UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2004
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 1-11916
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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 Identification No.)
incorporation or organization)
25 Eastmans Road
Parsippany, New Jersey 07054
---------------------- -----
(Address of principal executive offices) (Zip Code)
(201) 261-8797
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Registrant's telephone number, including area code
Not Applicable
--------------
(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 by check mark whether the registrant is an accelerated filer (as
defined on Exchange Act Rule 12b-2). YES NO X
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock - Par Value $.01 17,223,801
- -------------- -------------- ----------
Class Outstanding Shares
At July 30, 2004
WIRELESS TELECOM GROUP, INC.
Table of Contents
PART I. FINANCIAL INFORMATION Page(s)
Item 1 -- Consolidated Financial Statements:
Condensed Balance Sheets as of June 30, 2004 (unaudited)
and December 31, 2003 3
Condensed Statements of Operations for the Three and Six Months
Ended June 30, 2004 and 2003 (unaudited) 4
Condensed Statements of Cash Flows for the Six Months
Ended June 30, 2004 and 2003 (unaudited) 5
Notes to Interim Condensed Financial Statements (unaudited) 6 - 7
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 11
Item 3 -- Quantitative and Qualitative Disclosures About Market Risk 11
Item 4 -- Controls and Procedures 11
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings 12
Item 2 -- Changes in Securities and Use of Proceeds 12
Item 3 -- Defaults upon Senior Securities 12
Item 4 -- Submission of Matters to a Vote of Security Holders 12
Item 5 -- Other Information 12
Item 6 -- Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index 14
2
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
- ASSETS -
JUNE, 30 DECEMBER 31,
2004 2003
---------------- ----------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $15,048,428 $16,265,765
Accounts receivable -- net of allowance for doubtful
accounts of
$133,046 and $175,399 for 2004 and 2003,
respectively 3,158,305 3,076,080
Inventories 6,518,135 5,903,191
Current portion of deferred tax
asset 264,880 264,880
Prepaid expenses, taxes and other current
assets 740,791 665,366
---------------- ----------------
TOTAL CURRENT ASSETS 25,730,539 26,175,282
---------------- ----------------
PROPERTY, PLANT AND EQUIPMENT - NET 5,691,014 5,528,931
---------------- ----------------
OTHER ASSETS:
Goodwill 1,351,392 1,351,392
Deferred tax
asset 383,861 383,861
Other assets 153,940 184,745
---------------- ----------------
TOTAL OTHER ASSETS 1,889,193 1,919,998
---------------- ----------------
TOTAL ASSETS $33,310,746 $33,624,211
================ ================
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable $828,169 $1,256,672
Accrued expenses and other current liabilities 566,245 367,437
Current portion of mortgage payable 41,877 40,329
Income taxes
payable 155,514 538,986
---------------- ----------------
TOTAL CURRENT LIABILITIES 1,591,805 2,203,424
---------------- ----------------
LONG TERM LIABILITIES:
Mortgage payable 3,067,547 3,088,880
Deferred rent
payable 128,300 111,855
---------------- ----------------
TOTAL LONG TERM LIABILITIES 3,195,847 3,200,735
---------------- ----------------
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,
20,273,501
and 19,992,378 issued for 2004 and 2003,
respectively 202,735 199,924
Additional paid-in-capital 13,591,415 13,100,857
Retained
earnings 22,430,373 22,620,700
Treasury stock at cost, - 3,049,700
shares (7,701,429) (7,701,429)
---------------- ----------------
TOTAL SHAREHOLDERS' EQUITY 28,523,094 28,220,052
---------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $33,310,746 $33,624,211
================ ================
See accompanying notes
3
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------------------- ---------------------------------
2004 2003 2004 2003
------------- ------------------ ------------- -------------------
NET SALES $5,584,405 $4,835,975 $11,070,850 $8,988,617
------------- ------------------ ------------- -------------------
COSTS AND EXPENSES:
Cost of sales 2,555,970 2,452,932 4,951,119 4,521,393
Operating
expenses 2,075,415 1,935,752 5,046,367 3,937,196
Interest and other income (32,645) (188,396) (239,540) (342,780)
Interest expense 58,898 59,623 117,983 119,419
------------- ------------------ ------------- -------------------
TOTAL COSTS AND EXPENSES 4,657,638 4,259,911 9,875,929 8,235,228
------------- ------------------ ------------- -------------------
INCOME BEFORE INCOME TAXES 926,767 576,064 1,194,921 753,389
PROVISION FOR INCOME TAXES 279,850 208,738 360,136 267,919
------------- ------------------ ------------- -------------------
NET INCOME $646,917 $367,326 $834,785 $485,470
============= ================== ============= ===================
NET INCOME PER COMMON
SHARE:
BASIC $0.04 $0.02 $0.05 $0.03
============= ================== ============= ===================
DILUTED $0.04 $0.02 $0.05 $0.03
============= ================== ============= ===================
See accompanying notes
4
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Six Months
Ended June 30,
-------------------------------------
2004 2003
--------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $834,785 $485,470
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 220,863 230,181
