UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
CURRENT REPORT Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
| Date of report (Date of earliest event reported): |
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation)
(Commission File Number) |
(IRS Employer Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.01. | Completion of Acquisition of Disposition of Assets. |
On December 30, 2022, Wireless Telecom Group, Inc., a New Jersey corporation (the “Company”), and its wholly owned subsidiary, Wireless Telecommunications Group, LTD, a company organized under the laws of England and Wales (“Holdings”), completed the transaction (the “Transaction”) pursuant to the Securities Purchase Agreement (the “Purchase Agreement”) dated December 4, 2022 with E-Space Acquisitions LLC, a Delaware limited liability company (“Buyer”), and eSpace Inc., a Delaware corporation, as guarantor. Pursuant to the Purchase Agreement, the Buyer acquired 100% of the issued and outstanding equity interests of Holdings from the Company. The consideration for the Transaction was $14.5 million, inclusive of $13.75 million in cash consideration and a $750,000 note payable, subject to agreed-upon reductions and certain post-closing adjustments as set forth in the Purchase Agreement.
The above description of the Purchase Agreement and the Transaction is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which was filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on December 5, 2022 and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits |
(b) Pro forma financial information.
The pro forma financial information of the Company as adjusted to give effect to the sale of the Holdings is presented in the unaudited pro forma condensed consolidated financial statements filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
(d) Exhibits. The following exhibits are filed as a part of this report.
| Exhibit No. | Description | |
| 99.1 | Unaudited Pro Forma Condensed Consolidated Financial Statements of Wireless Telecom Group, Inc. | |
| 99.2 | Press Release of Wireless Telecom Group, Inc., dated December 30, 2022 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WIRELESS TELECOM GROUP, INC. | ||
| Date: December 30, 2022 | By: | /s/ Michael Kandell |
| Michael Kandell | ||
| Chief Financial Officer |
Exhibit 99.1
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On December 30, 2022, Wireless Telecom Group, Inc. (the “Company”) completed the previously announced sale of its wholly owned subsidiary, Wireless Telecommunications Group, LTD, a company organized under the laws of England and Wales to E-Space Acquisitions LLC for $14.5 million comprised of $13.75 million in cash consideration and a $750,000 note payable, subject to agreed-upon reductions of approximately $650,000.
Wireless Telecommunications Group, LTD wholly owns CommAgility LTD, a company organized under the laws of England and Wales. Wireless Telecommunications Group, LTD and CommAgility LTD collectively made up the Company’s Radio, Baseband and Software segment (“RBS”).
As previously disclosed on March 1, 2022, the Company completed the sale of its formerly wholly owned subsidiary, Microlab/FXR, LLC (“Microlab”) to RF Industries, LTD for approximately $22.8 million in proceeds net of indemnification and purchase price adjustment holdbacks and direct expenses.
The following unaudited pro forma consolidated financial statements of the Company have been derived from the Company’s historical consolidated financial statements. The unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2022 give effect to the Company’s sale of RBS as if it had occurred on January 1, 2022. The unaudited pro forma consolidated balance sheet as of September 30, 2022 gives effect to the sale of RBS as if it had occurred on that date. The unaudited pro forma consolidated statement of operations for the twelve months ended December 31, 2021 give effect to the Company’s sale of RBS and Microlab as if both divestitures had occurred on January 1, 2021.
The unaudited pro forma consolidated financial statements of the Company and its subsidiaries have been prepared using assumptions and estimates that the Company’s management believes are reasonable under the circumstances and are intended for informational purposes only. They are not necessarily indicative of the financial results that would have occurred if the transactions described herein had taken place on the dates indicated, nor are they indicative of the future consolidated results of the Company. However, management believes that the estimates and assumptions used provide a reasonable basis for presenting the significant effects of the sale of Microlab and RBS. Management also believes the pro forma adjustments give appropriate effect to the estimates and assumptions and are applied in conformity with accounting principles generally accepted in the United States of America.
The unaudited pro forma financial information should be read in conjunction with the historical consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company for the nine months ended September 30, 2022 (unaudited) and for the year ended December 31, 2021 (audited), including the related notes, filed with the Securities and Exchange Commission on Form 10-Q on November 14, 2022 and on Form 10-K on March 17, 2022, respectively.
Wireless Telecom Group, Inc.
