(Registrant’s Telephone Number, Including Area Code) ~~973-386-9696~~973-386-9696

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

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.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (check one):

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 standard provided pursuant to Section 13(a) of the Exchange Act. ~~[ ]~~☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

The aggregate market value of the registrants’ Common Stock, $.01 par value, held by non-affiliates and computed by reference to the closing price as reported by NYSE American on June 30, ~~2019: $28,924,861.~~2021: $69,130,053. As of March 6, ~~2020,~~2022, there were ~~21,647,571~~22,666,074 shares of the Company’s common stock ($.01 par value) outstanding.

Portions of the Registrant’s Proxy Statement relating to the ~~2020~~2021 Annual Meeting of Stockholders (the ~~“2020~~“2021 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form ~~10-K.~~10-K.

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 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.

In 2019, Wireless Telecom Group was comprised of four brands – Microlab, Boonton, Noisecom, and CommAgility – organized into three reporting segments – Network Solutions, Test and Measurement and Embedded Solutions. Since our acquisition of Holzworth Instrumentation, Inc. (“Holzworth”) in February of 2020, we are also offering the Holzworth brand in our Test and Measurement segment.

Our customers include wireless carriers, defense contractors, military and government agencies, satellite communication companies, network equipment manufacturers, tower companies, semiconductor device manufacturers, system integrators and medical device manufacturers.

Our products include components, modules, systems and instruments 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”) 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 consolidated financial statements for the ~~2019~~2021 fiscal year include the accounts of Wireless Telecom Group, Inc., doing business as, and operating under the trade name Noise Com, Inc., and its wholly owned subsidiaries including Boonton Electronics Corporation, Microlab/FXR, Wireless Telecommunications Ltd., CommAgility Limited and ~~CommAgility Limited.~~Holzworth Instrumentation, Inc. The corporate website address is www.wirelesstelecomgroup.com. Noise Com, Inc., Boonton Electronics Corporation, Microlab/FXR, ~~and~~ CommAgility Limited Ltd., and Holzworth Instrumentation, Inc. are hereinafter referred to as “Noisecom”, “Boonton”, “Microlab”, “CommAgility” and ~~“CommAgility”~~“Holzworth”, respectively.

In 2021, Microlab, Boonton, Noisecom, CommAgility and Holzworth were organized as one reporting segment and three product groups. Our product groups are organized as follows: Radio Frequency Components (“RFC”) is comprised of our Microlab brand; Radio, Baseband, Software (“RBS”) is comprised of our CommAgility brand; and Test and Measurement (“T&M”) is comprised of our Boonton, Noisecom and Holzworth brands. As more fully described under Recent Event below, on December 16, 2021, the Company entered into an agreement to sell the membership interests of Microlab to RF Industries, Ltd. The transaction closed on March 1, 2022. Accordingly, following the close of the sale, the Company will be comprised of the Boonton, Holzworth, and Noisecom brands within our T&M product group and CommAgility within our RBS product group. All of the financial information included in this Annual Report on Form 10K includes the financial results of Microlab for the fiscal year ended 2021. In fiscal 2022, the results of Microlab will be reported as a discontinued operation.

On December 16, 2021, the Company and its wholly owned subsidiary Microlab entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with RF Industries, Ltd., a Nevada corporation (the “Buyer”) whereby the Buyer agreed to purchase 100% of the membership interests in Microlab for a purchase price of $24,250,000, subject to certain adjustments as set forth in the Purchase Agreement. The board of directors of each of the Company and the Buyer unanimously approved the Purchase Agreement and the transactions contemplated thereby (collectively, the “Transaction”). On February 25, 2022, the shareholders of the Company approved the transaction at a Special Meeting of Shareholders held virtually via live webcast and on March 1, 2022, the Transaction closed.

At closing the Company received approximately $23.9 million, net of $250,000 of indemnity holdback amounts placed in escrow accounts, of which $4.2 million was used to repay our outstanding term loan with Muzinich BDC, approximately $700,000 was used to repay our outstanding revolver balance related to the Bank of America credit agreement, $486,000 was used to pay our advisors and $455,000 will be used to pay certain transaction bonuses resulting in an additional $18.0 million in cash to the balance sheet in March. We believe the Transaction allows us to prepare for the next stage of transformation with a stronger concentration of revenues in specialized 5G software and services for 5G private networks and test and measurement applications for the satellite communications, semiconductor and aerospace and defense industries. Furthermore, with the repayment of the Muzinich term loan and the Bank of America credit agreement, we have strengthened our balance sheet and increased our liquidity allowing us flexibility to invest in our higher margin product groups.

The Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations presented in this Annual Report on Form 10-K for the fiscal year ended 2021 include the results of Microlab for all periods presented because the Transaction was consummated on March 1, 2022.

Our customers include wireless carriers, aerospace and defense companies, military and government agencies, satellite communication companies, network equipment manufacturers, tower companies, semiconductor companies, system integrators, neutral host providers, medical device manufacturers and other global technology companies.

Our products include components, modules, instruments, systems and software used across the lifecycle of wireless connectivity and communication development, deployment and testing. Our services include software customization, calibration, repair and maintenance. Our customers use these products in the development and deployment of long-term evolution (“LTE”) and 5G private networks, small cell solution development and deployment, 5G test environments, automated test environments, research labs, network densification and deployment, expansion and upgrade of distributed antenna systems, and medical device manufacturing In addition, the Company’s products are used in the development and testing of satellite communication systems, radar systems, semiconductor manufacturing, automotive electronics and avionics.

