Working capital adjustment | (292) | |||||||||
Deferred purchase price payment | $ 250 | $ 208 | ||||||||
Deferred purchase price payment, description | The first earnout payment will be equal to two times the amount, if any, by which Holzworth's EBITDA for the fiscal year ending December 31, 2020 exceeds $1.25 million. The second earnout payment will be equal to two times the amount, if any, by which Holzworth's EBITDA for the fiscal year ending December 31, 2021 exceeds the greater of $1.25 million or Holzworth's EBITDA for the prior fiscal year | |||||||||
Share Purchase Agreement [Member] | Holzworth Instrumentation Inc [Member] | March 31, 2020 [Member] | ||||||||||
Expected deferred purchase price payment | $ 250 | |||||||||
Working capital adjustment | (250) | |||||||||
Share Purchase Agreement [Member] | Holzworth Instrumentation Inc [Member] | June 30, 2020 [Member] | ||||||||||
Expected deferred purchase price payment | 250 | |||||||||
Working capital adjustment | $ (42) | |||||||||
Share Purchase Agreement [Member] | Holzworth Instrumentation Inc [Member] | September 30, 2020 [Member] | ||||||||||
Expected deferred purchase price payment | 250 | |||||||||
Share Purchase Agreement [Member] | Holzworth Instrumentation Inc [Member] | March 31, 2021 [Member] | ||||||||||
Expected deferred purchase price payment | 750 | |||||||||
Share Purchase Agreement [Member] | Holzworth Instrumentation Inc [Member] | Promissory Note [Member] | ||||||||||
Stock issued during period for acquisition | $ 465 | |||||||||
Stock issued during period for acquisition, shares | 347,319 | |||||||||
Cash consideration | $ 8,000 | |||||||||
Indemnification holdback | 800 | |||||||||
Share Purchase Agreement [Member] | Holzworth Instrumentation Inc [Member] | Maximum [Member] | ||||||||||
Aggregate purchase price for the Acquisition | 17,000 | |||||||||
Aggregate earnout payments | 250 | |||||||||
Share Purchase Agreement [Member] | Holzworth Instrumentation Inc [Member] | Minimum [Member] | ||||||||||
Amount of EBITDA target to receive full deferred purchase price payments | $ 2,503 | |||||||||
Share Purchase Agreement [Member] | Holzworth Instrumentation Inc [Member] | Minimum [Member] | Forecast [Member] | ||||||||||
Amount of EBITDA target to receive full deferred purchase price payments | $ 200 | |||||||||
Lock-up and Voting Agreement [Member] | Holzworth Instrumentation Inc [Member] | ||||||||||
Aggregate earnout payments | $ 1,500 | |||||||||
Percentage for earnout consideration | 30.00% | |||||||||
Earnout consideration, description | To the extent any shares of Company common stock are issued in payment of any Earnout Consideration (as defined in the Share Purchase Agreement) in accordance with the terms of the Share Purchase Agreement, such shares shall be subject to all applicable transfer restrictions, voting and other provisions set forth in the Lock-up and Voting Agreement, with the Effective Date with respect to such shares being the date such shares were issued; provided that, to the extent the portion of the first $1.5 million of Earnout Consideration that is paid in cash represents less than 30% of such Earnout Consideration, the portion of shares of Company common stock issued as Earnout Consideration constituting the difference between the cash percentage paid and 30% of the first $1.5 of Earnout Consideration shall not be considered Lock-Up Shares. |
Acquisition of Holzworth - Sche
Acquisition of Holzworth - Schedule of Business Consideration (Details) - USD ($) $ in Thousands | Feb. 07, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill | $ 15,881 | $ 15,881 | $ 10,069 | |
Holzworth Instrumentation Inc [Member] | ||||
Cash at close | $ 7,219 | 7,219 | ||
Equity issued at close | 465 | 465 | ||
Purchase price holdback | 800 | 800 | ||
Working capital adjustment | (295) | (292) | ||
Deferred purchase price | 1,300 | 1,410 | ||
Contingent consideration | 555 | 2,440 | ||
Total purchase price | 10,044 | 12,042 | ||
Cash | 30 | 30 | 30 | |
Accounts receivable | 485 | 514 | 514 | |
Inventory | 1,218 | 1,438 | 1,438 | |
Intangible assets | 4,500 | 4,260 | 4,260 | |
Other assets | 960 | 967 | 967 | |
Fixed assets | 144 | 144 | 144 | |
Accounts payable | (129) | (129) | (129) | |
Accrued expenses | (425) | (429) | (429) | |
