| 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 “second quarter(s)”
or “three months” indicate the Company’s three month period ended June 30, 2021 and June 30, 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 and six months ended June 30, 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 has negatively impacted regional and global economies, disrupted global supply chains and created significant volatility
and disruption of financial markets. 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 12.4 12.5 10 One
customer accounted for 16.3 12.7 Fair
Value of Financial Instruments Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction
between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the
inputs used in the valuation methodologies in measuring fair value: Level
1 - Quoted prices in active markets for identical assets or liabilities. Level
2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active;
or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or
liabilities. Level
3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or
liabilities. The
categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to
the fair value measurement. The
carrying amounts of the Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued liabilities,
approximate fair value due to their relatively short maturities. The Company’s term loan and revolving credit facility bear interest
at a variable interest rate plus an applicable margin and, therefore, carrying amount approximates fair value. Contingent
Consideration Under
the terms of the 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 June 30, 2021, amounts due for the Holzworth deferred purchase price and earnout were $ 750,000 3.3 Subsequent
Events On
July 21, 2021, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities,
Inc. (the “Agent”), to issue and sell through the Agent, shares of the Company’s common stock, par value $ 0.01 12,000,000 From
July 21, 2021 through August 5, 2021 the Agent sold 261,968
shares of the Company’s common stock
for net proceeds of $ 731,815 ,
after deducting sales commissions paid to the Agent in accordance with the terms of the Sales Agreement. |