Provision for losses on accounts
receivable (42,353) 16,092
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (39,873) 179,845
(Increase) in inventories (614,945) (217,613)
(Increase) decrease in prepaid expenses and other
current assets (75,424) 56,997
(Decrease) increase in accounts payable and accrued
expenses (229,696) 192,518
(Decrease) in income taxes payable (383,472) -
--------------- -------------------
Net cash (used for) provided by operating
activities (330,115) 943,490
--------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (381,345) (119,280)
Cash surrender value - officer's life insurance 33,940 -
Increase in real estate escrow (4,736) (4,736)
--------------- -------------------
Net cash (used for) investing activities (352,141) (124,016)
--------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of mortgage note (19,784) (18,348)
Deferred revenue 16,445 -
Acquisition of treasury stock - (105,711)
Cash dividends paid (1,025,112) (674,713)
Proceeds from exercise of stock options/warrants 493,370 189,000
--------------- -------------------
Net cash (used for) financing activities (535,081) (609,772)
--------------- -------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,217,337) 209,702
Cash and cash equivalents, at beginning of year 16,265,765 15,523,180
--------------- -------------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $15,048,428 $15,732,882
=============== ===================
SUPPLEMENTAL INFORMATION:
Cash paid during the
period for:
Taxes $742,136 $101,528
Interest $117,983 $119,419
See accompanying notes
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 June 30, 2004
and the condensed, consolidated statements of operations for
the three and six month periods ended June 30, 2004 and 2003
and the condensed, consolidated statements of cash flows for
the six month periods ended June 30, 2004 and 2003 have been
prepared by the Company without audit. The consolidated
financial statements include the accounts of Wireless
Telecom Group, Inc. and its wholly-owned subsidiaries
Boonton Electronics Corporation, Microlab/FXR, WTG Foreign
Sales Corporation and NC Mahwah, Inc.
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, 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,
2003, which note is incorporated herein by reference.
Specific reference is made to that 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 accounting principles
generally accepted in the United States of America have been
condensed or omitted from this report.
The results of operations for the three and six month periods
ended June 30, 2004 and 2003 are not necessarily indicative
of the results to be expected for the full year.
Certain prior years' information has been reclassified to conform
to the current year's reporting presentation.
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. As
promulgated in SFAS 128 "Earnings Per Share" ("SFAS 128"),
SFAS 128 requires the presentation of "basic" and "diluted"
earnings per share on the face of the income statement.
NOTE 3 - SHAREHOLDERS' EQUITY
During the six months ended June 30, 2004, no shares were
repurchased by the Company, under the stock repurchase
program authorized by the Board of Directors on November 27,
2000 and as amended on October 5, 2001.
6
WIRELESS TELECOM GROUP, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS
Effective January 1, 2002, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill
and Other Intangible Assets". In accordance with SFAS No.
142, intangible assets, including purchased goodwill, must
be evaluated for impairment. Those intangible assets that
will continue to be classified as goodwill or as other
intangibles with indefinite lives are no longer amortized,
but will be tested for impairment periodically. During 2003,
the goodwill relating to the acquisition of Microlab/FXR was
tested for impairment by an independent valuation consulting
firm for the year ended December 31, 2003. The conclusion of
the valuation was that this goodwill was not impaired under
Statement of Financial Accounting Standards No. 142
requirements for goodwill impairment testing. Additional
testing will be done at the end of this year and each year
going forward to continue to test for impairment of
goodwill.
NOTE 5 - ACCOUNTING FOR STOCK OPTIONS
The Company accounts for its stock-based compensation in
accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," and has adopted
the disclosure-only alternative of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," as amended by SFAS No. 148,
"Accounting for Stock-Based Compensation - Transition and
Disclosure."
The following table illustrates the effect on net income and
earnings per share had compensation expense for the employee
stock-based plans been recorded based on the fair value
method under SFAS No. 123:
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
---- ---- ---- ----
Net income:
As reported $646,917 $367,326 $834,785 $485,470
Pro forma 616,712 313,043 777,753 378,398
Basic earnings per share:
As reported $.04 $.02 $.05 $.03
Pro forma .04 .02 .05 .03
Diluted earnings per share:
As reported $.04 $.02 $.05 $.03
Pro forma .04 .02 .04 .02
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company's former CEO, who resigned in March 2004, is now
employed by the Company as an outside engineering consultant
on a week-to-week basis. The Company has agreed to pay this
former CEO at a weekly rate of $1,600 for a minimum of 20
hours per week. This verbal agreement can be terminated at
any time.