Since the Company’s incorporation in the State of New Jersey in 1985, it has been primarily engaged in supplying noise source components and instruments, electronic testing and measurement instruments, and radio frequency (“RF”) passive components to customers. With the CommAgility acquisition in February of 2017, the Company expanded to include the delivery of digital signal processing ~~modules~~hardware cards and the delivery, implementation and configuration of LTE and 5G physical layer and stack software. In February 2020, we acquired Holzworth which specializes in supplying signal generators and phase noise analyzers to global aerospace and defense companies, the semiconductor industry and government labs. Approximately ~~93%~~83% and ~~90%~~82% of the Company’s consolidated revenues in fiscal years ~~2019~~2021 and ~~2018,~~2020, respectively, were derived from commercial customers. The remaining consolidated revenues (approximately 7%17% and ~~10%~~18% in ~~2019~~2021 and ~~2018,~~2020, respectively) were comprised of revenues from the United States government (particularly the armed forces) and prime defense contractors.

~~Our Network Solutions segment is comprised of our~~~~Microlab~~ ~~business.~~

Microlab designs and manufactures a wide selection of RF components and integrated subsystems for signal conditioning and distribution in the wireless infrastructure markets as well as for use in medical devices. Microlab products are used in small cell deployments, distributed antenna systems, in-building wireless solutions and cellular base-stations. Microlab is a leader in low passive intermodulation (“PIM”) radio frequency and microwave products for these purposes due to our quality, design consultation for specialized services, long history and expertise.

Microlab components possess unique capabilities in the area of broadband frequency coverage, minimal loss and low PIM. High performance components – such as power combiners, directional couplers, attenuators, terminators and filters – are developed for broadband applications to support commercial in-building wireless networks, public safety networks, rail and transportation deployments, corrosive salt/fog environment build-outs and global positioning system (“GPS”) signal distribution.

Along with components and integrated subsystems, the Microlab portfolio also includes system performance monitoring and timing synchronization solutions. These products include a portfolio of GPS digital repeaters and splitters for cellular timing synchronization as well as a passive systems monitor for real-time diagnostics of an in-building distributed antenna system.

~~Our Test and Measurement segment is comprised of the~~~~Boonton~~ ~~and~~~~Noisecom~~ ~~brands and, subsequent to the closing of our acquisition of Holzworth, the~~~~Holzworth~~ ~~brand.~~

Boonton is a leader in high performance RF and microwave test equipment for radar, avionics, electronic warfare, electromagnetic interference compatibility, and satellite and wireless communications applications due to our product quality and measurement speed and accuracy. Used across the semiconductor, military, aerospace, medical and commercial communications industries, Boonton products enable a wide range of ~~radio frequency~~ power measurements and signal analysis for ~~radio frequency~~RF product design, production, maintenance and testing.

Boonton designs and produces electronic test and measurement equipment including power meters, power sensors, voltmeters, and audio and modulation analyzers. These products measure and analyze the performance of ~~radio frequency~~RF and microwave systems used by the military and commercial sectors. Boonton products are also used to test terrestrial and satellite communications, radar and telemetry. Certain power meter products are designed for measuring signals based on wideband modulation formats, allowing a variety of measurements to be made, including maximum power, peak power, average power and minimum power.

Noisecom is a leader in ~~radio frequency~~RF and microwave noise sources for signal jamming, system impairment, reference level comparison and calibration, receiver robustness testing, and jitter injection due to our product quality and product design flexibility. Noisecom designs and produces noise generation instruments, calibrated noise sources, noise modules and diodes. Noisecom noise products are used to provide wide band interference and test signals for sophisticated commercial communication and defense applications, and as a stable reference standard for advanced systems found in radar applications and satellite communications. Noise source products:

Electronic noise generation devices from Noisecom come in a variety of product types including noise diodes, built-in-test modules (“BITE”), calibrated noise sources, jitter sources, cryogenic noise standards and programmable instruments. Calibrated noise sources are available from audio to millimeter wavelengths in coaxial or waveguide modules. Programmable instruments are highly configurable and able to generate precise carrier-to-noise, signal-to-noise and broadband white noise levels. Noisecom products are customizable to meet the unique needs of challenging applications and can be designed for high power, high crest factor, and specific filtering.

Holzworth designs and manufactures specialty ~~phased~~phase noise analyzers and signal generators used by aerospace and defense companies, government labs, the semiconductor industry, and network equipment ~~providers,~~providers. Holzworth products are used in, among ~~others, in~~other things, research and automated test ~~environments.~~environments and for quantum computing. Holzworth signal generators are optimized for ultra-low phase noise performance, spectral purity and fast switching speeds and their phase noise analyzers are of the same innovative design philosophy, optimized for measurement speed, z540 traceable accuracy and high reliability while measuring to noise floors at the theoretical limit.

CommAgility develops the software which enables specialized LTE and 5G deployments, applications and private network ~~deployments~~solutions including the LTE physical layer and stack software, for ~~4G and emerging 5G~~ mobile network and related applications. CommAgility also develops embedded signal processing hardware and ~~radio frequency~~RF modules which enable 4G5G and 5GLTE mobile network ~~solutions~~ and ~~related applications.~~application solutions. Combining the latest digital ~~signal~~ processing ~~(“DSP”), field programmable gate array (“FPGA”)~~platforms and ~~radio frequency~~RF technologies with advanced, industry-leading software, CommAgility provides compact, powerful and reliable products for integration into high performance test equipment, specialized radio and intelligence systems, satellite systems and ~~R&D~~research and development demonstrators.

CommAgility engineers work closely with customers to provide hardware and software solutions ~~for the most demanding real-time signal processing, test~~in specialized applications and ~~control challenges~~use-cases in wireless baseband, ~~semiconductor processing, medical imaging, radar~~private networks, and ~~sonar applications.~~non-terrestrial (“NTN”) communications. Additionally, CommAgility licenses, implements and customizes 5G and LTE physical layer and stack software for private ~~LTE~~ networks supporting satellite communications, the military and aerospace industries, offering our customers unique implementation capabilities built on 3rd Generation Partnership Project (“3GPP”) standards.

