-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GVOVI0yRSH44mEMP0b6fy3FZ86tOTp7BytVm/pLuo4czJEToKAMudk2QEHBvYqzn V5gg7QGH8v6pEgv/Ae9+HQ== 0000950117-00-001231.txt : 20000515 0000950117-00-001231.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950117-00-001231 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WIRELESS TELECOM GROUP INC CENTRAL INDEX KEY: 0000878828 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 222582295 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11916 FILM NUMBER: 629974 BUSINESS ADDRESS: STREET 1: EAST 64 MIDLAND AVE CITY: PARAMUS STATE: NJ ZIP: 07652 BUSINESS PHONE: 2012618797 MAIL ADDRESS: STREET 1: EAST 64 MIDLAND AVE CITY: PARAMUS STATE: NJ ZIP: 07652 FORMER COMPANY: FORMER CONFORMED NAME: NOISE COM INC/NJ DATE OF NAME CHANGE: 19930328 10-Q 1 WIRELESS TELECOM GROUP, INC. 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _______ Commission file number 1-11916 WIRELESS TELECOM GROUP, INC. ----------------------------- (Exact name of registrant as specified in its charter) New Jersey 22-2582295 - ----------------------------------- ----------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) East 64 Midland Avenue Paramus, New Jersey 07652 - -------------------------------------------- ----- (Address of principal executive offices) (Zip Code)
(201) 261-8797 ------------------------------------------------------------------- Registrant's telephone number, including area code -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the most recent practicable date. Common Stock -- Par Value $.01 17,243,007 - ------------------------------ ------------------ Class Outstanding Shares At May 8, 2000
WIRELESS TELECOM GROUP, INC. Table of Contents
PART I. FINANCIAL INFORMATION Page(s) Item 1 -- Consolidated Financial Statements: Condensed Balance Sheets as of March 31, 2000 (unaudited) and December 31, 1999 3 Condensed Statements of Operations for the Three Months Ended March 31, 2000 and 1999 (unaudited) 4 Condensed Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 (unaudited) 5 Notes to Interim Condensed Financial Statements (unaudited) 6 Review Report on Interim Condensed Financial Statements 7 Item 2 -- Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 9 PART II. OTHER INFORMATION Item 1 -- Legal Proceedings 10 Item 2 -- Changes in Securities 10 Item 3 -- Defaults upon Senior Securities 10 Item 4 -- Submission of Matters to a Vote of Security Holders 10 Item 5 -- Other Information 10 Item 6 -- Exhibits and Reports on Form 8-K 10 Signatures 11 Exhibit 11.1 12 Exhibit 27 13
2 PART I -- FINANCIAL INFORMATION ITEM 1 -- Financial Statements WIRELESS TELECOM GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
-- ASSETS -- MARCH 31, DECEMBER 31, 2000 1999 ------------- ------------- (UNAUDITED) CURRENT ASSETS: Cash and cash equivalents $ 23,567,656 $ 22,139,504 Accounts receivable -- net of allowance for doubtful accounts of $58,592 and $44,681, respectively 1,247,044 919,404 Inventories 1,424,749 1,389,887 Prepaid expenses and other current assets 701,493 1,636,245 ------------ ------------ TOTAL CURRENT ASSETS 26,940,942 26,085,040 ------------ ------------ PROPERTY, PLANT AND EQUIPMENT -- NET 602,006 609,854 ------------ ------------ OTHER ASSETS: Goodwill -- net 2,323,718 2,365,385 Investment property net of accumulated depreciation(Note 3) 4,225,538 4,247,711 Other assets 558,964 57,385 ------------ ------------ TOTAL OTHER ASSETS 7,108,220 6,670,481 ------------ ------------ $ 34,651,168 $ 33,365,375 ============ ============ -- LIABILITIES AND SHAREHOLDERS' EQUITY -- CURRENT LIABILITIES: Accounts payable $ 564,330 $ 287,488 Accrued expenses and other current liabilities 764,439 772,011 Current portion of mortgage payable 30,400 31,509 Income tax payable 218,391 218,391 ------------ ------------ TOTAL CURRENT LIABILITIES 1,577,560 1,309,399 ------------ ------------ DEFERRED INCOME TAXES 206,610 206,610 ------------ ------------ LONG TERM LIABILITIES: Mortgage payable 3,225,647 3,229,976 Other 127,772 144,440 ------------ ------------ TOTAL LONG TERM LIABILITIES 3,353,419 3,374,416 ------------ ------------ COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY(NOTE4): Preferred stock, $.01 par value, 2,000,000 shares authorized, none issued -- -- Common stock, $.01 par value, 30,000,000 shares authorized, 17,805,854 and 17,702,298 shares issued, respectively 178,059 177,023 Additional paid-in-capital 7,005,977 6,631,061 Retained earnings 23,600,378 22,937,701 Treasury stock at cost, 588,900 shares (1,270,835) (1,270,835) ------------ ------------ 29,513,579 28,474,950 ------------ ------------ $ 34,651,168 $ 33,365,375 ============ ============