7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
- ------------
Wireless Telecom Group, Inc., and its operating subsidiaries, Boonton
Electronics Corporation and Microlab/FXR (collectively, the "Company"), develop,
manufacture and market a wide variety of electronic noise sources, electronic
testing and measuring instruments including power meters, voltmeters and
modulation meters and high-power passive microwave components. The Company's
products have historically been primarily used to test the performance and
capability of cellular/PCS and satellite communication systems and to measure
the power of RF and microwave systems. Other applications include radio, radar,
wireless local area network (WLAN) and digital television.
The financial information presented herein includes:
(i) Condensed Consolidated Balance Sheets as of June 30, 2004 and as of
December 31, 2003
(ii) Condensed Consolidated Statements of Operations for the three and six
month periods ended June 30, 2004 and 2003 and
(iii) Condensed Consolidated Statements of Cash Flows for the six month periods
ended June 30, 2004 and 2003.
FORWARD LOOKING STATEMENTS
- --------------------------
The statements contained in this Quarterly Report on Form 10-Q that are not
historical facts, including, without limitation, the statements under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," are forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements may be identified
by, among other things, the use of forward-looking terminology such as
"believes," "expects," "intends," "plans," "may," "will," "should,"
"anticipates" or "continues" or the negative thereof of other variations thereon
or comparable terminology, or by discussions of strategy that involve risks and
uncertainties. These statements are based on the Company's current expectations
of future events and are subject to a number of risks and uncertainties that may
cause the Company's actual results to differ materially from those described in
the forward-looking statements. These risks and uncertainties include, but are
not limited to, product demand and development of competitive technologies in
our market sector, the impact of competitive products and pricing, the loss of
any significant customers, the effects of adoption of newly announced accounting
standards, the effects of economic conditions and trade, legal and other
economic risks, among others. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated or projected. These risks
and uncertainties are disclosed from time to time in the Company's filings with
the Securities and Exchange Commission, the Company's press releases and in oral
statements made by or with the approval of authorized personnel. The Company
assumes no obligation to update any forward-looking statements as a result of
new information or future events or developments.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
Management's discussion and analysis of the financial condition and results
of operations are based upon the Company's consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires the Company to make estimates and judgments that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amount
of revenues and expenses for each period. The following represents a summary of
the Company's critical accounting policies, defined as those policies that the
Company believes are: (a) the most important to the portrayal of its financial
condition and results of operations, and (b) that require management's most
difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effects of matters that are inherently uncertain.
ALLOWANCES FOR DOUBTFUL ACCOUNTS
- --------------------------------
The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of any of its customers were to decline, additional
allowances might be required.
8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
INCOME TAXES
- ------------
As part of the process of preparing the consolidated financial statements,
the Company is required to estimate its income taxes in each of the
jurisdictions in which it operates. The process incorporates an assessment of
the current tax exposure together with temporary differences resulting from
different treatment of transactions for tax and financial statement purposes.
Such differences result in deferred tax assets and liabilities, which are
included within the consolidated balance sheet. The recovery of deferred tax
assets from future taxable income must be assessed and, to the extent that
recovery is not likely, the Company establishes a valuation allowance. Increases
in valuation allowances result in the recording of additional tax expense.
Further, if the ultimate tax liability differs from the periodic tax provision
reflected in the consolidated statements of operations, additional tax expense
may be recorded.
VALUATION OF LONG-LIVED ASSETS
- ------------------------------
The Company assesses the potential impairment of long-lived tangible and
intangible assets whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. Changes in the operating strategy can
significantly reduce the estimated useful life of such assets.
RESULTS OF OPERATIONS
- ---------------------
The following discussion of our financial condition and results of
operations should be read in conjunction with our interim condensed consolidated
financial statements and the notes to those statements included in Part I, Item
I of this Quarterly Report on Form 10-Q and in conjunction with the consolidated
financial statements contained in our Annual Report on Form 10-K for the year
ended December 31, 2003.
For the six months ended June 30, 2004 as compared to the corresponding
period of the previous year, net sales increased to $11,071,000 from $8,989,000,
an increase of $2,082,000 or 23.2%. For the quarter ended June 30, 2004 as
compared to the corresponding quarter of the previous year, net sales increased
to $5,584,000 from $4,836,000, an increase of $748,000 or 15.5%. The increases
in the three and six months ended June 30, 2004 are a result of increased sales
activity in all business operations.