Unaudited Pro Forma Balance Sheet
As of September 30, 2022
(in thousands, except share amounts)
| As of September 30, 2022 | ||||||||||||||
| WTG As Reported | Pro Froma Adjustments | WTG As Adjusted | ||||||||||||
| CURRENT ASSETS | ||||||||||||||
| Cash & cash equivalents | $ | 10,726 | $ | 12,500 | (a) | $ | 23,226 | |||||||
| Accounts receivable - net of reserves of $183 | 4,329 | (1,243 | ) | (b) | 3,086 | |||||||||
| Inventories - net of reserves of $686 | 5,685 | (612 | ) | (b) | 5,073 | |||||||||
| Prepaid expenses and other current assets | 2,196 | (860 | ) | (b) | 1,336 | |||||||||
| TOTAL CURRENT ASSETS | 22,936 | 9,785 | 32,721 | |||||||||||
| PROPERTY PLANT AND EQUIPMENT - NET | 1,162 | (651 | ) | (b) | 511 | |||||||||
| OTHER ASSETS | ||||||||||||||
| Goodwill | 9,405 | (3,405 | ) | (b) | 6,000 | |||||||||
| Acquired intangible assets, net | 3,070 | (339 | ) | (b) | 2,731 | |||||||||
| Deferred income taxes, net | 2,412 | - | 2,412 | |||||||||||
| Right of use assets | 724 | - | 724 | |||||||||||
| Other assets | 253 | - | 253 | |||||||||||
| TOTAL OTHER ASSETS | 15,864 | (3,744 | ) | 12,120 | ||||||||||
| TOTAL ASSETS | $ | 39,962 | $ | 5,390 | $ | 45,352 | ||||||||
| CURRENT LIABILITIES | ||||||||||||||
| Short term debt | $ | - | $ | - | $ | - | ||||||||
| Accounts payable | 1,527 | (823 | ) | (b) | 704 | |||||||||
| Short term leases | 369 | - | 369 | |||||||||||
| Accrued expenses and other current liabilities | 4,307 | (809 | ) | (b) | 3,498 | |||||||||
| Deferred revenue | 92 | (72 | ) | (b) | 20 | |||||||||
| TOTAL CURRENT LIABILITIES | 6,295 | (1,704 | ) | 4,591 | ||||||||||
| LONG TERM LIABILITIES | ||||||||||||||
| Long term debt | - | - | - | |||||||||||
| Long term leases | 397 | - | 397 | |||||||||||
| Other long term liabilities | 30 | - | 30 | |||||||||||
| Deferred tax liability | 189 | (189 | ) | (b) | 0 | |||||||||
| TOTAL LONG TERM LIABILITIES | 616 | (189 | ) | 427 | ||||||||||
| 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 35,550,342 shares issued, 22,310,889 shares outstanding | 366 | - | 366 | |||||||||||
| Additional paid in capital | 52,635 | - | 52,635 | |||||||||||
| Retained earnings/(deficit) | 7,210 | 7,293 | (a) | 14,503 | ||||||||||
| Treasury stock at cost, 13,239,453 shares | (27,170 | ) | - | (27,170 | ) | |||||||||
| Accumulated other comprehensive income | 10 | (10 | ) | (b) | - | |||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 33,051 | 7,283 | 40,334 | |||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 39,962 | $ | 5,390 | $ | 45,352 | ||||||||
Wireless Telecom Group, Inc.