Deferred revenue | (13) | (13) | (13) | |
Other long term liabilities | (740) | (740) | (740) | |
Net assets acquired | 6,030 | 6,042 | 6,042 | |
Goodwill | $ 4,014 | 6,000 | 6,000 | |
Holzworth Instrumentation Inc [Member] | Adjustment [Member] | ||||
Cash at close | ||||
Equity issued at close | ||||
Purchase price holdback | ||||
Working capital adjustment | 3 | |||
Deferred purchase price | 110 | |||
Contingent consideration | 1,885 | |||
Total purchase price | 1,998 | |||
Cash | ||||
Accounts receivable | 29 | 29 | ||
Inventory | 220 | 220 | ||
Intangible assets | (240) | (240) | ||
Other assets | 7 | 7 | ||
Fixed assets | ||||
Accounts payable | ||||
Accrued expenses | (4) | (4) | ||
Deferred revenue | ||||
Other long term liabilities | ||||
Net assets acquired | 12 | 12 | ||
Goodwill | $ 1,986 | $ 1,986 |
Acquisition of Holzworth - Sc_2
Acquisition of Holzworth - Schedule of Post Acquisition Consolidated Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Opening balance as of December 31, 2019 | $ 10,069 |
Holzworth acquisition | 6,000 |
Foreign currency translation | (188) |
Closing balance as of September 30, 2020 | 15,881 |
Holzworth Instrumentation Inc [Member] | |
Opening balance as of December 31, 2019 | |
Holzworth acquisition | 6,000 |
Foreign currency translation | |
Closing balance as of September 30, 2020 | 6,000 |
Microlab/FXR LLC [Member] | |
Opening balance as of December 31, 2019 | 1,351 |
Holzworth acquisition | |
Foreign currency translation | |
Closing balance as of September 30, 2020 | 1,351 |
CommAgility Limited [Member] | |
Opening balance as of December 31, 2019 | 8,718 |
Holzworth acquisition | |
Foreign currency translation | (188) |
Closing balance as of September 30, 2020 | $ 8,530 |
Acquisition of Holzworth - Sc_3
Acquisition of Holzworth - Schedule of Pro-Forma for Operation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net revenues | $ 31,502 | $ 41,689 | |
Net income/(loss) | $ (2,714) | $ (1,700) | |
Earnings per diluted share | $ (0.13) | $ (0.08) | |
WTG Pro Forma [Member] | |||
Net revenues | $ 12,917 | ||
Net income/(loss) | $ (431) | ||
Earnings per diluted share | $ (0.02) |
Debt (Details Narrative)
Debt (Details Narrative) $ / shares in Units, $ in Thousands | May 04, 2020 | Feb. 07, 2020USD ($)Integer$ / sharesshares | Sep. 30, 2020 | Feb. 16, 2017USD ($) |
Paycheck Protection Program Loan [Member] | ||||
Loan description | On May 4, 2020, the Company received $2.0 million pursuant to a loan from Bank of America N.A. under the Paycheck Protection Program ("PPP") of the 2020 Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") administered by the Small Business Association ("SBA"). The loan has an interest rate of 1% and a term of 24 months. A repayment schedule has not yet been provided by Bank of America. Accordingly, the full amount of the term loan has been shown as due in May 2022. | |||
Muzinich BDC, Inc [Member] | Warrant [Member] | ||||
Fair value of warrants | $ 150 | |||
Muzinich BDC, Inc [Member] | Warrant [Member] | Risk Free Interest Rate [Member] | ||||
Warrants and rights outstanding, measurement input | Integer | 1.41 | |||
Muzinich BDC, Inc [Member] | Warrant [Member] | Volatility [Member] | ||||
Warrants and rights outstanding, measurement input | Integer | 48.7 | |||
Muzinich BDC, Inc [Member] | Warrant [Member] | Stock Price [Member] | ||||
Warrants and rights outstanding, stock price | $ / shares | $ 1.34 | |||
Muzinich BDC, Inc [Member] | Initial Term Loan Facility [Member] | ||||
Debt instrument, face amount | $ 8,400 | |||
Principal payment | $ 21 | |||
Debt instrument, maturity date | Feb. 7, 2025 | |||
Percentage for upfront fee | 2.50% | |||
Debt incurred costs | $ 1,000 | |||
Muzinich BDC, Inc [Member] | Initial Term Loan Facility [Member] | Warrant [Member] | ||||
Warrants to purchase common stock | shares | 266,167 | |||
Warrants exercise price | $ / shares | $ 1.3923 | |||
Warrants to purchase common stock, value | $ 370,588 | |||
Warrants volume weighted average price, description | 90-day volume weighted average price for shares of stock of the Company | |||
Muzinich BDC, Inc [Member] | Initial Term Loan Facility [Member] | February 7, 2022 [Member] | ||||
Prepayment premium, rate | 2.00% | |||
