Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 01, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | WIRELESS TELECOM GROUP INC | |
Entity Central Index Key | 0000878828 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
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 | 21,660,318 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
CURRENT ASSETS | ||
Cash & cash equivalents | $ 3,880 | $ 4,910 |
Accounts receivable - net of reserves of $146 and $143, respectively | 6,378 | 5,520 |
Inventories - net of reserves of $1,192 and $1,129 respectively | 9,261 | 8,796 |
Prepaid expenses and other current assets | 2,539 | 2,172 |
TOTAL CURRENT ASSETS | 22,058 | 21,398 |
PROPERTY PLANT AND EQUIPMENT - NET | 1,748 | 1,824 |
OTHER ASSETS | ||
Goodwill | 11,557 | 11,512 |
Acquired intangible assets, net | 4,929 | 5,242 |
Deferred income taxes | 5,701 | 5,701 |
Right of use assets | 1,549 | 1,680 |
Other assets | 557 | 561 |
TOTAL OTHER ASSETS | 24,293 | 24,696 |
TOTAL ASSETS | 48,099 | 47,918 |
CURRENT LIABILITIES | ||
Short term debt | 84 | 512 |
Accounts payable | 2,118 | 1,546 |
Short term leases | 546 | 534 |
Accrued expenses and other current liabilities | 6,351 | 7,997 |
Deferred revenue | 708 | 924 |
TOTAL CURRENT LIABILITIES | 9,807 | 11,513 |
LONG TERM LIABILITIES | ||
Long term debt | 8,933 | 8,895 |
Long term leases | 1,060 | 1,200 |
Other long term liabilities | 2,128 | 82 |
Deferred tax liability | 381 | 377 |
TOTAL LONG TERM LIABILITIES | 12,502 | 10,554 |
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 34,888,904 and 34,888,904 shares issued, 21,660,318 and 21,669,361 shares outstanding | 349 | 349 |
Additional paid in capital | 50,277 | 50,163 |
Retained earnings | (1,179) | (946) |
Treasury stock at cost, 13,228,586 and 13,219,543 shares | (24,573) | (24,556) |
Accumulated other comprehensive income | 916 | 841 |
TOTAL SHAREHOLDERS' EQUITY | 25,790 | 25,851 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 48,099 | $ 47,918 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, reserves | $ 146 | $ 143 |
Inventories, reserves | $ 1,192 | $ 1,129 |
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 | 34,888,904 | 34,888,904 |
Common stock, shares outstanding | 21,660,318 | 21,669,361 |
Treasury stock, shares | 13,228,586 | 13,219,543 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income/(Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Net revenues | $ 11,321 | $ 9,429 |
Cost of revenues | 5,376 | 5,001 |
Gross profit | 5,945 | 4,428 |
Operating expenses | ||
Research and development | 1,382 | 1,578 |
Sales and marketing | 1,713 | 1,717 |
General and administrative | 2,862 | 2,487 |
Total operating expenses | 5,957 | 5,782 |
Operating loss | (12) | (1,354) |
Other income | 24 | 239 |
Interest expense | (297) | (225) |
Loss before taxes | (285) | (1,340) |
Tax benefit | (52) | (193) |
Net Loss | (233) | (1,147) |
Other comprehensive income/(loss): | ||
Foreign currency translation adjustments | 75 | (935) |
Comprehensive loss | $ (158) | $ (2,082) |
Loss per share: | ||
Basic | $ (0.01) | $ (0.05) |
Diluted | $ (0.01) | $ (0.05) |
Weighted average shares outstanding: | ||
Basic | 21,742,000 | 21,398,000 |
Diluted | 21,742,000 | 21,398,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS USED BY OPERATING ACTIVITIES | ||
Net Loss | $ (233) | $ (1,147) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Depreciation and amortization | 530 | 524 |
Amortization of debt issuance fees | 83 | 63 |
Share-based compensation expense | 114 | 81 |
Deferred rent | (7) | (7) |
Deferred income taxes | (32) | |
Provision for doubtful accounts | 3 | (5) |
Inventory reserves | 61 | 21 |
Changes in assets and liabilities, net of acquisition: | ||
Accounts receivable | (853) | 58 |
Inventories | (517) | (127) |
Prepaid expenses and other assets | (254) | 355 |
Accounts payable | 606 | 230 |
Accrued expenses and other liabilities | 235 | (143) |
Net cash used by operating activities | (232) | (129) |
CASH FLOWS USED BY INVESTING ACTIVITIES | ||
Capital expenditures | (144) | (51) |
Acquisition of business, net of cash acquired | (200) | (7,189) |
Net cash used by investing activities | (344) | (7,240) |
CASH FLOWS PROVIDED/(USED) BY FINANCING ACTIVITIES | ||
Revolver borrowings | 8,073 | |
Revolver repayments | (8,471) | |
Term loan borrowings | 8,400 | |
Term loan repayments | (449) | (363) |
Debt issuance fees | (1,056) | |
Shares withheld for employee taxes | (17) | (26) |
Net cash provided/(used) by financing activities | (466) | 6,557 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 12 | (228) |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (1,030) | (1,040) |
Cash and Cash Equivalents, at Beginning of Period | 4,910 | 4,245 |
CASH AND CASH EQUIVALENTS, AT END OF PERIOD | 3,880 | 3,205 |
SUPPLEMENTAL INFORMATION: | ||
Cash paid during the period for interest | 213 | 146 |
Cash paid during the period for income taxes | $ 13 | $ 28 |
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, 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) | ||||
Forfeiture of restricted stock | ||||||
Forfeiture of restricted stock, shares | (16,667) | |||||
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) | ||||
Share-based compensation expense | 81 | 81 | ||||
Cumulative translation adjustment | (935) | (935) | ||||
Balance at Mar. 31, 2020 | $ 348 | 49,756 | 5,995 | (24,535) | (284) | 31,280 |
Balance, shares at Mar. 31, 2020 | 34,818,904 | |||||
Balance at Dec. 31, 2020 | $ 349 | 50,163 | (946) | (24,556) | 841 | 25,851 |
Balance, shares at Dec. 31, 2020 | 34,888,904 | |||||
Net income/(loss) | (233) | (233) | ||||
Shares withheld for employee taxes | (17) | (17) | ||||
Share-based compensation expense | 114 | 114 | ||||
Cumulative translation adjustment | 75 | 75 | ||||
Balance at Mar. 31, 2021 | $ 349 | $ 50,277 | $ (1,179) | $ (24,573) | $ 916 | $ 25,790 |
Balance, shares at Mar. 31, 2021 | 34,888,904 |
Summary of Significant Accounti
Summary of Significant Accounting Principles and Policies | 3 Months Ended |
Mar. 31, 2021 | |