Gross profit on net sales for the six months ended June 30, 2004 was
$6,120,000 or 55.3% as compared to $4,467,000 or 49.7% of net sales for the six
months ended June 30, 2003. Gross profit on net sales for the quarter ended June
30, 2004 was $3,028,000 or 54.2% as compared to $2,383,000 or 49.3% of net sales
for the three months ended June 30, 2003. Gross profit is higher for the three
and six months ended June 30, 2004 than in the same periods for 2003 primarily
due to higher sales volume and lower manufacturing labor and direct overhead
costs. The Company can experience variations in gross profit based upon the mix
of products sold as well as variations due to revenue volume and economies of
scale. The Company continues to carefully monitor costs associated with material
acquisition, manufacturing and production.
Operating expenses for the six months ended June 30, 2004 were $5,046,000
or 45.6% of net sales as compared to $3,937,000 or 43.8% of net sales for the
six months ended June 30, 2003. Operating expenses for the quarter ended June
30, 2004 were $2,075,000 or 37.2% of net sales as compared to $1,936,000 or
40.0% of net sales for the quarter ended June 30, 2003.
For the three months ended June 30, 2004 as compared to the same period of
the prior year, operating expenses increased in dollars by $140,000. This
increase is primarily due to an increase in commissions expense of $135,000, an
increase in amortization expense of $58,000 relating to a licensing agreement
entered into by the Company, partially offset by a decrease in research and
development expense of $94,000. For the six months ended June 30, 2004 as
compared to the same period in the prior year, operating expenses increased in
dollars by $1,109,000. This increase is primarily due to a one-time payout to
the Company's former Chief Executive Officer of $685,000, an increase in
commissions expense of $271,000, an increase in amortization expense of $115,000
relating to a licensing agreement entered into by the Company, an increase in
advertising expense of $48,000, partially offset by a decrease in research and
development expense of $58,000.
9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Interest and other income decreased by $103,000 for the six months ended
June 30, 2004 and by $156,000 for the quarter ended June 30, 2004. These
decreases were primarily due to realized losses in a working capital management
account, classified as cash equivalents, due to the fact that they were highly
liquid and readily convertible to cash, and were intended to be liquidated by
the Company on a short-term basis.
Net income increased to $835,000, or $.05 per share (diluted), for the six
months ended June 30, 2004 as compared to $485,000, or $.03 per share (diluted)
for the six months ended June 30, 2003. The Company realized net income for the
quarter ended June 30, 2004 of $647,000 or $.04 per share (diluted) as compared
to $367,000 or $.02 per share (diluted) for the three months ended June 30,
2003. The explanation of these changes can be derived from the analysis given
above of operations for the three and six month periods ending June 30, 2004 and
2003, respectively.
LIQUIDITY AND CAPITAL RESOURCES:
- --------------------------------
The Company's working capital has increased by $167,000 to $24,139,000 at
June 30, 2004, from $23,972,000 at December 31, 2003. At June 30, 2004 the
Company had a current ratio of 16.2 to 1, and a ratio of debt to net worth of
0.17 to 1. At December 31, 2003 the Company had a current ratio of 11.9 to 1,
and a ratio of debt to net worth of 0.19 to 1.
The Company used cash for operations of $330,000 for the six month period
ending June 30, 2004. This use of cash was primarily due to a one-time payout to
the Company's former Chief Executive Officer of $685,000, an increase in
inventories of $615,000, a decrease in income taxes payable of $383,000, and a
decrease in accounts payable and accrued expenses of $230,000, partially offset
by net income of $835,000 and a non-cash adjustment for depreciation and
amortization of $221,000.
The Company's former CEO, who resigned in March 2004, is now employed by
the Company as an outside engineering consultant on a week-to-week basis. The
Company has agreed to pay this former CEO at a weekly rate of $1,600 for a
minimum of 20 hours per week. This verbal agreement can be terminated at any
time. Mr. Terence McCoy was brought in as the Company's CEO and director
following Mr. Garcia's resignation. Mr. McCoy resigned effective July 9, 2004
and no longer serves as an officer or a director of the Company.
The Company has historically been able to collect its account receivables
approximately every two months. This average collection period has been
sufficient to provide the working capital and liquidity necessary to operate the
Company. The Company continues to monitor production requirements and delivery
times while maintaining manageable levels of goods on hand.
Operating activities provided $943,000 in cash flows for the comparable
period in 2003. The source of these funds was primarily due to cash provided by
net income of $485,000, a non-cash adjustment for depreciation and amortization
of $230,000, an increase in accounts payable and accrued expense of $193,000 and
a decrease in accounts receivable of $180,000, partially offset by an increase
in inventories of $218,000.