The accompanying notes are an integral part of these financial statements. 3 WIRELESS TELECOM GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended March 31, --------------------------- 2000 1999 ---- ---- NET SALES $ 2,141,335 $ 1,543,724 ----------- ----------- COSTS AND EXPENSES: Cost of sales 672,849 389,200 Operating expenses 781,063 496,981 Interest, dividend and other income (407,241) (213,580) ----------- ----------- TOTAL COSTS AND EXPENSES 1,046,671 672,601 ----------- ----------- INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAX 1,094,664 871,123 PROVISION FOR INCOME TAXES 431,986 327,846 ----------- ----------- INCOME FROM CONTINUING OPERATIONS 662,678 543,277 DISCONTINUED OPERATIONS: Income (Loss) from discontinued operations -- net of income taxes -- (17,982) Gain on sale of test equipment business -- net of income taxes -- 3,578,834 ----------- ----------- NET INCOME $ 662,678 $ 4,104,129 =========== =========== NET INCOME PER COMMON SHARE (NOTE 2): BASIC Continuing Operations $ .04 $ .03 Discontinued Operations $ .00 $ .20 ----------- ----------- $ .04 $ .23 =========== =========== DILUTED Continuing Operations $ .04 $ .03 Discontinued Operations .00 .20 ----------- ----------- $ .04 $ .23 =========== ===========
The accompanying notes are an integral part of these financial statements. 4 WIRELESS TELECOM GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31, ---------------------------- 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 662,678 $ 4,104,129 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 109,191 135,896 Other income (16,668) (5,556) Provision for losses on accounts receivable 13,911 (97,648) Gain on sale of discontinued division -- (5,583,204) Changes in assets and liabilities: (Increase) decrease in accounts receivable (341,551) 694,428 (Increase) in inventories (34,862) (108,586) Decrease in prepaid expenses and other assets 934,752 915,865 Increase (decrease) in accounts payable and accrued expenses 269,271 (127,004) Increase in income taxes payable -- 1,922,809 ----------- ------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 1,596,722 1,851,129 ----------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment (500,000) -- Capital expenditures (37,504) (162,784) Officer's life insurance -- 24,159 Proceeds from sale of discontinued division -- 16,730,730 Proceeds from covenant not to compete -- 200,000 Purchase of Noise Product line -- (2,500,000) Expenses related to disposal -- (1,186,551) Increase of real estate escrow (1,579) -- ----------- ------------ NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES (539,083) 13,105,554 ----------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES Payments on mortgage (5,437) -- Proceeds from exercise of stock options\warrants 375,950 -- ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 370,513 -- ------------ ------------ NET INCREASE IN CASH AND CASH EQUIVALENTS 1,428,152 14,956,683 Cash and cash equivalents, at beginning of year 22,139,504 9,031,724 ------------ ------------ CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 23,567,656 $ 23,988,407 ============ ============ SUPPLEMENTAL INFORMATION: Cash paid during the period for: Taxes $ 725,400 $ 15,280
The accompanying notes are an integral part of these financial statements. 5 WIRELESS TELECOM GROUP, INC. NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES The condensed consolidated balance sheet as of March 31, 2000 and the condensed consolidated statements of operations for the three month periods ended March 31, 2000 and 1999 and the condensed consolidated statements of cash flows for the three month periods ended March 31, 2000 and 1999 have been prepared by the Company without audit. The financial statements for the period ended March 31, 2000 have been reviewed by our auditors. The consolidated financial statements include the accounts of Wireless Telecom Group, Inc. and its wholly-owned subsidiaries, WTG Foreign Sales Corporation and NC Mahwah, Inc. WTG Foreign Sales Corporation began operations as a subsidiary of the Company in February 