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 (“RF”) 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. Our customers include wireless carriers, aerospace companies, defense contractors, military and government agencies, satellite communication companies, network equipment manufacturers, tower companies, semiconductor device manufacturers, system integrators, neutral host providers and medical device manufacturers. Our products include components, modules, instruments, systems and software 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”) and 5G 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 accompanying 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”). They have been prepared using accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany transactions and balances have been eliminated in consolidation. 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 “first quarter(s)” or “three months” indicate the Company’s fiscal periods ended March 31, 2021 and March 31, 2020, and references to “year-end” indicate the fiscal year ended December 31, 2020. 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, 2020. Specific reference is made to that report since certain information and footnote disclosures normally included in financial statements in accordance with US GAAP have been reduced for interim periods in accordance with SEC rules. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021. 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 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. The COVID-19 pandemic continued to negatively impact the Company in the first quarter of 2021, with reduced order flow most notably in our Microlab and Boonton brands from periods prior to the pandemic. We believe this is attributable to the impact of the COVID-19 pandemic on customer spending for products related to these brands. 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 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, 2020. 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. 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. One customer accounted for 12.5% and 12.7% of the Company’s consolidated revenue for the three months ended March 31, 2021 and 2020, respectively. One customer accounted for 18.8% of consolidated accounts receivable as of March 31, 2021. At December 31, 2020, one customer accounted for 12.7% 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, the Company is required to pay additional purchase price in the form of deferred purchase price payments and an earnout based on Holzworth’s financial results for the year ended December 31, 2020. Additional earnout payments may be due if Holzworth achieves certain financial targets for the year ending December 31, 2021. 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. The contingent consideration liabilities are considered a Level 3 fair value measurement. As of March 31, 2021, amounts due for the Holzworth deferred purchase price and earnout were $750,000 and $3.4 million, respectively. 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 | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Changes and Error Corrections [Abstract] | |
Accounting Pronouncements | NOTE 2 – Accounting Pronouncements Recently Adopted Accounting Standards There have been no changes to our significant accounting policies as described in the 2020 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 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 | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Changes and Error Corrections [Abstract] | |
Acquisition of Holzworth | NOTE 3 – Acquisition of Holzworth On February 7, 2020 the Company completed the acquisition of all of the outstanding shares of Holzworth. 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. The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations At closing, a portion of the purchase price was paid to the Sellers through the issuance of 347,319 shares of the Company’s common stock, valued at approximately $500,000 based upon a 90-day volume weighted average price for shares of stock of the Company. The shares issued to the Sellers are subject to Lock-up and Voting Agreements. During 2020, the Company paid $8.3 million in net cash to the Sellers consisting of $7.2 million in cash at close, $600,000 in indemnification holdback payments and $750,000 in deferred purchase price reduced by $292,000 of a working capital adjustment that was owed to the Company by the Sellers. The final indemnification holdback payment of $200,000 was paid on March 31, 2021. The Sellers earned a second deferred purchase price payment of $750,000 when Holzworth exceeded $1.25 million in EBITDA (as defined in the Share Purchase Agreement) for the twelve months ended December 31, 2020. Additionally, the Sellers earned $3.4 million in additional purchase price in the form of an earnout (“Year 1 Earnout”) which was also based on Holzworth’s EBITDA for the twelve months ended December 31, 2020. On February 19, 2021, the Company entered into the Second Amendment to Share Purchase Agreement (the “Second Amendment”) with Holzworth. The Second Amendment, among other things, converted the second deferred purchase price of $750,000 into unsecured seller notes with interest at an annual rate of 6.5% starting from April 1, 2021 until final payment. The payment date has been changed from March 31, 2021 to three equal installments of $250,000, plus accrued interest, due on July 1, 2021, October 1, 2021 and January 1, 2022. Additionally, the parties amended the payment dates of the earnout consideration. The payment date of the Year 1 Earnout has been amended from March 31, 2021 to (i) six (6) equal quarterly installments of 10% of the Year 1 Earnout payable on the last business day of each calendar quarter between June 30, 2021 and September 30, 2022 and (ii) one (1) installment payment equal to 40% of the Year 1 Earnout on December 31, 2022. The Year 1 Earnout is payable in cash or shares of the Company’s common stock based on the 90 trading day volume weighted average price immediately preceding final determination of the Year 1 Earnout or $2.19 per share. The estimated payment for the Year 1 Earnout is $3.4 million, of which $1.4 million is recorded in accrued expenses and other current liabilities and $2.0 million is recorded in other long term liabilities in the consolidated balance sheet as of March 31, 2021. The Company may also be required to pay additional amounts in cash and stock as earnout consideration based on Holzworth’s EBITDA for the fiscal year ending December 31, 2021 (“Year 2 Earnout”). The Year 2 Earnout will be equal to two times the amount, if any, by which Holzworth’s EBITDA for fiscal year December 31, 2021 exceeds Holzworth’s EBITDA for fiscal year 2020. Pursuant to the Second Amendment, the Year 2 Earnout is payable in four equal quarterly installments payable on the last business day of each calendar quarter between March 31, 2022 and December 31, 2022. The aggregate payments of the Year 1 Earnout and Year 2 Earnout cannot exceed $7.0 million and the aggregate purchase price cannot exceed $17.0 million. The following table summarizes the components of the purchase price and the allocation of the purchase price at fair value at the acquisition date (in thousands): Amounts Recognized as of Acquisition Date Cash at close $ 7,219 Equity issued at close 465 Purchase price holdback 800 Working capital adjustment (292 ) Deferred purchase price 1,410 Contingent consideration 2,440 Total purchase price 12,042 Cash 30 Accounts receivable 514 Inventory 1,438 Intangible assets 4,260 Other assets 967 Fixed assets 144 Accounts payable (129 ) Accrued expenses (429 ) Deferred revenue (13 ) Other long term liabilities (740 ) Net assets acquired 6,042 Goodwill $ 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 January 1, 2020 $ - $ 1,351 $ 8,718 $ 10,069 Holzworth acquisition 6,000 - - 6,000 Goodwill Impairment - - (4,742 ) (4,742 ) Foreign currency translation - - 185 185 Balance as of December 31, 2020 $ 6,000 $ 1,351 $ 4,161 $ 11,512 Foreign currency translation - - 45 45 Balance as of March 31, 2021 $ 6,000 $ 1,351 $ 4,206 $ 11,557 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 4 – Debt Debt consists of the following (in thousands): March 31, 2021 Revolver at LIBOR plus margin $ - Term loan at LIBOR plus margin 7,867 Less: Debt issuance costs, net of amortization (779 ) Less: Fair value of warrants, net of amortization (116 ) Paycheck Protection Program loan 2,045 Total Debt 9,017 Less: Debt maturing within one year (84 ) Non-current portion of long term debt $ 8,933 Term loan payments by period (in thousands): Remainder of 2021 $ 63 2022 2,129 2023 84 2024 84 2025 7,552 Thereafter - Total $ 9,912 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 Facility included 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 2.50% 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. On May 4, 2020, the Company entered into the First Amendment to the Term Loan Facility which, among other things, amended the definition of “Indebtedness” to include the PPP (as defined below) loan as long as the proceeds are used for allowable purposes under the CARES Act, the receipt of the loan does not violate the Credit Facility and the Company submits an application for forgiveness and substantially all of the loan is forgiven. The Company submitted its application for forgiveness in the first quarter of 2021. On February 25, 2021, the Company and its subsidiaries entered into the Second Amendment to the Credit Agreement and Limited Waiver (“Amendment 2”) with Muzinich, in which Muzinich agreed to waive the Company’s obligation to comply with the consolidated leverage ratio and fixed charge coverage ratio financial covenants in the Term Loan Facility for the fiscal quarter ending December 31, 2020. We were not in compliance with such covenants primarily as a result of the impact the COVID-19 pandemic had on our consolidated financial results. Amendment 2, among other things, amended the definition of consolidated EBITDA to include certain cash tax benefits related to our U.K. tax jurisdiction and reduced our consolidated leverage ratio for the twelve month periods ended September 30, 2021 from 3.00 to 2.75, December 31, 2021 from 2.75 to 2.25, March 31, 2022 from 2.50 to 2.00 and June 30, 2022 from 2.25 to 2.00. Additionally, the interest rate margin was increased from 7.25% to 9.25% effective January 1, 2021 and will step down to 8.50% and 7.25% upon the Company achieving consolidated EBITDA on a trailing twelve-month basis of $4.0 million and $6.3 million, respectively. Muzinich and the Company also agreed on an excess cash flow payment of $428,000 which was made in March 2021 and Muzinich provided consent for the Company to change the deferred purchase price payments to and enter into notes with the Holzworth sellers in the amount of $750,000, as described above in Note 3. The Company entered into a Credit Facility with Bank of America, N.A. 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. Additionally, the Company prepaid the remaining principal balance of the BOA Term Loan in the amount of $304,000. On May 4, 2020, the Company, its subsidiaries and Bank of America entered into Amendment No. 6 which, among other things, amended the definition of “Debt” to include the PPP loan as long as the proceeds are used for allowable purposes under the CARES Act and the Company promptly submits an application for forgiveness and substantially all of the loan is forgiven. The Company submitted its application for forgiveness in the first quarter of 2021. On February 25, 2021, the Company, its subsidiaries and Bank of America entered into Amendment No. 7 which revised the Credit Facility to accommodate the changes to the deferred purchase price payments to and notes with the Holzworth sellers, as described above, and provided Bank of America’s consent to the Company entering into the Muzinich Second Amendment, as described above. As of March 31, 2021, the interest rate on the Term Loan Facility was 10.25% and the interest rate on the Revolver was 2.12%. The Company had zero drawn on the asset-based revolver as of March 31, 2021. As of March 31, 2021, and the date hereof the Company is in compliance with all covenants of the 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. As of March 31, 2021, the Company has applied for forgiveness of the loan, however, has elected to account for the loan in accordance with Accounting Standard Codification 470 Debt |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 and December 31, 2020. 