In January 2020, CommAgility announced a collaboration agreement with NXP Semiconductors in connection with the ~~LTE standard.~~NXP Layerscape Access Programmable Baseband Processors for 5G New Radio Platforms. The collaboration enables CommAgility to accelerate 5G hardware and software development and enhance the performance of its 5G platform, providing advantages to customers developing 5G solutions and reducing their time of development. The collaboration will help CommAgility address needs for private and specialized network solutions.

In October 2021, CommAgility joined the O-RAN Alliance, a global community that aims to develop and promote Open Radio Access Network (“RAN”) products and solutions for mobile networks. With more than 300 members, the O-RAN Alliance is enabling the industry to take advantage of new open virtualized architectures, software and hardware. The membership gives CommAgility access to all O-RAN specifications, including those that are not yet approved or released to the public. The Company will be able to perform interoperability testing and integration of its implementations at industry promoted events called plugfests with other alliance members and contributors.

Prior to the sale, Microlab designed and manufactured a wide selection of RF components and integrated subsystems for signal conditioning and distribution in the wireless infrastructure markets as well as for use in medical devices. Microlab products are used in small cell deployments, distributed antenna systems, in-building wireless solutions and cellular base-stations. In 2020, Microlab expanded its portfolio of RF components for ultra-wide band frequency ranges enabling the deployment of commercial wireless networks utilizing new licensed and unlicensed mid-band spectrum allocations.

Microlab components possess unique capabilities in the area of broadband frequency coverage, minimal loss and low passive intermodulation (“PIM”). High performance components – such as power combiners, directional couplers, attenuators, terminators and filters – are developed for broadband applications to support commercial in-building wireless networks, public safety networks, rail and transportation deployments, corrosive salt/fog environment build-outs and global positioning system (“GPS”) signal distribution.

The Company’s products are sold globally through our in-house sales force, industry-specific manufacturers’ representatives and through a network of authorized distributors. The Company promotes the sale of its products through its website, product literature, published articles, technical conference presentations, direct mailings, trade advertisements and trade show exhibitions.

The Company’s relationships with its manufacturers’ representatives and distributors are governed by written contracts that either run for one-year renewable periods terminable by either party on 30 to 60 days prior notice or have indefinite lives terminable by either party on 30 to 60 days prior notice. The contracts generally provide for territorial and product representation.

The Company currently sells the majority of its products to aerospace and defense companies, technology component distributors, telecommunications service providers, systems integrators, neutral host operators, ~~distributors, large defense contractors,~~ global technology and services companies, U.S. and foreign governments, and medical device manufacturers.

For the years ended December 31, ~~2019~~2021 and ~~2018~~December 31, 2020, no one customer ~~Viavi Solutions,~~ accounted for ~~24.8% and 22.0%~~more than 10% of total consolidated ~~revenues, respectively.~~revenues.

We compete against many companies which utilize similar technology, some of which are larger and have substantially greater resources and expertise in financial, technical and marketing areas than us. Some of these companies include Keysight Technologies, Inc., Rohde & Schwarz GmbH & Co. KG, Anritsu Corporation, Kathrein, Commscope, ~~Qualcomm~~Mavenir, AnaPico, Parallel Wireless, Arraycomm, Astri, Accelercomm and Azcom. We also compete against smaller offshore vendors with significantly lower costs and expenses than us, such as Sym Technology, Inc., Innowave RF and Wireless Supply.

The Company’s consolidated backlog of firm orders to be shipped in the next twelve months was approximately ~~$3.8~~$11.7 million at December 31, ~~2019,~~2021, compared to approximately ~~$8.2~~$8.3 million at December 31, ~~2018.~~2020. The increase in backlog is due to higher order flow from our T&M and RFC product groups as compared to the prior year. Excluding Microlab, the Company’s backlog at December 31, 2021 was $9.2 million which was approximately $2.1 million or 30% higher than December 31, 2020. It is anticipated that the majority of the backlog orders at December 31, ~~2019~~2021 will be filled during the current year. The stated backlog is not necessarily indicative of Company revenues for any future period nor is a backlog any assurance that the Company will realize a profit from the orders.

~~CommAgility develops~~The Company purchases components, devices and subassemblies from a wide variety of sources. The Company’s procurement policy requires maintaining adequate levels of raw materials inventory to minimize the ~~software which enables private network deployments including~~Company’s production lead times with third-party suppliers and to improve the ~~LTE physical layer~~Company’s capacity to expedite fulfillment of customer orders. During 2021, the Company experienced component shortages and ~~stack software,~~longer lead times from suppliers. Although there was no material impact to our consolidated financial statements in 2021 as a result of supply chain disruptions, continued component shortages or extended lead times in the future may have an adverse impact on the Company’s operations. For the year ended December 31, 2021 two suppliers each accounted for 4G and emerging 5G mobile network and related applications. CommAgility also develops embedded signal processing and radio frequency modules which enable 4G and 5G mobile network solutions and related applications. ~~Combining~~12% of total consolidated inventory purchases. For the latest digital signal processing (“DSP”), field programmable gate array (“FPGA”) and radio frequency technologies with advanced, industry-leading software, CommAgility provides compact, powerful and reliable productsyear ended December 31, 2020, two suppliers each accounted for ~~integration into high performance test equipment, specialized radio and intelligence systems, satellite systems and R&D demonstrators.~~14% of total consolidated inventory purchases

The Company is not party to any ~~long term~~long-term contracts regarding the deliveries of its supplies and components. It generally purchases such items pursuant to written purchase orders of both the individual and blanket variety. Blanket purchase orders usually cover the purchase of a larger amount of items at fixed prices for delivery and payment on specific dates.

For Boonton and Noisecom products, the Company develops, designs, manufactures, assembles, calibrates and tests the products at our facility in Parsippany, New Jersey. Testing of Boonton and Noisecom products is generally accomplished at the end of the manufacturing process and is performed in-house, as are all quality control processes.