1996. On March 11, 1999 the Company consummated the sale of all of its Wireless Test Equipment Business to Telecom Analysis Systems, Inc., a New Jersey corporation ("TAS"), for a purchase price of approximately $19 million pursuant to an Asset Purchase Agreement, dated January 7, 1999, between the Company and TAS (the "Asset Purchase Agreement"). Also, pursuant to the Asset Purchase Agreement, the Company purchased TAS' products relating to single-function noise generation (the "Noise Assets") for a purchase price of approximately $2.5 million, and the Company and TAS entered into non-competition agreements with the businesses associated with the respective products purchased by each. In the opinion of management, the accompanying condensed consolidated financial statements referred to above contain all necessary adjustments, consisting of normal accruals and recurring entries only, which are necessary to present fairly 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 financial statements included in its annual report on Form 10-K for the year ended December 31, 1999, which is incorporated herein by reference. Specific reference is made to this report for a description of the Company's securities and the notes to financial statements included therein, since certain information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles have been condensed or omitted. The results of operations for the three month periods ended March 31, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. NOTE 2 -- INCOME PER COMMON SHARE Income per common share is computed by dividing the net income by the weighted average number of common shares and common equivalent shares outstanding during each period. The Company has adopted SFAS 128 "Earnings Per Share" ("SFAS 128"), which has changed the method for calculating earnings per share. SFAS 128 requires the presentation of "basic" and "diluted" earnings per share on the face of the income statement. Prior period earnings per share data have been restated in accordance with Statement 128. NOTE 3 -- INVESTMENT PROPERTY The Company has reclassified the land and building it owns in Mahwah, New Jersey. This property is not being utilized for operations and is currently available for sale. 6 REVIEW REPORT ON INTERIM CONDENSED FINANCIAL STATEMENTS To the Shareholders Wireless Telecom Group, Inc. We have reviewed the accompanying balance sheet, statement of operations and statement of cash flows of Wireless Telecom Group, Inc. as of March 31, 2000 and for the three month period then ended. These financial statements are the responsibility of the company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. /s/ Lazar Levine & Felix LLP ---------------------------- LAZAR LEVINE & FELIX LLP New York, New York May 10, 2000 7 ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION Wireless Telecom Group, Inc., a New Jersey corporation (the "Company"), develops, manufactures and markets a wide variety of electronic noise sources, and in addition, until March 11, 1999, test instruments for the wireless telecommunication industry. The Company's products have historically been primarily used to test the performance and capability of cellular/PCS and satellite communications systems. Other applications include radio, radar, wireless local area network (WLAN) and digital television. On March 11, 1999 the Company consummated the sale of all of its Wireless Test Equipment Business to Telecom Analysis Systems, Inc., a New Jersey corporation ("TAS"), for a purchase price of approximately $19 million pursuant to an Asset Purchase Agreement, dated January 7, 1999, between the Company and TAS (the "Asset Purchase Agreement"). Also, pursuant to the Asset Purchase Agreement, the Company purchased TAS' products relating to single-function noise generation (the "Noise Assets") for a purchase price of approximately $2.5 million, and the Company and TAS entered into non-competition agreements with the businesses associated with the respective products purchased by each. The financial information presented herein includes: (i) Condensed consolidated balance sheets as of March 31, 2000 and as of December 31, 1999 (ii) Condensed consolidated statements of operations for the three month periods ended March 31, 2000 and 1999 and (iii) Condensed consolidated statements of cash flows for the three month periods ended