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). An initial right-of-use asset of $1.9 million was recognized as a non-cash asset addition with the adoption of the new lease accounting standard on January 1, 2019. With our acquisition of Holzworth on February 7, 2020, we acquired a right-of-use asset of $789,000. There have been no other right-of-use assets recognized since the date of adoption of the new lease standard. Cash paid for amounts included in the present value of operating lease liabilities was $164,000 and $151,000 during the three months ended March 31, 2021 and 2020, respectively, and was included in operating cash flows. Operating lease costs for the three months ended March 31, 2021 and March 31, 2020 were $276,000 and $247,000, respectively. The following table presents information about the amount and timing of cash flows arising from the Company’s leases as of March 31, 2021: (in thousands) March 31, 2021 Maturity of Lease Liabilities Remainder of 2021 $ 467 2022 637 2023 276 2024 158 2025 163 Thereafter 69 Total Undiscounted operating lease payments 1,770 Less: imputed interest (164 ) Present value of operating lease liabilities $ 1,606 Balance sheet classification Current lease liabilities $ 546 Long-term lease liabilities 1,060 Total operating lease liabilities $ 1,606 Other information Weighted-average remaining term (months) for operating leases 41 Weighted-average discount rate for operating leases 5.88 % |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | NOTE 6 – Revenue Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s performance obligations are satisfied either over time or at a point in time. Revenue from performance obligations that transferred at a point in time accounted for approximately 97% and 99% of the Company’s consolidated revenue for the three months ended March 31, 2021 and 2020, respectively. Nature of Products and Services Hardware The Company generally has one performance obligation in its arrangements involving the sales of radio frequency solutions, digital signal processing hardware, power meters, analyzers, noise/signal generators, phase noise analyzers and other components. When the terms of a contract include the transfer of multiple products, each distinct product is identified as a separate performance obligation. Generally, satisfaction occurs when control of the promised goods is transferred to the customer in exchange for consideration in an amount for which we expect to be entitled. Generally, control is transferred when legal title of the asset moves from the Company to the customer. We sell our products to a customer based on a purchase order, and the shipping terms per each individual order are primarily used to satisfy the single performance obligation. However, in order to determine when control has transferred to the customer, the Company also considers: ● when the Company has a present right to payment for the asset; ● when the Company has transferred physical possession of the asset to the customer; ● when the customer has the significant risks and rewards of ownership of the asset; and ● when the customer has accepted the asset. Software Arrangements involving licenses of software in the CommAgility brand may involve multiple performance obligations, most notably subsequent releases of the software. The Company has concluded that each software release in a multiple deliverable arrangement involving CommAgility software licenses is a distinct performance obligation and, accordingly, transaction price is allocated to each release when the customer obtains control of the software. Performance obligations that are not distinct at contract inception are combined. Specifically, with the Company’s sales of software, contracts that include customization may result in the combination of the customization services with the license as one distinct performance obligation and recognized over time. The duration of these performance obligations are typically one year or less. Services Arrangements involving calibration and repair services of the Company’s products are generally considered a single performance obligation and are recognized as the services are rendered. Shipping and Handling Shipping and handling activities performed after the customer obtains control are accounted for as fulfillment activities and recognized as cost of revenues. Significant Judgments For the Company’s more complex software and services arrangements, significant judgment is required in determining whether licenses and services are distinct performance obligations that should be accounted for separately or are not distinct and thus accounted for together. Further, in cases where we determine that performance obligations should be accounted for separately, judgment is required to determine the standalone selling price for each distinct performance obligation. Certain of the Company shipments include a limited return right. In accordance with Topic 606, the Company recognizes revenue net of expected returns. Contract Balances The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in contract assets (unbilled revenue) or contract liabilities (deferred revenue) on the Company’s consolidated balance sheet. The Company records unbilled revenue when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Unbilled revenue was $210,000 and $260,000 as of March 31, 2021 and December 31, 2020, respectively, and recorded in prepaid expenses and other current assets. Deferred revenue was $708,000 and $924,000 as of March 31, 2021 and December 31, 2020, respectively. The decrease in deferred revenue from December 31, 2020 is primarily due to recognition of revenue for certain CommAgility projects involving multiple performance obligations. 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. See details in the tables below (in thousands). Three Months Ended March 31, Three Months Ended March 31, Total net revenues by revenue type Passive and active RF components $ 3,134 $ 4,268 Signal generators and components 3,329 1,820 Signal analyzers and power meters 1,558 1,565 Signal processing hardware 1,483 1,199 Software licenses 990 108 Services 827 469 Total net revenue $ 11,321 $ 9,429 Total net revenues by geographic areas Americas $ 7,779 $ 6,246 EMEA 2,534 2,045 APAC 1,008 1,138 Total net revenue $ 11,321 $ 9,429 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