Unaudited Pro Forma Consolidated Statements of Operations
(in thousands, except per share amounts)
| Nine months ended September 30, 2022 | ||||||||||||||
| WTG As Reported | Pro Froma Adjustments | WTG As Adjusted | ||||||||||||
| Net revenues | $ | 18,994 | $ | (3,366 | ) | (c) | $ | 15,628 | ||||||
| Cost of revenues | 8,566 | (1,749 | ) | (c) | 6,817 | |||||||||
| Gross profit | 10,428 | (1,617 | ) | 8,811 | ||||||||||
| Operating expenses: | ||||||||||||||
| Research and development | 3,352 | (1,980 | ) | (c) | 1,372 | |||||||||
| Sales and marketing | 3,620 | (680 | ) | (c) | 2,940 | |||||||||
| General and administrative | 9,169 | (1,580 | ) | (c) | 7,589 | |||||||||
| Total operating expenses | 16,141 | (4,240 | ) | 11,901 | ||||||||||
| Operating income/(loss) | (5,713 | ) | 2,623 | (3,090 | ) | |||||||||
| Gain/(loss) on extinguishment of debt | (792 | ) | - | (792 | ) | |||||||||
| Other income/(expense) | 87 | 216 | (c) | 303 | ||||||||||
| Interest expense | (159 | ) | - | (159 | ) | |||||||||
| Gain/(Loss) before taxes | (6,577 | ) | 2,839 | (3,738 | ) | |||||||||
| Tax provision/(benefit) | (1,540 | ) | 599 | (c) | (941 | ) | ||||||||
| Net income/(loss) from continuing operations | $ | (5,037 | ) | $ | 2,240 | $ | (2,797 | ) | ||||||
| Net income from discontinued operations, net of tax | 11,695 | - | 11,695 | |||||||||||
| Net income/(loss) | $ | 6,658 | 2,240 | $ | 8,898 | |||||||||
| Other comprehensive income/(loss): | ||||||||||||||
| Foreign currency translation adjustments | (761 | ) | 761 | (c) | - | |||||||||
| Comprehensive Income/(Loss) | $ | 5,897 | $ | 3,001 | $ | 8,898 | ||||||||
| Income/(loss) per share from continuing operations: | ||||||||||||||
| Basic | $ | (0.23 | ) | $ | (0.13 | ) | ||||||||
| Diluted | $ | (0.23 | ) | $ | (0.13 | ) | ||||||||
| Income/(loss) per share from discontinued operations: | ||||||||||||||
| Basic | $ | 0.53 | $ | 0.53 | ||||||||||
| Diluted | $ | 0.53 | $ | 0.53 | ||||||||||
| Income/(loss) per share: | ||||||||||||||
| Basic | $ | 0.30 | $ | 0.41 | ||||||||||
| Diluted | $ | 0.30 | $ | 0.41 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 21,886 | 21,886 | ||||||||||||
| Diluted | 21,886 | 21,886 | ||||||||||||
Wireless Telecom Group, Inc.
Unaudited Pro Forma Consolidated Statements of Operations
(in thousands, except per share amounts)
| Year ended December 31, 2021 | ||||||||||||||
| WTG As Reported | Pro Froma Adjustments | WTG As Adjusted | ||||||||||||
| Net revenues | $ | 49,245 | $ | (26,569 | ) | (d) | $ | 22,676 | ||||||
| Cost of revenues | 24,158 | (14,446 | ) | (d) | 9,712 | |||||||||
| Gross profit | 25,087 | (12,123 | ) | 12,964 | ||||||||||
| Operating expenses: | ||||||||||||||
| Research and development | 5,550 | (3,832 | ) | (d) | 1,718 | |||||||||
| Sales and marketing | 7,169 | (3,166 | ) | (d) | 4,003 | |||||||||
| General and administrative | 11,869 | (2,793 | ) | (d) | 9,076 | |||||||||
| Goodwill impairment | 258 | (258 | ) | - | ||||||||||
| Loss on change in fair value of contingent consideration | 386 | - | 386 | |||||||||||
| Total operating expenses | 25,232 | (10,049 | ) | 15,183 | ||||||||||
| Operating income/(loss) | (145 | ) | (2,074 | ) | (2,219 | ) | ||||||||
| Gain/(loss) on extinguishment of debt | 2,045 | - | 2,045 | |||||||||||
| Other income/(expense) | 70 | 438 | (e) | 508 | ||||||||||
| Interest expense | (1,143 | ) | 1,133 | (f) | (10 | ) | ||||||||
| Income/(Loss) before taxes | 827 | (503 | ) | 324 | ||||||||||
| Tax provision/(benefit) | (673 | ) | 696 | (g) | 23 | |||||||||
| Net income/(loss) | $ | 1,500 | $ | (1,199 | ) | $ | 301 | |||||||
| Other comprehensive income/(loss): | ||||||||||||||
| Foreign currency translation adjustments | (70 | ) | 70 | - | ||||||||||
| Comprehensive Income/(Loss) | $ | 1,430 | $ | (1,129 | ) | $ | 301 | |||||||
| Loss per share: | ||||||||||||||
| Basic | $ | 0.07 | $ | 0.01 | ||||||||||
| Diluted | $ | 0.06 | $ | 0.01 | ||||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 22,050 | 22,050 | ||||||||||||
| Diluted | 24,297 | 24,297 | ||||||||||||
Notes to the Unaudited Pro Forma Financial Information
Note 1 – Basis of Presentation
The historical unaudited consolidated balance sheet as of September 30, 2022 reflects the reported assets, liabilities and shareholders’ equity of the Company with pro forma adjustments associated with the sale of RBS.