Muzinich BDC, Inc [Member] | Initial Term Loan Facility [Member] | February 7, 2023 [Member] | ||||
Prepayment premium, rate | 1.00% | |||
Muzinich BDC, Inc [Member] | Initial Term Loan Facility [Member] | LIBOR [Member] | ||||
Loan bear interest at variable rate | 7.25% | |||
Loan bear interest at variable rate, description | The term loan bears interest at LIBOR (subject to a floor of 1.0%) plus a margin of 7.25%. | |||
Muzinich BDC, Inc [Member] | Second Term Loan Facility [Member] | ||||
Debt instrument, face amount | $ 11,600 | |||
Muzinich BDC, Inc [Member] | Second Term Loan Facility [Member] | Additional Warrant [Member] | ||||
Warrants to purchase common stock | shares | 367,564 | |||
Warrants exercise price | $ / shares | $ 1.3923 | |||
Warrants to purchase common stock, value | $ 511,765 | |||
Warrants volume weighted average price, description | 90-day volume weighted average price for shares of stock of the Company | |||
Muzinich BDC, Inc [Member] | Term Loan Facility [Member] | ||||
Loan covenant, description | The required leverage ratio starts at 4.75 to 1.0 for the twelve month periods ended March 31, 2020 and June 30, 2020, and decreases in various increments to 4.0 to 1.0 for the twelve months ended September 30, 2020, 3.75 to 1.0 for the twelve months ended December 31, 2020, 2.75 to 1.0 for the twelve months ended December 31, 2021 and 2.0 to 1.0 for the twelve months ended December 31, 2022 and thereafter. The consolidated fixed charge coverage ratio is the ratio of consolidated EBITDA, as defined, less consolidated capital expenditures and cash income taxes paid to consolidated fixed charges, as defined, calculated on a twelve-month basis. The consolidated fixed charge coverage ratio for the twelve month periods ended March 31, 2020, June 30, 2020 and September 30, 2020 must be 1.35 to 1 and increases in various increments on a quarterly basis to 1.5 to 1.0 for the twelve month period ended December 31, 2020 and 2021, and to 1.75 to 1.0 for the 12 months ending December 31, 2022 and thereafter. Lastly, the Company must maintain minimum liquidity, defined as cash and availability under the UK borrowing base, as defined, of $1.0 million over any trailing four-week period until such time as the foreign subsidiary has positive EBITDA, as defined, for three consecutive quarters and the Holzworth deferred purchase price has been paid in full. The Term Loan Facility also provides for a number of events of default, including, among others, nonpayment, bankruptcy, inaccuracy of representations and warranties, breach of covenant, change in control, entry of final judgement or order, breach of material contracts, and as long as the Company's consolidated leverage ratio is greater than 1.0 to 1.0 (as calculated in accordance with the terms of the Term Loan Facility), the cessation of service of any two of Tim Whelan, Michael Kandell or Daniel Monopoli as Chief Executive Officer, Chief Financial Officer or Chief Technology Officer, respectively, of the Borrower without a satisfactory replacement within 60 days. | |||
Muzinich BDC, Inc [Member] | Term Loan [Member] | ||||
Debt instrument interest rate | 8.25% | |||
Bank of America, N.A [Member] | Revolving Loan [Member] | ||||
Line of credit facility, maximum borrowing capacity | $ 9,000 | |||
Line of credit, rate | 2.25% | |||
Bank of America, N.A [Member] | Revolving Loan [Member] | Amendment No. 5 [Member] | ||||
Debt incurred costs | $ 270 | |||
Line of credit facility, maximum borrowing capacity | $ 5,000 | |||
Borrowers' fixed charge coverage ratio, description | Reduced the interest rate margin applicable to revolving loans made under the Credit Facility from a range of 2.75% to 3.25% to a range of 2.00% to 2.50%, based on the Borrowers' Fixed Charge Coverage Ratio | |||
Line of credit facility, maturity date | Mar. 31, 2023 | |||
Debt instrument closing fees | $ 25 | |||
Bank of America, N.A [Member] | Term Loan [Member] | ||||
Debt instrument, face amount | $ 760 | |||
Line of credit remaining balance | 304 | |||
Line of credit | $ 760 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Less: Debt issuance costs, net of amortization | $ (877) | |
Less: Fair value of warrants, net of amortization | (131) | |
Paycheck Protection Program loan | 2,045 | |
Total Debt | 9,374 | |