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 Company’s major tax jurisdictions are New Jersey, Colorado and the United Kingdom (“U.K.”). 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 March 31, 2021, the Company’s net deferred tax asset of approximately $5.3 million is net of a valuation allowance of approximately $7.7 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 benefit of $52,000 for the three months ended March 31, 2021, primarily due to the impact of estimated research and development deductions in the U.K. The effective rate of income tax benefit of 18.2% is lower than the statutory rate in the United States due to the impact of the research and development deductions in the U.K. The effective rate of income tax benefit of 12.9% for the three months ended March 31, 2020 was lower than the statutory rates in the United States and the U.K. primarily due to the impact of research and development deductions in the U.K. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2021 | |
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, the number of shares issuable under the terms of the Holzworth earnout 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 March 31, 2021 2020 Weighted average common shares outstanding 21,741,550 21,397,919 Potentially dilutive equity awards 2,308,144 388,668 Weighted average common shares outstanding, assuming dilution 24,049,694 21,786,587 For the three months ended March 31, 2021, the weighted average number of options to purchase common stock not included in potentially dilutive equity awards because the effects are anti-dilutive, or the performance condition was not met was 1,320,000. The number of shares issuable under the terms of the Holzworth earnout, if all paid in shares of common stock, is 1,599,807 and is included in potentially dilutive equity awards in the chart above. For the three months ended March 31, 2020, the weighted average number of options and warrants to purchase common stock not included in potentially dilutive equity awards because the effects are anti-dilutive, or the performance condition was not met was 1,455,000. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2021 | |
Loss per share: | |
Inventories | NOTE 9 – Inventories Inventory carrying value is net of inventory reserves of $1.2 million at March 31, 2021 and $1.1 million at December 31, 2020. Inventories consist of (in thousands): March 31, December 31, Raw materials $ 4,689 $ 4,644 Work-in-process 584 618 Finished goods 3,988 3,534 Total Inventory $ 9,261 $ 8,796 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Accrued Expenses And Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | NOTE 10 – Accrued Expenses and Other Current Liabilities As of March 31, 2021, and December 31, 2020 accrued expenses and other current liabilities consisted of the following (in thousands): March 31, December 31 Holzworth earnout – short term $ 1,369 $ 3,423 Payroll and related benefits 1,137 864 Goods received not invoiced 900 458 Holzworth deferred purchase price 750 950 Commissions 605 605 Sales and use and VAT tax 436 315 Professional fees 388 331 Returns reserve 248 212 Warranty reserve 140 140 Bonus 97 123 Harris arbitration liability - 116 Other 281 460 Total $ 6,351 $ 7,997 |
Accounting for Stock Based Comp
Accounting for Stock Based Compensation | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Accounting for Stock Based Compensation | NOTE 11 - Accounting for Stock Based Compensation The Company’s results for the three months ended March 31, 2021 and 2020 include $114,000 and $81,000, 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 March 31, 2021, there are approximately 226,000 shares available for issuance under the 2012 Plan. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 12 – COMMITMENTS AND CONTINGENCIES There have been no material changes in our commitments and contingencies and risks and uncertainties as of March 31, 2021 from that previously disclosed in our annual report on Form 10-K for the year ended December 31, 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Principles and Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
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 (“RF”) 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. Our customers include wireless carriers, aerospace companies, defense contractors, military and government agencies, satellite communication companies, network equipment manufacturers, tower companies, semiconductor device manufacturers, system integrators, neutral host providers and medical device manufacturers. Our products include components, modules, instruments, systems and software 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”) and 5G 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 accompanying 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”). They have been prepared using accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany transactions and balances have been eliminated in consolidation. 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 “first quarter(s)” or “three months” indicate the Company’s fiscal periods ended March 31, 2021 and March 31, 2020, and references to “year-end” indicate the fiscal year ended December 31, 2020. |
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, 2020. Specific reference is made to that report since certain information and footnote disclosures normally included in financial statements in accordance with US GAAP have been reduced for interim periods in accordance with SEC rules. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year ending December 31, 2021. |