Net cash used for investing activities for the six months ended June 30,
2004 was $352,000. The primary use of these funds was capital expenditures of
$381,000. For the six months ended June 30, 2003, net cash used for investing
activities was $124,000. The primary use of these funds was capital expenditures
of $119,000.
Net cash used for financing activities for the six months ended June 30,
2004 was $535,000. The primary use of these funds was for dividends paid in the
amount of $1,025,000, partially offset by proceeds from the exercise of stock
options in the amount of $493,000. Net cash used for financing activities in the
same period of 2003 was $610,000. The primary use of these funds in 2003 was for
dividends paid in the amount of $675,000 and the acquisition of treasury stock
in the amount of $106,000, partially offset by proceeds from the exercise of
stock options in the amount of $189,000.
The Company anticipates that its resources provided by its cash flow from
operations will be sufficient to meet its financing requirements for at least
the next twelve-month period. The Company does not believe it will need to
borrow funds during the next twelve-month period.
INFLATION AND SEASONALITY
- -------------------------
The Company does not anticipate that inflation will significantly impact
its business or its results of operations nor does it believe that its business
is seasonal.
10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
- ----------------------------------------------
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." This statement amends and
clarifies financial accounting and reporting for derivatives and for hedging
activities under SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." This standard is effective for contracts entered into or
modified after June 30, 2003. This standard had no impact on the Company's
financial statements.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Instruments with Characteristics of Both Liabilities and Equity." This standard
requires that certain financial instruments embodying an obligation to transfer
assets or to issue equity securities be classified as liabilities. It is
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise is generally effective July 1, 2003. This standard had no impact
on the Company's financial statements.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has a credit facility with its major bank for the express
purpose of purchasing components from an Asian supplier under a letter of
credit. The Company has paid for the components received thus far during 2004.
Should the Company not make payment directly, the credit facility would be
utilized. The credit facility bears interest based on interest rates tied to the
prime rate, which may fluctuate over time based on economic conditions.
ITEM 4 - CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures designed to ensure
that information required to be disclosed in reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the specified time periods. As of the end of the period covered
by this report, the Company's Chief Executive Officer and Chief Financial
Officer evaluated, with the participation of the Company's management, the
effectiveness of the Company's disclosure controls and procedures. Based on the
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective.
There were no changes in the Company's internal control over financial reporting
that occurred during the Company's most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
11
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is not aware of any material legal proceeding
against the Company or in which any of their property
is subject.
Item 2. CHANGES IN SECURITIES
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Registrant held its Annual Meeting of Stockholders on May 21,
2004. The following proposal was adopted by the votes indicated.
(b) (c)(1) Seven directors were elected at the Annual Meeting to
serve until the Annual Meeting of Stockholders in 2005. The names
of these Directors and votes cast in favor of their election and
shares withheld are as follows:
NAME VOTES FOR VOTES WITHHELD
Terence McCoy 15,358,020 1,110,294
Paul Genova 15,413,278 1,055,034
John Wilchek 15,157,478 1,310,834
Henry L. Bachman 15,156,878 1,311,434
Karabet "Gary" Simonyan 15,413,878 1,054,434
Michael Manza 15,413,208 1,055,094
Andrew Scelba 15,413,208 1,055,094
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11.1 Computation of per share earnings
31.1 Certification Pursuant to Section 302 of The
Sarbanes-Oxley Act of 2002 (Principal Executive
Officer)
31.2 Certification Pursuant to Section 302 of The
Sarbanes-Oxley Act of 2002 (Principal Financial
Officer)
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of The
Sarbanes-Oxley Act of 2002 (Principal Executive
Officer)
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of The
Sarbanes-Oxley Act of 2002 (Principal Financial
Officer)
(b) Reports on Form 8-K:
1. Form 8-K, dated March 19, 2004, reporting on Item 5,
certain management changes at the Company.
12
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: July 30, 2004 /S/Karabet Simonyan
----------------------------
Karabet Simonyan
Chief Executive Officer
Date: July 30, 2004 /S/Paul Genova
----------------------------
Paul Genova
President, Chief Financial Officer
13
EXHIBIT LIST
11.1 Computation of per share earnings
31.1 Certifications Pursuant to Section 302 of The Sarbanes-Oxley
Act of 2002 (Principal Executive Officer)
31.2 Certifications Pursuant to Section 302 of The Sarbanes-Oxley
Act of 2002 (Principal Financial Officer)
32.1 Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
(Principal Executive Officer)
32.2 Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002
(Principal Financial Officer)
14