Less: Debt maturing within one year | (84) | |
Non-current portion of long term debt | 9,290 | |
Revolving Loan [Member] | ||
Total Debt | ||
Term Loan [Member] | ||
Total Debt | $ 8,337 |
Debt - Schedule of Term Loan Pa
Debt - Schedule of Term Loan Payments (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2020 | $ 21 |
2021 | 84 |
2022 | 2,130 |
2023 | 84 |
2024 | 84 |
Thereafter | 7,979 |
Total | $ 10,382 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating lease costs | $ 296 | $ 222 | $ 791 | $ 669 |
Leases - Schedule of Maturity o
Leases - Schedule of Maturity of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Remainder of 2020 | $ 157 | |
2021 | 619 | |
2022 | 637 | |
2023 | 276 | |
2024 | 158 | |
Thereafter | 231 | |
Total Undiscounted operating lease payments | 2,078 | |
Less: imputed interest | (213) | |
Present value of operating lease liabilities | 1,865 | |
Current lease liabilities | 527 | $ 440 |
Long-term lease liabilities | 1,338 | $ 1,018 |
Total operating lease liabilities | $ 1,865 | |
Weighted-average remaining term (months) for operating leases | 46 months | |
Weighted-average discount rate for operating leases | 5.87% |
Disaggregated Revenue (Details
Disaggregated Revenue (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Transferred at Point in Time [Member] | ||||
Revenue recognized at a point in time (shipment), percentage | 99.00% | 99.00% | 99.00% | 99.00% |
Disaggregated Revenue - Schedul
Disaggregated Revenue - Schedule of Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Total Net Revenue | $ 10,868 | $ 10,812 | $ 31,404 | $ 37,353 |
Americas [Member] | ||||
Total Net Revenue | 8,958 | 7,177 | 23,598 | 21,623 |
EMEA [Member] | ||||
Total Net Revenue | 1,145 | 3,184 | 4,793 | 14,103 |
APAC [Member] | ||||
Total Net Revenue | 765 | 451 | 3,013 | 1,627 |
Passive and Active RF Components [Member] | ||||
Total Net Revenue | 4,407 | 5,185 | 14,527 | 16,518 |
Signal Generators and Components [Member] | ||||
Total Net Revenue | 3,970 | 1,337 | 8,598 | 4,362 |
Signal Analyzers and Power Meters [Member] | ||||
Total Net Revenue | 1,451 | 1,323 | 4,297 | 3,946 |
Signal Processing Hardware [Member] | ||||
Total Net Revenue | 106 | 2,506 | 1,471 | 11,154 |
Software Licenses [Member] | ||||
Total Net Revenue | 443 | 5 | 1,157 | 11 |
Services [Member] | ||||
Total Net Revenue | $ 491 | $ 456 | $ 1,354 | $ 1,362 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Net deferred tax asset | $ 4,500 | $ 4,500 | ||
Net of a valuation allowance | 7,100 | 7,100 | ||
Effective rate of income tax benefit | 28.30% | |||
Tax provision | $ 128 | $ (169) | $ 352 | $ (256) |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details Narrative) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive securities excluded from computation of earnings, amount | 3,246,167 | 1,445,000 | 2,924,650 | 1,275,000 |
Holzworth Instrumentation Inc [Member] | ||||
Weighted-average number of shares issuable under the terms of earnout | 1,468,374 | 367,094 |
Earnings (Loss) Per Share - Sch
Earnings (Loss) Per Share - Schedule of Weighted Average Common Shares Outstanding (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Loss per share: | ||||
Weighted average common shares outstanding | 21,703,000 | 20,866,000 | 21,643,000 | 20,854,000 |
Potentially dilutive equity awards | 388,366 | 655,351 | 295,186 | 654,239 |
Weighted average common shares outstanding, assuming dilution | 22,091,634 | 21,521,102 | 21,938,141 | 21,508,483 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Inventory Valuation Reserves | $ 1,082 | $ 969 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 4,911 | $ 4,024 |
Work-in-process | 716 | 406 |
Finished goods | 3,447 | 2,895 |
Inventory net | $ 9,074 | $ 7,325 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Accrued Expenses And Other Current Liabilities | ||
Contingent Consideration | $ 2,440 | |
Deferred Purchase Price | 1,510 | |
Professional fees | 1,047 | 513 |
Payroll and related benefits | 908 | 308 |
Commissions | 535 | 430 |
Goods received not invoiced | 478 | 346 |
Bonus | 279 | 126 |
Sales and use and VAT tax | 262 | 355 |
Returns Reserve | 219 | 199 |
Warranty Reserve | 160 | 160 |
Severance | 3 | 102 |
Other | 656 | 118 |
Total | $ 8,497 | $ 2,657 |