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 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. The COVID-19 pandemic continued to negatively impact the Company in the first quarter of 2021, with reduced order flow most notably in our Microlab and Boonton brands from periods prior to the pandemic. We believe this is attributable to the impact of the COVID-19 pandemic on customer spending for products related to these brands. 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 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, 2020. |
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. 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. One customer accounted for 12.5% and 12.7% of the Company’s consolidated revenue for the three months ended March 31, 2021 and 2020, respectively. One customer accounted for 18.8% of consolidated accounts receivable as of March 31, 2021. At December 31, 2020, one customer accounted for 12.7% 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, the Company is required to pay additional purchase price in the form of deferred purchase price payments and an earnout based on Holzworth’s financial results for the year ended December 31, 2020. Additional earnout payments may be due if Holzworth achieves certain financial targets for the year ending December 31, 2021. 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. The contingent consideration liabilities are considered a Level 3 fair value measurement. As of March 31, 2021, amounts due for the Holzworth deferred purchase price and earnout were $750,000 and $3.4 million, respectively. |
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) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of Business Consideration | The following table summarizes the components of the purchase price and the allocation of the purchase price at fair value at the acquisition date (in thousands): Amounts Recognized as of Acquisition Date Cash at close $ 7,219 Equity issued at close 465 Purchase price holdback 800 Working capital adjustment (292 ) Deferred purchase price 1,410 Contingent consideration 2,440 Total purchase price 12,042 Cash 30 Accounts receivable 514 Inventory 1,438 Intangible assets 4,260 Other assets 967 Fixed assets 144 Accounts payable (129 ) Accrued expenses (429 ) Deferred revenue (13 ) Other long term liabilities (740 ) Net assets acquired 6,042 Goodwill $ 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 January 1, 2020 $ - $ 1,351 $ 8,718 $ 10,069 Holzworth acquisition 6,000 - - 6,000 Goodwill Impairment - - (4,742 ) (4,742 ) Foreign currency translation - - 185 185 Balance as of December 31, 2020 $ 6,000 $ 1,351 $ 4,161 $ 11,512 Foreign currency translation - - 45 45 Balance as of March 31, 2021 $ 6,000 $ 1,351 $ 4,206 $ 11,557 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt consists of the following (in thousands): March 31, 2021 Revolver at LIBOR plus margin $ - Term loan at LIBOR plus margin 7,867 Less: Debt issuance costs, net of amortization (779 ) Less: Fair value of warrants, net of amortization (116 ) Paycheck Protection Program loan 2,045 Total Debt 9,017 Less: Debt maturing within one year (84 ) Non-current portion of long term debt $ 8,933 |
Schedule of Term Loan Payments | Term loan payments by period (in thousands): Remainder of 2021 $ 63 2022 2,129 2023 84 2024 84 2025 7,552 Thereafter - Total $ 9,912 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021: (in thousands) March 31, 2021 Maturity of Lease Liabilities Remainder of 2021 $ 467 2022 637 2023 276 2024 158 2025 163 Thereafter 69 Total Undiscounted operating lease payments 1,770 Less: imputed interest (164 ) Present value of operating lease liabilities $ 1,606 Balance sheet classification Current lease liabilities $ 546 Long-term lease liabilities 1,060 Total operating lease liabilities $ 1,606 Other information Weighted-average remaining term (months) for operating leases 41 Weighted-average discount rate for operating leases 5.88 % |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of 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. See details in the tables below (in thousands). Three Months Ended March 31, Three Months Ended March 31, Total net revenues by revenue type Passive and active RF components $ 3,134 $ 4,268 Signal generators and components 3,329 1,820 Signal analyzers and power meters 1,558 1,565 Signal processing hardware 1,483 1,199 Software licenses 990 108 Services 827 469 Total net revenue $ 11,321 $ 9,429 Total net revenues by geographic areas Americas $ 7,779 $ 6,246 EMEA 2,534 2,045 APAC 1,008 1,138 Total net revenue $ 11,321 $ 9,429 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Loss per share: | |
Schedule of Weighted Average Common Shares Outstanding | In accordance with ASC 260, “Earnings Per Share”, the following table reconciles basic shares outstanding to fully diluted shares outstanding. For the Three Months Ended March 31, 2021 2020 Weighted average common shares outstanding 21,741,550 21,397,919 Potentially dilutive equity awards 2,308,144 388,668 Weighted average common shares outstanding, assuming dilution 24,049,694 21,786,587 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Loss per share: | |
Schedule of Inventory | Inventories consist of (in thousands): March 31, December 31, Raw materials $ 4,689 $ 4,644 Work-in-process 584 618 Finished goods 3,988 3,534 Total Inventory $ 9,261 $ 8,796 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accrued Expenses And Other Current Liabilities | |
Schedule of Accrued Expenses and Other Current Liabilities | As of March 31, 2021, and December 31, 2020 accrued expenses and other current liabilities consisted of the following (in thousands): March 31, December 31 Holzworth earnout – short term $ 1,369 $ 3,423 Payroll and related benefits 1,137 864 Goods received not invoiced 900 458 Holzworth deferred purchase price 750 950 Commissions 605 605 Sales and use and VAT tax 436 315 Professional fees 388 331 Returns reserve 248 212 Warranty reserve 140 140 Bonus 97 123 Harris arbitration liability - 116 Other 281 460 Total $ 6,351 $ 7,997 |
Summary of Significant Accoun_3