Approximately ~~48%~~51% of Microlab’s revenues are traced to products that are sourced from offshore vendors. ~~Certain of Microlab’s products that were sourced from offshore vendors were subject to tariffs throughout the entirety of fiscal 2019, and, effective September 1, 2019, all~~The majority of Microlab products that come from offshore suppliers are subject to tariffs. ~~The impact of tariffs has decreased our consolidated gross profit margin by less than 1%.~~ The remainder of Microlab products are designed and manufactured by the Company in Parsippany, New Jersey. All Microlab products are tested by the Company in Parsippany, New Jersey.

CommAgility hardware products are built by contract manufacturers to CommAgility designs and tested either by the contract manufacturer or by CommAgility. Software products are licensed to customers through a system that allows the customer to download the software once access has been granted.

Holzworth products are designed, developed, assembled and tested in our facility in Boulder, Colorado.

The Company typically provides one to three year warranties on all of its products covering both parts and labor. The Company, at its option, repairs or replaces products that are defective during the warranty period if the proper preventive maintenance procedures have been followed by its customers.

In cases of defective products the customer typically returns them to the Company’s facility. The Company’s service personnel ~~replace or~~typically repair the defective items and ship them back to the customer. Generally, all servicing is done at the Company’s facility, and the Company charges its customers a fee for those service items that are not covered by warranty. ~~The~~If the defective product cannot be repaired, the Company typically ~~does not offer their customers any formal written service contracts.~~replaces the product free of charge but unrepairable products are an infrequent occurrence.

The testing of electronic communications equipment and the accurate transmission of information entail a risk of product liability to the Company. Product liability claims could be asserted against the Company by end-users of any of the Company’s products. The Company maintains product liability insurance coverage. No claims have been asserted for product liability due to a defective or malfunctioning device in the past five years.

We believe that our intellectual property, including its methodologies, is critical to our success and competitive position. We rely on a combination of U.S. and foreign patents, copyrights, trademarks and trade secrets, as well as confidentiality agreements to establish and protect our proprietary rights. All employees are subject to the Company’s policies to ensure that all of the Company’s intellectual property and business information are maintained in confidence. Key employees have signed non-disclosure and non-competition agreements.

The Company’s operations are subject to various federal, state and local environmental laws, ordinances and regulations that limit discharges into the environment, establish standards for the handling, generation, use, emission, release, discharge, treatment, storage and disposal of, or exposure to, hazardous materials, substances and waste, and require cleanup of contaminated soil and groundwater.

As a result of the Microlab divestiture, the Company filed a General Information Notice with the New Jersey Department of Environmental Protection (“NJDEP”) for our corporate headquarters in Parsippany, N.J. in accordance with the New Jersey Industrial Site Recovery Act (“ISRA”). Additionally, the Company engaged a Licensed Site Remediation Professional (“LSRP”) to perform a Preliminary Assessment (“PA”) at the site in accordance with the provisions of ISRA. The PA is identifying several areas requiring further environmental investigation. In accordance with ISRA, the Company posted a $100,000 letter of credit with the NJDEP. The Company will engage the LSRP to perform further investigation and testing at the site during 2022 in order to determine what, if any, remediation is required. At this time, while it cannot be guaranteed, the Company ~~believes that it is in material compliance with all environmental laws,~~ does not anticipate ~~any~~that material ~~expenditure~~expenditures will be required to meet current or pending environmental requirements and generally believes that its processes and products do not present any unusual environmental concerns. The Company is unaware of any existing, pending or threatened contingent environmental liability that may have a material adverse effect on its ongoing business operations.under ISRA.

The Company’s operations are also governed by laws and regulations relating to workplace safety and worker health. The Company believes it is in material compliance with these laws and regulations and does not believe that future compliance with such laws and regulations will have a material adverse effect on its results of operations or financial condition.

~~The Company is~~Certain of the Company’s products may be subject to International Traffic in Arms Regulation, or ITAR. ITAR requires export licenses from the U.S. Department of State for products shipped outside the U.S. that have military or strategic applications. Because some of the Company’s products could have military or strategic applications, it must ensure its compliance with ITAR.

In addition, the Company is subject to the Export Administration Regulations, or EAR, which regulates the export of certain “dual use” items and technologies and, in some instances, requires a license from the U.S. Department of Commerce in connection with sales of the Company’s products.

The Company believes it is in material compliance with all such export regulations.

Certain of the Company’s contracts with the U.S. Government are subject to Federal Acquisition Regulations (“FAR”) regarding government procurement. Further, certain of the Company’s contracts are subject to the IT security requirements of Defense Federal Acquisition Regulation Supplement (“DFARS”) for controlled unclassified information.

The Company believes it is in material compliance with applicable requirements of FAR and DFARS.

The Cybersecurity Maturity Model Certification (“CMMC”) framework is designed to protect Federal Contract Information (“FCI”) and Controlled Unclassified Information (“CUI”) that is handled, stored and/or processed by Defense Industrial Base contractors and is being implemented to further protect the mission of the U.S. Department of Defense (“DOD”). CMMC applies to all DOD contractors and anyone in the defense contract supply chain. Certain of our contracts with the defense subcontractors or direct with the U.S Government may require compliance with CMMC. The original timeline for implementation of CMMC was based on a five-year phased rollout schedule. The Company is in the process of completing self-assessments to comply with CMMC.

~~As of February 29, 2020, the Company has 154 full time employees, including Holzworth employees.~~ The Company is not subject to collective bargaining agreements in the United States or internationally and considers its relationship with its employees to be good. On February 28, 2022, immediately prior to the Microlab divestiture the Company had 155 full time employees. Subsequent to the Microlab divestiture on March 1, 2022, the Company has 115 full time employees.

The Company is subject to the disclosure requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Therefore, the Company files periodic reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.

You can access financial and other information, including copies of our recent SEC filings, at the Company’s Investor Relations page on its website. The address of the website is www.wirelesstelecomgroup.com. The Company makes available, free of charge, copies of its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC.