Accounting for Stock Based Co_2
Accounting for Stock Based Compensation (Details Narrative) - USD ($) | Aug. 04, 2020 | Jun. 04, 2020 | Apr. 07, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2014 | Dec. 31, 2012 |
Stock based compensation expense | $ 151,000 | $ 160,000 | $ 360,000 | $ 560,000 | |||||
Net revenues | 10,868,000 | $ 10,812,000 | $ 31,404,000 | $ 37,353,000 | |||||
Share-based payment arrangement, option, exercise price range, lower range limit | $ 1.20 | ||||||||
Share-based payment arrangement, option, exercise price range, upper range limit | $ 1.92 | ||||||||
Performance Based Stock Option [Member] | |||||||||
Share based compensation grant price per share | $ 1.20 | $ 1.50 | |||||||
Option term | 10 years | 10 years | |||||||
Exercise price | $ 1.20 | $ 1.50 | |||||||
Risk Free Interest Rate | 0.19% | 0.48% | |||||||
Expected Volatility | 52.06% | 50.85% | |||||||
Expected Dividend Yield | 0.00% | 0.00% | |||||||
Performance Based Stock Option [Member] | General and Administrative Expense [Member] | |||||||||
Stock options expenses | $ 38,000 | $ 68,000 | |||||||
Service Based Stock Options [Member] | |||||||||
Stock options outstanding, shares | 1,925,000 | 1,925,000 | |||||||
Performance Based Stock Options [Member] | |||||||||
Stock options outstanding, shares | 1,205,000 | 1,205,000 | |||||||
Restricted Stock Units [Member] | |||||||||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, vested, number | 272,917 | ||||||||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, nonvested, number | 150,000 | 150,000 | |||||||
Restricted Stock Award [Member] | |||||||||
Share-based compensation arrangement by share-based payment award, equity instruments other than options, nonvested, number | 238,170 | 238,170 | |||||||
Initial 2012 Plan [Member] | |||||||||
Shares available for future grants | 2,000,000 | ||||||||
2012 Plan [Member] | |||||||||
Shares available for future grants | 243,000 | 243,000 | |||||||
2012 Plan [Member] | Performance Based Stock Option [Member] | |||||||||
Share based compensation arrangement granted to employees performance based | 150,000 | 970,000 | |||||||
2012 Plan [Member] | Performance Based Stock Option [Member] | 25% Vesting [Member] | |||||||||
Net revenues | $ 55,000,000 | $ 55,000,000 | |||||||
Consolidated annualized gross revenues, vesting percentage | 25.00% | 25.00% | |||||||
2012 Plan [Member] | Performance Based Stock Option [Member] | 50% Vesting [Member] | |||||||||
Net revenues | $ 61,500,000 | $ 61,500,000 | |||||||
Consolidated annualized gross revenues, vesting percentage | 50.00% | 50.00% | |||||||
2012 Plan [Member] | Performance Based Stock Option [Member] | 75% Vesting [Member] | |||||||||
Net revenues | $ 69,000,000 | $ 69,000,000 | |||||||
Consolidated annualized gross revenues, vesting percentage | 75.00% | 75.00% | |||||||
2012 Plan [Member] | Performance Based Stock Option [Member] | 100% Vesting [Member] | |||||||||
Net revenues | $ 77,500,000 | $ 77,500,000 | |||||||
Consolidated annualized gross revenues, vesting percentage | 100.00% | 100.00% | |||||||
2012 Plan [Member] | Restricted Stock Units [Member] | Six Independent Board Members [Member] | |||||||||
Stock awards, granted | 25,000 | ||||||||
Stock awards, grant date fair value | $ 1.18 | ||||||||
Vesting period, description | Once vested the RSU will be settled by delivery of shares to the board member no later than 30 days following: 1) the third anniversary of the grant date, 2) separation from service following, or coincident with, a vesting date, or 3) a change in control. | ||||||||
2012 Plan [Member] | Restricted Stock Award [Member] | Chief Revenue Officer [Member] | |||||||||
Stock awards, granted | 50,000 | ||||||||
Stock awards, grant date fair value | $ 1.20 | ||||||||
Vesting period, description | The fair market value of the award is $1.20 per granted share and the award vests in four equal installments of 12,500 shares on August 1 of 2021, 2022, 2023 and 2024, respectively | ||||||||
2012 Plan [Member] | Additional Shares [Member] | |||||||||
Shares available for future grants | 1,600,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) $ in Thousands | Jun. 05, 2019USD ($) |
Harris Corporation [Member] | Maximum [Member] | |
Estimated possible loss | $ 250 |