The unaudited pro forma consolidated balance sheet as of September 30, 2022 has been prepared in accordance with the Securities and Exchange Commission’s pro forma rules under S-X Article 11 assuming the sale of RBS occurred as of that date. The unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2022 have been prepared assuming the sale of RBS occurred on January 1, 2022. The unaudited pro forma consolidated statement of operations for the year ended December 31, 2021 have been prepared assuming that the sale of Microlab and RBS occurred on January 1, 2021. All material adjustments required to reflect the sales of Microlab and RBS are set forth in the columns labeled “Pro Forma Adjustments”. The data contained in the columns labeled “WTG As Reported” is derived from WTG’s historical unaudited consolidated balance sheet as of September 30, 2022 and WTG’s historical unaudited consolidated statement of operations for the nine months ended September 30, 2022 and audited consolidated statement of operations for the year ended December 31, 2021.
Note 2 – Pro Forma Adjustments
The following adjustments were made in the preparation of the unaudited pro forma consolidated balance sheet:
| (a) | To record as of September 30, 2022 (i) the expected net proceeds from the sale of RBS and (ii) the expected gain on the sale of RBS pursuant to the terms of the Purchase Agreement: |
Amount (in thousands) | ||||
| Gross consideration from the sale of RBS | $ | 14,500 | ||
| Estimated Closing and transaction costs | (1,250 | ) | ||
| Estimated offsets | (650 | ) | ||
| Purchase price note receivable | (100 | ) | ||
| Expected Net Proceeds from sale of RBS | $ | 12,500 | ||
Amount (in thousands) | ||||
| Gross consideration from the sale RBS | $ | 14,500 | ||
| Estimated offsets to purchase price | (650 | ) | ||
| Estimated transaction costs | (1,250 | ) | ||
| Book value of RBS assets | (5,307 | ) | ||
| Estimated gain on sale of RBS | $ | 7,293 | ||
Note – The expected net gain on the sale of RBS has not been reflected in the pro form consolidated statements of operations.
| (b) | To eliminate the net assets of the RBS segment consisting of trade accounts receivable, inventory, prepaid and other current assets, goodwill and acquired intangible assets, net fixed assets, accounts payable, accrued expenses, deferred revenue, deferred tax liability and accumulated other comprehensive income. Prepaid and other current assets includes the recognition of the $100,000 note receivable that is part of the purchase consideration. |
| (c) | To eliminate the operating activity related to RBS which includes net revenues, costs of revenues, research and development, sales and marketing and general and administrative expenses, other expenses comprised primarily of foreign exchange losses and tax benefit. Other comprehensive income adjustment related to foreign currency translation adjustments is also eliminated. |
| (d) | To eliminate the operating activity related to Microlab and RBS (in thousands): |
| Microlab | RBS | Total | ||||||||||
| Net Revenues | $ | 17,756 | $ | 8,813 | $ | 26,569 | ||||||
| Costs of Revenues | 10,259 | 4,187 | 14,446 | |||||||||
| Operating expenses: | ||||||||||||
| Research and development | 900 | 2,932 | 3,832 | |||||||||
| Sales and marketing | 2,374 | 792 | 3,166 | |||||||||
| General and administrative | 42 | 2,752 | 2,793 | |||||||||
| Goodwill impairment | 258 | 258 | ||||||||||
| (e) | To record sublease income related to Microlab’s sublease of 25 Eastman’s Road Parsippany N.J. |
| (f) | To eliminate interest expense related to our term debt and debt discount amortization. |
| (g) | To revise the tax benefit for elimination of Microlab and RBS taxable income. |
Exhibit 99.2
Wireless Telecom Group Announces Closing of Transaction with E-Space
Parsippany, New Jersey, USA – December 30, 2022 –Wireless Telecom Group, Inc. (NYSE American: WTT) (the “Company”) today announced the completion of its previously announced sale of CommAgility Ltd., to global space company, E-Space, in a transaction valued at $14.5 million, inclusive of $13.75 million in cash consideration and a $750,000 note payable, subject to agreed-upon reductions.