The COVID-19 pandemic could materially adversely affect our financial condition, future plans and results of operations.

The COVID-19 pandemic has had a significant adverse effect on the economy in the United States and globally and on most businesses. The Company is not able to predict the ultimate impact that COVID -19 will have on its business; however, if the pandemic and government action in response thereto impose limitations on operations of our customers or suppliers or result in a prolonged supply-chain constraints, labor shortages, economic recession or depression, the Company’s development and implementation of its strategic plan, as well as our ability to generate material revenue therefrom, could be hindered, which would have a material negative impact on the Company’s financial condition and results of operations. While vaccinations beginning in 2021 allowed for economic recovery, recent and evolving variants of the virus, as well as reduced efficacy of vaccines over time and the possibility that a large number of people decline to get vaccinated or receive booster shots, creates inherent uncertainty as to the potential future impact of the pandemic on our business, our industry and the economy in general.

The Microlab business has historically accounted for a substantial portion of our revenue. Subsequent to the divestiture of Microlab on March 1, 2022, we are entirely dependent on our remaining business units.

The Microlab business accounted for 36.1% and 42.3% of our consolidated revenues for the years ended December 31, 2021 and 2020, respectively. Effective March 1, 2022, we sold Microlab and will no longer benefit from its performance and are entirely dependent upon the Boonton, Holzworth and Noisecom brands within our test and measurement product group, and the CommAgility brand within our radio, baseband, and software product group. Although we expect the revenue generated from our remaining businesses to grow in the future, our business will be substantially different following the sale of Microlab, and there can be no assurance that we will achieve sustained growth, achieve or sustain profitability, or generate positive cash flows from the test and measurement and radio, baseband and software product groups, or in new products or business opportunities we may pursue.

We depend on the deployment of 4G LTE and 5G NR private networks and specialized applications in wireless baseband and related services to grow our business, and our business may be harmed if our customers are unsuccessful in the deployment of such technology and applications or if they deploy technologies that are not supported by our solutions.

We depend on the deployment of 4G LTE and 5G NR wireless private networks and specialized applications in wireless baseband which are supported by our CommAgility software licenses and services. Deployment of private networks in support of industrial internet of things (“IOT”) networks, non-terrestrial communications, transportation networks and air to ground networks requires significant capital expenditure by customers. If new deployments of these specialized technologies are delayed because of a lack of capital or other issues, or if we are unsuccessful in winning new projects for deployment of 4G LTE and 5G NR private networks, our financial results could be adversely affected.

Our future success depends on our ability to anticipate and to adapt to technological changes and to develop, implement and market product innovations.

Many of our markets are characterized by advances in information processing and communications capabilities that require increased transmission speeds and greater bandwidth. These advances require ongoing improvements in the capabilities of our products. However, we may not be successful in our ongoing improvement efforts if, among other things, our products:

There are various competitive wireless technologies that could be a substitute for the products we sell. The failure to successfully introduce new or enhanced products on a timely and cost-competitive basis or the inability to continue to market existing products on a cost-competitive basis could have a material adverse effect on our results of operations and financial condition. In addition, revenues from new products may replace revenues from some of our existing products, mitigating the benefits of new product introductions and possibly resulting in excess levels of inventory.

Furthermore, we must make long-term investments and commit significant resources before knowing whether our investments will eventually result in products that the market will accept. We must accurately forecast volumes, mix of products and configurations that meet customer requirements, and we may not succeed. If we do not succeed, we may be left with inventories of obsolete products or we may not have enough of some products available to meet customer demand, which could lead to reduced revenues and higher expenses.

Our business is dependent on capital spending on data and communication networks by customers or end users of our products, and reductions in such capital spending could adversely affect our business.

Our performance is dependent on customers’ or end users’ capital spending for constructing, rebuilding, maintaining or upgrading data and communication networks, which can be volatile or hard to forecast. Capital spending in the communications industry is cyclical and can be curtailed or deferred on short notice. A variety of factors affect the amount of capital spending, and therefore, our revenues and profits, including:

Our customers or the end users of our products may not purchase new equipment at levels we have seen in the past or expect in the future. Accordingly, we may not be able to maintain or increase our revenue in the future, and our business, financial condition, results of operations and cash flows could be materially adversely affected.

We depend on the deployment of 4G LTE and 5G NR private networks and related services to grow our business, and our business may be harmed if our customers are unsuccessful in the deployment of 4G LTE and 5G NR private networks or if they deploy technologies that are not supported by our solutions.

We depend on the deployment of 4G LTE and 5G NR wireless private networks which are supported by our Embedded Solutions software licenses and services. Deployment of private networks in support of industrial internet of things (“IOT”) networks, satellite communications, transportation networks and air to ground networks requires significant capital expenditure by customers. If new deployments of 4G LTE or 5G NR private networks are delayed because of a lack of capital or other issues, or if we are unsuccessful in winning new projects for deployment of 4G LTE and 5G NR private networks, our financial results could be adversely affected.

We depend on a limited number of customers for a significant portion of our revenues. The loss of, or a significant decrease in business from any of these customers could seriously harm our financial condition and results of operations.

We derived a significant portion of our revenues from a limited number of customers in 2019. On a segment basis, client concentration may be of even greater significance. In 2019 one customer accounted for 90% of Embedded Solutions revenues. Two customers accounted for approximately 71% and 18% of the Embedded Solutions segment revenues for 2018. In addition, in our Network Solutions segment, we have one customer representing approximately 17% and 13% of the 2019 and 2018 revenues, respectively, for that segment. The loss of, or a significant decrease in, business from one or more of our more significant customers could seriously harm our financial condition and results of operations. We expect to continue to depend upon some of these larger customers for a significant percentage of our revenues.