Summary of Significant Accounting Principles and Policies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Share Purchase Agreement [Member] | Holzworth Instrumentation Inc [Member] | Sellers [Member] | |||
Deferred purchase price payment | $ 750 | $ 750 | |
Expected earnout payment | $ 3,400 | $ 3,400 | |
Revenues [Member] | Customer Concentration Risk [Member] | One Customer [Member] | |||
Concentration credit risk, percentage | 12.50% | 12.70% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | One Customer [Member] | |||
Concentration credit risk, percentage | 18.80% | 12.70% |
Acquisition of Holzworth (Detai
Acquisition of Holzworth (Details Narrative) - Holzworth Instrumentation Inc [Member] - USD ($) $ in Thousands | Feb. 19, 2021 | Feb. 07, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Cash consideration | $ 12,042 | |||
Working capital adjustment | 292 | |||
Aggregate earnout payments | $ 2,440 | |||
Share Purchase Agreement [Member] | Maximum [Member] | ||||
Cash consideration | $ 17,000 | |||
Aggregate earnout payments | 7,000 | |||
Share Purchase Agreement [Member] | Amendment 2 [Member] | Unsecured Seller Notes [Member] | ||||
Conversion of note | $ 750 | |||
Annual interest rate | 6.50% | |||
Debt maturity description | The payment date has been changed from March 31, 2021 to three equal installments of $250,000, plus accrued interest, due on July 1, 2021, October 1, 2021 and January 1, 2022. | |||
Installments payments | $ 250 | |||
Share Purchase Agreement [Member] | Year 1 Earnout [Member] | Amendment 2 [Member] | ||||
Installment description | The payment date of the Year 1 Earnout has been amended from March 31, 2021 to (i) six (6) equal quarterly installments of 10% of the Year 1 Earnout payable on the last business day of each calendar quarter between June 30, 2021 and September 30, 2022 and (ii) one (1) installment payment equal to 40% of the Year 1 Earnout on December 31, 2022. The Year 1 Earnout is payable in cash or shares of the Company’s common stock based on the 90 trading day volume weighted average price immediately preceding final determination of the Year 1 Earnout or $2.19 per share. | |||
Earnout payment amount | $ 3,400 | |||
Share Purchase Agreement [Member] | Year 1 Earnout [Member] | Amendment 2 [Member] | Accrued Expenses and Other Current Liabilities [Member] | ||||
Earnout payment amount | 1,400 | |||
Share Purchase Agreement [Member] | Year 1 Earnout [Member] | Amendment 2 [Member] | Other Long Term Liabilities [Member] | ||||
Earnout payment amount | $ 2,000 | |||
Share Purchase Agreement [Member] | Year 2 Earnout [Member] | Amendment 2 [Member] | ||||
Installment description | Pursuant to the Second Amendment to the Share Purchase Agreement the Year 2 Earnout is payable in 4 equal quarterly installments payable on the last business day of each calendar quarter between March 31, 2022 and December 31, 2022. | |||
Share Purchase Agreement [Member] | Sellers [Member] | ||||
Stock issued for common stock, shares | 347,319 | |||
Stock issued for common stock | $ 500 | |||
Payments to sellers | 8,300 | |||
Cash consideration | 7,200 | |||
Payments for indemnification holdback | $ 200 | 600 | ||
Working capital adjustment | (292) | |||
Deferred purchase price payment | 750 | 750 | ||
Expected earnout payment | $ 3,400 | 3,400 | ||
Share Purchase Agreement [Member] | Sellers [Member] | Second Deferred Purchase Price [Member] | ||||
Expected deferred purchase price payment | 750 | |||
Amount of EBITDA target to receive full deferred purchase price payments | $ 1,250 |
Acquisition of Holzworth - Sche
Acquisition of Holzworth - Schedule of Business Consideration (Details) - USD ($) $ in Thousands | Feb. 07, 2020 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Goodwill | $ 11,557 | $ 11,512 | $ 10,069 | |
Holzworth Instrumentation Inc [Member] | ||||
Cash at close | $ 7,219 | |||
Equity issued at close | 465 | |||
Purchase price holdback | 800 | |||
Working capital adjustment | (292) | |||
Deferred purchase price | 1,410 | |||
Contingent consideration | 2,440 | |||
Total purchase price | 12,042 | |||
Cash | 30 | |||
Accounts receivable | 514 | |||
Inventory | 1,438 | |||
Intangible assets | 4,260 | |||
Other assets | 967 | |||
Fixed assets | 144 | |||
Accounts payable | (129) | |||
Accrued expenses | (429) | |||
Deferred revenue | (13) | |||
Other long term liabilities | (740) | |||
Net assets acquired | 6,042 | |||
Goodwill | $ 6,000 | $ 6,000 | $ 6,000 |
Acquisition of Holzworth - Sc_2
Acquisition of Holzworth - Schedule of Post Acquisition Consolidated Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Opening balance | $ 11,512 | $ 10,069 |
Holzworth acquisition | 6,000 | |
Goodwill impairment | (4,742) | |
Foreign currency translation | 45 | 185 |
Closing balance | 11,557 | 11,512 |
Holzworth Instrumentation Inc [Member] | ||
Opening balance | 6,000 | |
Holzworth acquisition | 6,000 | |
Foreign currency translation | ||
Closing balance | 6,000 | 6,000 |
Microlab/FXR LLC [Member] | ||
Opening balance | 1,351 | 1,351 |
Holzworth acquisition | ||
Foreign currency translation | ||
Closing balance | 1,351 | 1,351 |
CommAgility Limited [Member] | ||
Opening balance | 4,161 | 8,718 |
Holzworth acquisition | ||
Goodwill impairment | (4,742) | |
Foreign currency translation | 45 | 185 |
Closing balance | $ 4,206 | $ 4,161 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) $ in Thousands | Feb. 25, 2021 | May 04, 2020 | Feb. 07, 2020 | Dec. 31, 2020 | Jan. 31, 2021 | Jan. 02, 2021 | Feb. 16, 2017 |
Paycheck Protection Program Loan [Member] | |||||||
Debt instrument, face amount | $ 2,000 | ||||||
Debt instrument, stated interest rate | 1.00% | ||||||
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. | ||||||
Debt instrument term | 24 months | ||||||
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] | Term Loan Facility [Member] | Amendment 2 [Member] | |||||||
Loan covenant, description | Leverage ratio for the twelve month periods ended September 30, 2021 from 3.00 to 2.75, December 31, 2021 from 2.75 to 2.25, March 31, 2022 from 2.50 to 2.00 and June 30, 2022 from 2.25 to 2.00. | ||||||