The transaction was the result of the Company’s previously disclosed process for evaluating strategic alternatives. As a result of this transaction, Wireless Telecom Group is now comprised solely of its Test & Measurement brands including Boonton, Holzworth and Noisecom.
Tim Whelan, Wireless Telecom Group, Inc. Chief Executive Officer stated, “This is an exciting milestone for the Company. With the close of this transaction, we have successfully executed on the sale of two of our three segments during 2022, pursuing our goal of unlocking and maximizing shareholder value. We remain focused on our strategic alternative initiatives around the remaining Test & Measurement business. As our process advances to more complete stages, we expect to continue evaluating the opportunity for any tax efficient return of capital to our shareholders.”
Tim Burke, E-Space vice president who will lead the CommAgility sales organization added, “We look forward to advancing our integration of CommAgility into Team E-Space as well as building upon the capabilities they built-to-date, which will support both the current dynamic customer base and our future opportunities.”
Wireless Telecom Group continues to explore strategic alternatives for the Company to enhance value for stockholders. Wireless Telecom Group does not expect to comment further or update the market with any additional information on the process unless and until its Board of Directors has approved a specific transaction or otherwise deems disclosure appropriate or necessary. There can be no assurance that the evaluation of strategic alternatives will result in any strategic alternative, or any assurance as to its outcome or timing.
CDX Advisors is serving as exclusive financial advisor and Bryan Cave Leighton Paisner is serving as legal counsel to Wireless Telecom Group.
About Wireless Telecom Group, Inc.
Wireless Telecom Group, Inc., comprised of Boonton, Holzworth, and Noisecom, is a global designer and manufacturer of advanced RF and microwave components, modules, systems, and instruments. Serving the wireless, telecommunication, satellite, military, aerospace, and semiconductor industries, Wireless Telecom Group products enable innovation across a wide range of traditional and emerging wireless technologies. With a unique set of high-performance products including peak power meters, signal generators, phase noise analyzers, signal processing modules, noise sources, and programmable noise generators, Wireless Telecom Group enables the development, testing, and deployment of wireless technologies around the globe. Wireless Telecom Group is headquartered in Parsippany, New Jersey, in the New York City metropolitan area, and maintains a global network of Sales and Service offices for excellent product service and support. Wireless Telecom Group’s website address is http://www.wirelesstelecomgroup.com.
About E-Space
E-Space is a global space company focused on bridging Earth and space with the world’s most sustainable low Earth orbit (LEO) network that is expected to reach over one hundred thousand multi-application communication satellites to help businesses and governments securely and affordably access the power of space to solve problems on Earth. Founded by industry pioneer Greg Wyler, E-Space is focused on democratizing space and transforming industries by bringing down the cost of space-based communications, raising the level of satellite system resiliency and setting a new standard in sustainable space infrastructure that will effectively minimize and reduce space debris and destruction while preserving access to space for future generations. Learn more about the Company at e-space.com, or follow E-Space on LinkedIn and Instagram.
Wireless Telecom Group Media/Investor Contact:
Mike Kandell, Chief Financial Officer (973) 386-9696
E-Space Media Contact:
Chris Phillips, vice president, PR & Communications: chris.phillips@e-space.com; +1 (917) 974-1667
Cover |
Dec. 30, 2022 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Dec. 30, 2022 |
| Entity File Number | 001-11916 |
| Entity Registrant Name | Wireless Telecom Group, Inc. |
| Entity Central Index Key | 0000878828 |
| Entity Tax Identification Number | 22-2582295 |
| Entity Incorporation, State or Country Code | NJ |
| Entity Address, Address Line One | 25 Eastmans Road |
| Entity Address, City or Town | Parsippany |
| Entity Address, State or Province | NJ |
| Entity Address, Postal Zip Code | 07054 |
| City Area Code | (973) |
| Local Phone Number | 386-9696 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock |
| Trading Symbol | WTT |
| Security Exchange Name | NYSEAMER |
| Entity Emerging Growth Company | false |
-8?2
M0$3;8T.P6BP^0"X99K>]9!:G