~~Our business operations and financial performance may be affected by the recent coronavirus outbreak in China.~~

The recent outbreak of coronavirus in China is spreading globally and is expected to adversely affect the economic conditions throughout the world. The outbreak has slowed the economic growth in China. With the spread of the Coronavirus to the United States and other countries, it is unclear how economic activity and workflows might be impacted on a worldwide basis. Many employers in the United States are requiring their employees to work from home or not come into their office. If the outbreak continues and conditions worsen, we may experience a disruption in our supply chain as well as a decline in sales activities and customer orders. The impact of the Coronavirus on our operations is uncertain at this time. Given the rapidly changing situation related to this pandemic, we believe it could have a material adverse effect on our business, financial conditions and results of operations.

Our degree of leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk on our variable rate debt and prevent us from meeting obligations on our indebtedness.

We currently have a credit facility with Bank of America providing an asset-based revolver and a term loan (see Management Discussion and Analysis – Liquidity and Capital Resources below). To fund the cash portion of the purchase price of the Holzworth acquisition, on February 7, 2020, we entered into a term loan facility with Muzinich BDC which provides for a term loan in the amount of $8.4 million.

Our ability to continue to fund our obligations and to reduce debt may be affected by general economic, financial market, competitive, legislative and regulatory factors, among other things. An inability to fund our debt requirements or reduce debt could have a material adverse effect on our business, operating results, cash flows and financial condition.

~~Restrictive covenants in the agreements governing our credit facility could restrict our ability to pursue business strategies.~~

The agreements governing our term loan and credit facility limit our ability, among other things, to incur additional secured indebtedness, incur liens, pay dividends, enter into transactions with our affiliates, and sell assets. In addition, our credit facility contains restrictive covenants that limit our ability to engage in activities that might be in our long term best interest, such as, subject to permitted exceptions, making capital expenditures in excess of certain thresholds, making investments and acquisitions, and extending loans and other advances to affiliates. Furthermore, the term loan facility contains specific financial covenants including a quarterly leverage test, fixed charge coverage test and a liquidity requirement for our CommAgility business. The credit facility with Bank of America contains one financial covenant which is a fixed charge coverage test. A default of a covenant in our Muzinich term loan facility would trigger a cross default in our Bank of America credit facility and vice versa.

Our failure to comply with financial and other restrictive covenants could result in an event of default and cross default, which if not cured or waived, could result in the lenders requiring immediate payment of all outstanding borrowings or foreclosing on collateral pledged to them to secure the indebtedness.

Many of the end markets we serve, including but not limited to the commercial wireless market, have historically been cyclical and have experienced periodic downturns. The factors leading to and the severity and length of a downturn are very difficult to predict and there can be no assurance that we will appropriately anticipate changes in the underlying end markets we serve or that any increased levels of business activity will continue as a trend into the future. If we fail to anticipate changes in the end markets we serve, our business, results of operations and financial condition could be materially adversely affected. ~~We are subject to fluctuations in technology spending by existing and potential customers.~~

Our industry is highly competitive and if we are not able to successfully compete, we could lose market share and our revenues could decline.

We operate in industries characterized by aggressive competition, rapid technological change, evolving technology standards and short product life cycles. Current and prospective customers for our products evaluate our capabilities against the merits of our direct competitors. We compete primarily on the basis of technology and performance.

We also compete on price. That competition comes from smaller offshore vendors with significantly lower costs and expenses as well as larger companies which have substantially greater resources and expertise in financial, technical and marketing areas than we have. The emergence of smaller off shore vendors has created a highly competitive pricing environment specifically for our Network Solutions segment. Our competitors may introduce products that are competitively priced, have increased performance or functionality or incorporate technological advances that we have not yet developed or implemented.

To remain competitive, we must continue to develop, market and sell new and enhanced products at competitive prices, which will require significant research and development expenditures. If we do not develop new and enhanced products or if we are not able to invest adequately in our research and development activities, our business, financial condition and results of operations could be negatively impacted.

Many of our competitors are substantially larger than we are, and have greater financial, technical, marketing and other resources than we have. Many of these large enterprises are in a better position to withstand any significant reduction in capital spending by customers in our markets. They often have broader product lines and market focus and may not be as susceptible to downturns in a single market. These competitors may also be able to bundle their products together to meet the needs of a particular customer and may be capable of delivering more complete solutions than we are able to provide. To the extent large enterprises that currently do not compete directly with us choose to enter our markets by acquisition or otherwise, competition would likely intensify.

We are exposed to risks associated with acquisitions and investments which could cause us to incur unanticipated costs and liabilities and harm our business and results of operations.

On February 7, 2020 we acquired Holzworth Instrumentation, Inc., a company based in Denver, Colorado. Additionally, in the future we may make acquisitions of, or significant investments in, businesses with complementary products, services and/or technologies. The Holzworth acquisition and future acquisitions and investments involve numerous risks, including, but not limited to:

If we are unable to address these difficulties and challenges or other problems encountered in connection with any future acquisition or investment, we might not realize the anticipated benefits of that acquisition or investment and we could incur unanticipated costs, liabilities or otherwise suffer harm to our business generally. The difficulties and challenges of successful integration of any acquired company are increased when the integration involves companies with operations or material vendors outside the United States.

To the extent that we pay the consideration for any future acquisitions or investments in cash or any potential cash earn outs, it ~~would~~has reduced and may in the future reduce the amount of cash available to us for other purposes. Such payments also may increase our cash flow and liquidity ~~risk and could result in increased borrowings under our Credit Facility. See the Risk Factor titled “~~Our degree of leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk on our variable rate debt and prevent us from meeting obligations on our indebtedness.”risk. Future acquisitions or investments could also result in dilutive issuances of our equity securities or the incurrence of debt, contingent liabilities, amortization expenses or impairment charges against goodwill or intangible assets on our balance sheet, any of which could have a material adverse effect on our business, results of operations and financial condition.

Shortages or delays of supplies for component parts could adversely affect our operating results until alternate sources can be developed.