March 31, 2000 and 1999. The financial statements as of and for the period ended March 31, 2000 have been reviewed by our auditors. OPERATIONS For the three months ended March 31, 2000 as compared to the corresponding period of the previous year, net sales increased to $2,141,335 from $1,543,724 an increase of $597,611 or 38.7%. This is primarily due to an increase in application of the Company's products as built-in testers in wireless networks and an overall increase in the market for the Company's noise-based communication products. The Company's gross profit on net sales for the three months ended March 31, 2000 was $1,468,486 or 68.6% as compared to $1,154,524 or 74.8% for the three months ended March 31, 1999. The Company can experience variations in gross profit based upon the mix of product sales as well as variations due to revenue volume and economies of scale. The Company continues to rigidly monitor costs associated with material acquisition, manufacturing and production. Operating expenses for the three months ended March 31, 2000 were $781,063 or 36.5% of net sales as compared to $496,981 or 32.2% of net sales for the three months ended March 31, 1999. For the three months ended March 31, 2000 as compared to the same period of the prior year, operating expenses increased in dollars by $284,082. This increase is primarily due to increased expenditures in research and development and commission expenses. The amortization of goodwill in connection with the acquisition of products relating to single-function noise generation from Telecom Analysis Systems is also responsible for the increase in operating expenses. Interest, dividend and other income increased by $193,661 for the three months ended March 31, 2000. This increase was due to a higher average investment balance during 2000. 8 ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Net income from continuing operations increased to $662,678, or $.04 per share, for the three months ended March 31, 2000 as compared to $543,277, or $.03 per share for the three months ended March 31, 1999. The explanation of these changes can be derived from the analysis given above of operations for the quarters ending March 31, 2000 and 1999, respectively. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital has increased by $587,741 to $25,363,382 at March 31, 2000, from $24,775,641 at December 31, 1999. At March 31, 2000 the Company had a current ratio of 17.1 to 1, and a ratio of debt to net worth of .17 to 1. At December 31, 1999 the Company had a current ratio of 19.9 to 1, and a ratio of debt to net worth of .17 to 1. Cash provided by operations was $1,596,722 for the period ending March 31, 2000. Cash provided by net income was $662,678. In addition, prepaid expenses decreased by $934,752 and accounts payable and accrued expenses increased by $269,271. This was offset by an increase in accounts receivable of $341,551. Operating activities provided $1,851,129 in cash flows for the comparable period in 1999. Cash provided by operations was primarily due to net income and an increase in income taxes payable offset by the gain on sale of discontinued division. Net cash used for investing activities for the quarter ending March 31, 2000 was $539,083. The primary use of these funds was the purchase of a $500,000 investment in equity securities of an unrelated entity. For the quarter ended March 31, 1999 net cash provided by investing activities was $13,105,554. In 1999, the Company realized proceeds of $16,730,730 from the sale of its Wireless Test Equipment Business partially offset by $2,500,000 for the purchase of the Noise Product Line from Telecom Analysis Systems, and $1,186,551 for expenses relating to the disposal of the Wireless Test Equipment Business. Net cash provided by financing activities for the quarters ending March 31, 2000 and 1999 were $370,513 and $0.00, respectively. Proceeds from the exercise of stock options and warrants were the primary source of these funds in 2000. These proceeds were partially offset by cash outlays for mortgage payments on the Company's Mahwah facility. The Company believes that its financial resources from working capital provided by operations are adequate to meet current requirements. INFLATION AND SEASONALITY The Company does not anticipate that inflation will significantly impact its business nor does it believe that its business is seasonal. 