Debt instrument, stated interest rate | 7.25% | 9.25% | |||||
Excess cash flow payment | $ 428 | ||||||
Deferred purchase price conversion to loan | $ 750 | ||||||
Muzinich BDC, Inc [Member] | Term Loan Facility [Member] | Amendment 2 [Member] | TTM $4Million EBITDA [Member] | |||||||
Debt instrument, effective interest rate | 8.50% | ||||||
Muzinich BDC, Inc [Member] | Term Loan Facility [Member] | Amendment 2 [Member] | TTM $6.3Million EBITDA [Member] | |||||||
Debt instrument, effective interest rate | 7.25% | ||||||
Muzinich BDC, Inc [Member] | Term Loan [Member] | |||||||
Debt instrument, stated interest rate | 10.25% | ||||||
Bank of America, N.A [Member] | Revolving Loan [Member] | |||||||
Line of credit facility, maximum borrowing capacity | $ 9,000 | ||||||
Line of credit, rate | 2.12% | ||||||
Bank of America, N.A [Member] | Term Loan [Member] | |||||||
Debt instrument, face amount | $ 760 | ||||||
Prepayment of remaining prinicipal balance | $ 304 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Total Debt | $ 9,017 | |
Less: Debt maturing within one year | (84) | |
Non-current portion of long term debt | 8,933 | $ 8,895 |
Revolving Loan [Member] | ||
Total Debt | ||
Term Loan [Member] | ||
Less: Debt issuance costs, net of amortization | (779) | |
Less: Fair value of warrants, net of amortization | (116) | |
Total Debt | 7,867 | |
Paycheck Protection Program [Member] | ||
Total Debt | $ 2,045 |
Debt - Schedule of Term Loan Pa
Debt - Schedule of Term Loan Payments (Details) $ in Thousands | Mar. 31, 2021USD ($) |
Debt Disclosure [Abstract] | |
2021 | $ 63 |
2022 | 2,129 |
2023 | 84 |
2024 | 84 |
2025 | 7,552 |
Thereafter | |
Total | $ 9,912 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Feb. 07, 2020 | Jan. 02, 2019 | |
Operating lease, right-of-use asset | $ 1,549 | $ 1,680 | |||
Operating lease liabilities | 164 | $ 151 | |||
Operating lease costs | $ 276 | $ 247 | |||
ASU 2016-02 [Member] | |||||
Operating lease, right-of-use asset | $ 1,900 | ||||
ASU 2016-02 [Member] | Holzworth Instrumentation Inc [Member] | |||||
Operating lease, right-of-use asset | $ 789 | ||||
Minimum [Member] | |||||
Operating lease, term | 12 months | ||||
Maximum [Member] | |||||
Operating lease, term | 8 years |
Leases - Schedule of Maturity o
Leases - Schedule of Maturity of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Remainder of 2021 | $ 467 | |
2022 | 637 | |
2023 | 276 | |
2024 | 158 | |
2025 | 163 | |
Thereafter | 69 | |
Total Undiscounted operating lease payments | 1,770 | |
Less: imputed interest | (164) | |
Present value of operating lease liabilities | 1,606 | |
Current lease liabilities | 546 | $ 534 |
Long-term lease liabilities | 1,060 | $ 1,200 |
Total operating lease liabilities | $ 1,606 | |
Weighted-average remaining term (months) for operating leases | 41 months | |
Weighted-average discount rate for operating leases | 5.88% |
Revenue (Details Narrative)
Revenue (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Prepaid expenses and other current assets | $ 2,539 | $ 2,172 | |
Deferred revenue | 708 | 924 | |
Net revenues | 11,321 | $ 9,429 | |
Unbilled Revenue [Member] | |||
Prepaid expenses and other current assets | $ 210 | $ 260 | |
Transferred at Point in Time [Member] | |||
Revenue recognized at a point in time (shipment), percentage | 97.00% | 99.00% |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total net revenue | $ 11,321 | $ 9,429 |
Americas [Member] | ||
Total net revenue | 7,779 | 6,246 |
EMEA [Member] | ||
Total net revenue | 2,534 | 2,045 |
APAC [Member] | ||
Total net revenue | 1,008 | 1,138 |
Passive and Active RF Components [Member] | ||
Total net revenue | 3,134 | 4,268 |
Signal Generators and Components [Member] | ||
Total net revenue | 3,329 | 1,820 |
Signal Analyzers and Power Meters [Member] | ||
Total net revenue | 1,558 | 1,565 |
Signal Processing Hardware [Member] | ||
Total net revenue | 1,483 | 1,199 |
Software Licenses [Member] | ||
Total net revenue | 990 | 108 |
Services [Member] | ||
Total net revenue | $ 827 | $ 469 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Deferred tax assets, net | $ 5,300 | |
Deferred tax assets, valuation allowance | 7,700 | |
Income tax benefit | $ (52) | $ (193) |
Effective income tax rate | 18.20% | 12.90% |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Antidilutive securities excluded from computation of earnings, amount | 1,320,000 | 1,455,000 |
Holzworth Instrumentation Inc [Member] | ||
Weighted-average number of shares issuable under the terms of earnout | 1,599,807 |
Earnings (Loss) Per Share - Sch
Earnings (Loss) Per Share - Schedule of Weighted Average Common Shares Outstanding (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Loss per share: | ||
Weighted average common shares outstanding | 21,742,000 | 21,398,000 |
Potentially dilutive equity awards | 2,308,144 | 388,668 |
Weighted average common shares outstanding, assuming dilution | 24,049,694 | 21,786,587 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Inventory Valuation Reserves | $ 1,192 | $ 1,129 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventory (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 4,689 | $ 4,644 |
Work-in-process | 584 | 618 |
Finished goods | 3,988 | 3,534 |
Inventory net | $ 9,261 | $ 8,796 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Holzworth earnout – short term | $ 1,369 | $ 3,423 |
Payroll and related benefits | 1,137 | 864 |
Goods received not invoiced | 900 | 458 |
Holzworth deferred purchase price | 750 | 950 |
Commissions | 605 | 605 |
Sales and use and VAT tax | 436 | 315 |
Professional fees | 388 | 331 |
Returns reserve | 248 | 212 |
Warranty reserve | 140 | 140 |
Bonus | 97 | 123 |
Harris arbitration liability | 116 | |
Other | 281 | 460 |
Total | $ 6,351 | $ 7,997 |
Accounting for Stock Based Co_2
Accounting for Stock Based Compensation (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2014 | |
Stock based compensation expense | $ 114 | $ 81 | |
2012 Plan [Member] | |||
Shares available for future grants | 226,000 | ||
2012 Plan [Member] | Additional Shares [Member] | |||
Shares available for future grants | 1,600,000 |