Our operations are dependent on the ability of suppliers to deliver quality components, devices and subassemblies in time to meet critical manufacturing and distribution schedules. If we experience any constrained supply of component parts, such constraints, if persistent, could adversely affect operating results until alternate sourcing can be developed. There could be an increased risk of supplier constraints in periods where we are increasing production volume to meet customer demands. Volatility in the prices of these component parts, an inability to secure enough components at reasonable prices to build new products in a timely manner in the quantities and configurations demanded or, conversely, a temporary oversupply of these parts, could adversely affect our future ~~success depends~~operating results.

The loss of key personnel could adversely affect our ability to remain competitive; our development of new and upgraded products could be adversely impacted by our inability to hire or retain personnel with appropriate technical abilities.

We believe that the continued service of our executive officers will be important to our future growth and competitiveness. However, other than the employment agreements we entered into with our named executive officers, Timothy Whelan, Mike Kandell, Alfred Rodriguez and Dan Monopoli, we currently do not have any other employment agreements with our management team. We cannot provide assurance that any key members of our management team will remain employed by us.

Additionally, the design and manufacture of our products require substantial technical capabilities in many disparate disciplines, from engineering, software programming, mechanics and computer science to electronics and mathematics. In the last 12 months we have lost several key engineering resources. We believe that the continued employment of key members of our technical and sales staffs will be important to us but, as with our management team, we cannot assure you that they will remain employed by us.

Furthermore, our ability to research and develop new technologies and products, or upgraded versions of existing products, will depend, in part, on our ability to ~~anticipate~~hire personnel with knowledge and ~~to adapt to technological changes and to develop, implement and market product innovations.~~

~~Many of~~skills that our markets are characterized by advances in information processing and communications capabilities that require increased transmission speeds and greater bandwidth. These advances require ongoing improvements in the capabilities of our products. However, we maycurrent personnel do not ~~be successful in our ongoing improvement efforts if, among other things, our products:~~

Furthermore, we must make long-term investments and commit significant resources before knowing whether our investments will eventually result in products that the market will accept. We must accurately forecast volumes, mix of products and configurations that meet customer requirements, and we may not succeed.have. If we ~~do not succeed, we may be left with inventories of obsolete products~~are unable to hire or ~~we may not have enough of some products available to meet customer demand, which could lead to reduced revenues and higher expenses.~~

Our revenues are dependent in part on commercial upgrades of 4G and 5G wireless communications equipment, products and services. Our business may be harmed, and our investments in our technologies may not provide us an adequate return if:

Our business is dependent on our ability to increase our share of components sold and to continue to drive the adoption of our products and services into LTE, 4G and 5G wireless networks. If commercial deployment of our technologies, and upgrade of subscribers to 4G or 5G wireless communications equipment, products and services using our technologies do not continue or are delayed,retain such qualified personnel, our revenues could be negatively impacted, and our business could suffer.

Further, if we do not have competitively priced, market accepted products available to meet the wireless operators planned roll-out of 5G wireless communications systems, we may miss a significant opportunity and our business, financial condition and results of operations could be materially and adversely impacted.

The successful development of telecommunications products can be affected by many factors. Products that appear to be promising at their early phases of research and development may fail to be commercialized for various reasons, including the failure to obtain the necessary regulatory approvals. There is no assurance that any of our future research and development projects will be successful or completed within the anticipated ~~time frame~~timeframe or budget or that we will receive the necessary approvals from relevant authorities, customers, or prospective customers, for the production of these newly developed products, or that these newly developed products will achieve commercial success. Even if such products can be successfully commercialized, they may not achieve the level of market acceptance that we expect.

Dependence on contract manufacturing and outsourcing other portions of our supply chain might adversely affect our ability to bring products to market and could damage our reputation.

As part of our efforts to streamline operations and to minimize costs, we outsource aspects of our manufacturing processes and other functions and continue to evaluate additional outsourcing. If our contract manufacturers or other outsourcers fail to perform their obligations in a timely manner or at satisfactory quality levels, our ability to bring products to market and our reputation could suffer. For example, during a market upturn, our contract manufacturers might be unable to meet our demand requirements, which could preclude us from fulfilling our customers’ orders on a timely basis. The ability of these manufacturers to perform is largely outside of our control. Additionally, changing or replacing our contract manufacturers or other outsourcers could cause disruptions or delays.

If our products do not perform as promised, we could experience increased costs, lower margins and harm to our reputation.

The failure of our products to perform as promised could result in increased costs, lower margins and harm to our reputation. We may not be able to anticipate all of the possible performance or reliability problems that could arise with our existing or new products, which could result in significant product liability or warranty claims. In addition, any defects found in our products could result in a loss of revenues or market share, failure to achieve market acceptance, injury to our reputation, indemnification claims, litigation, increased insurance costs and increased service costs, any of which could discourage customers from purchasing our products and materially harm our business.

~~Uncertainty over global tariffs,~~Our business and operations could suffer in the event of security breaches.

Attempts by others to gain unauthorized access to information technology systems are becoming more sophisticated and are sometimes successful. These attempts, which might be related to industrial or other espionage, include covertly introducing malware to our computers and networks and impersonating authorized users, among others. We seek to detect and investigate all security incidents and to prevent their recurrence, but in some cases, we might be unaware of an incident or its magnitude and effects. The theft, unauthorized use or publication of our intellectual property and/or confidential business information could harm our competitive position, reduce the ~~financial impact~~value of ~~tariffs, may negatively~~our investment in research and development and other strategic initiatives or otherwise adversely affect our ~~results.~~business. To the extent that any security breach results in inappropriate disclosure of our customers’ or licensees’ confidential information, we may incur liability as a result. In addition, we might be required to devote significant additional resources to the security of our information technology systems.

~~Recent changes in U.S. domestic~~We rely on our information technology systems to manage numerous aspects of our business and ~~global tariff frameworks have increased our costs~~a disruption of producing goods and resulted in additional risks to our supply chain. Additional tariff changes are possible. We are engaged in efforts to mitigate tariff increases, but there is no assurance we will be successful. Further, uncertainties about future tariff changes could result in mitigation actions that prove to be detrimental to our business.