9 PART II -- OTHER INFORMATION Item 1. LEGAL PROCEEDINGS On March 15, 1999, a complaint was filed in the Superior Court of the State of California for the County of Orange. The action was brought by Mr. David Day, an individual; David Day d/b/a Day Test & Measurements and Day Test & Measurements, as plaintiffs against Noise Com, Inc., a New Jersey corporation; Wireless Telecom Group, Inc., a New Jersey corporation; Telecom Analysis Systems, Inc., Bowthorpe PLC and Does 1 through 100, inclusive as defendants. The action sets forth several causes of action, including breach of contract and fraud relating to an alleged failure of the defendants to pay full commissions allegedly owed to the plaintiff. The plaintiffs allege damages in excess of $1 million from each of the defendants. The Company believes that the damages that might be awarded to the plaintiffs in connection with this matter would not have a material adverse effect on the Company's business, financial condition or results of operations. The action is scheduled to be tried on June 19, 2000. On April 23, 1999, Noise Com commenced an arbitration proceeding against Day Test and Measurements ("Day Test"), a plaintiff in the aforementioned California action. In the arbitration, venued in New Jersey and brought under the rules of the American Arbitration Association, Noise Com alleges that Day Test, a former sales representative for Noise Com, failed to act with diligence and loyalty in performing its duties as Noise Com's agent. Also, the arbitration seeks to resolve the dispute concerning the commissions allegedly due Day Test. On April 27, 1999, Day Test objected to the arbitration, claiming that it never agreed to arbitrate disputes with Noise Com. In response to Day Test's objection, on May 6, 1999, Noise Com filed an action in the Superior Court of New Jersey, County of Bergen, seeking a declaratory judgement requiring Day Test to participate in the aforementioned New Jersey arbitration. Alternatively, Noise Com asks that the parties' disputes be decided by the New Jersey Court. Item 2. CHANGES IN SECURITIES Not applicable. Item 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. Item 5. OTHER INFORMATION Not applicable. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 11.1 Computation of per share earnings 27 Financial Data Schedule
(b) Reports on Form 8-K: Not applicable. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WIRELESS TELECOM GROUP, INC. (Registrant) Date: May 12, 2000 /S/ Edward Garcia ----------------------------------------- Edward Garcia Chairman and Chief Executive Officer Date: May 12, 2000 /S/ Demir Richard Eden ---------------------- Demir Richard Eden Acting Chief Financial Officer 11 EX-11 2 EXHIBIT 11.1 Exhibit 11.1 WIRELESS TELECOM GROUP, INC. COMPUTATION OF PER SHARE EARNINGS (UNAUDITED)
MARCH 31, 2000 March 31, 1999 -------------- -------------- Income from continuing operations $ 662,678 $ 543,277 Income from discontinued operations and Gain on sale of test equipment business net of income tax -- 3,560,852 -------------- ----------- Net Income $ 662,678 $ 4,104,129 ============== =========== BASIC EARNINGS: Weighted average number of common shares 17,162,257 17,557,298 Outstanding ============== =========== Basic earnings per common share: Continuing operations $0.04 $0.03 Discontinued operations 0.00 0.20 ----- ----- $0.04 $0.23 ===== ===== DILUTED EARNINGS: Weighted average number of common shares outstanding 17,162,257 17,557,298 Stock Options 772,138 -- -------------- ----------- Weighted average number of common shares outstanding, as 17,934,395 17,557,298 adjusted ============== =========== Diluted earnings per common share: Continuing operations $0.04 $0.03 Discontinued operations 0.00 0.20 ----- ----- $0.04 $0.23 ===== =====
12 EX-27 3 EXHIBIT 27.1
5 The schedule contains summary financial information extracted from the consolidated financial statements for the quarter ended March 31, 2000 and is qualified in its entirety by reference to such statements. 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 23,567,656 0 1,305,636 58,592 1,424,749 26,940,942 1,824,952 1,222,946 34,651,168 1,577,560 0 178,059 0 0 29,335,520 34,651,168 2,141,335 2,141,335 672,849 1,453,912 0 13,911 0 1,094,664 431,986 662,678 0 0 0 662,678 0.04 0.04
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