~~Shortages or delays of supplies for component parts~~these systems could adversely affect our ~~operating~~business.

Our information technology, or IT, systems are an integral part of our business. We depend on our IT systems for scheduling, sales order entry, purchasing, materials management, accounting, and production functions. Our IT systems also allow us to ship products to our customers on a timely basis, maintain cost-effective operations and provide a high level of customer service. Some of our systems are not fully redundant, and our disaster recovery planning does not account for all eventualities. A serious disruption to our IT systems could significantly limit our ability to manage and operate our business efficiently, which in turn could have a material adverse effect on our business, results ~~until alternate sources~~of operations and financial condition.

We rely on manufacturers’ representatives to sell our products to key large accounts and the loss of a key manufacturer’s representative could have a material impact on our revenues

Our products are sold through a small in-house direct sales force as well as a network of industry specific manufacturers’ representatives that have established relationships with our largest customers. Our arrangements with our manufacturers’ representatives generally can be ~~developed.~~canceled by either party with advance written notice. The loss of a manufacturer’s representative could result in a material decline in revenues.

Although the rate of inflation has been low in recent years, we are currently experiencing a significant rise in inflation. An inflationary environment can increase the cost of products we purchase as well as our labor and transportation costs. However, economic conditions and market factors may make it difficult for us to raise our prices enough to keep up with the rate of inflation which could reduce our profit margins or reduce the number of customers who purchase our products. If the current inflationary environment continues or worsens, we may not be able to adjust the pricing we charge for our products to offset increasing product costs, which would adversely impact our results of operations and cash flows.

We incur significant costs as a result of operating as a public company, and our management devotes substantial time to compliance initiatives.

We have incurred and will continue to incur significant legal, accounting and other expenses as a public company, including costs resulting from public company reporting obligations under the Exchange Act and regulations regarding corporate governance practices. The listing requirements of the NYSE American require that we satisfy certain corporate governance requirements relating to director independence, distributing annual and interim reports, stockholder meetings, stockholder approvals and voting, and soliciting proxies. Our management and other personnel will need to devote a substantial amount of time to ensuring compliance with all of these requirements.

Our results of operations could be affected by changes in tax-related matters.

A number of factors could cause our tax rate to increase, including a change in the jurisdictions in which our profits are ~~dependent~~earned and taxed; a change in the mix of profits from those jurisdictions; changes in available tax credits; changes in applicable tax rates; changes in accounting principles. We have deferred tax assets on our balance sheet. Changes in applicable tax laws and regulations or in our business performance could affect our ability to realize those deferred tax assets, which could also affect our results of operations.

Our stock price is volatile and the trading volume in our common stock is less than that of other larger companies in the wireless and advanced communications industries.

The market price of our common stock has experienced significant volatility and may continue to be subject to rapid swings in the future. From January 1, 2015 to February 3, 2022, the trading prices of our stock have ranged from $0.71 to $4.07 per share. There are several factors which could affect the price of our common stock unrelated to our financial performance, including announcements of technological innovations for new commercial products by us or our competitors, developments concerning propriety rights, new or revised governmental regulation or general conditions in the market or for our products, and the entrance of additional competitors into our markets.

Although our common stock is listed for trading on the ~~ability~~NYSE American, the trading volume in our common stock is less than that of suppliers to deliver quality components, devices and subassemblies in time to meet critical manufacturing and distribution schedules. If we experience any constrained supply of component parts, such constraints, if persistent, could adversely affect operating results until alternate sourcing can be developed. There could be an increased risk of supplier constraints in periods where we are increasing production volume to meet customer demands. Volatilityother, larger companies in the ~~prices~~wireless and advanced communications industries. Traditionally, the trading volume of ~~these component parts, an inability to secure enough components at reasonable prices to build new products in a timely manner~~our common stock has been limited. For example, for the 90 trading days ending on February 15, 2022, the average daily trading volume was approximately 68,000 shares per day and ranged from between 2,300 shares per day and approximately 2.3 million shares per day. Furthermore, we only have 22,666,074 shares of common stock outstanding as of the date of this report. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the ~~quantities~~marketplace of willing buyers and ~~configurations demanded~~sellers of our common stock at any given time. Because of our limited trading volume, holders of our common stock may not be able to sell quickly any significant number of shares, and any attempted sales of a large number of our shares will likely have a material adverse impact on the price of our common stock.

If securities or ~~conversely, a temporary oversupply of these parts,~~industry analysts do not publish research or reports about our business or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could ~~adversely affect~~decline.

The trading market for our ~~future operating results.~~common stock might be influenced by the research and reports that industry or securities analysts publish about us or our business. If any analysts issue an adverse or misleading opinion regarding us, our business model, products or stock performance, our stock price could decline.

The testing and use of electronic communications equipment and the accurate transmission of information entail a risk of product liability claims being asserted by customers and third parties.

Claims may be asserted against us by end-users of any of our products for liability due to a defective or malfunctioning device made by us, and we could be subject to corresponding litigation should one or more of our products fail to perform or meet certain minimum requirements. Such a claim and corresponding litigation could result in substantial costs, diversion of resources and management attention, termination of customer contracts and harm to our reputation.

We are subject to laws and regulations governing government contracts, and failure to address and comply with these laws and regulations could harm our business by leading to a reduction in revenue associated with these customers and subjecting us to civil and criminal penalties.

We have agreements relating to the sale of our products to U.S. government entities and, as a result, we are subject to various statutes and regulations that apply to companies doing business with the U.S. government. The laws governing government contracts differ from the laws governing private contracts. For example, many government contracts contain pricing terms and conditions that are not applicable to private contracts. We are also subject to investigation for compliance with the regulations governing government contracts. A failure to comply with these regulations might result in suspension of these contracts, or civil and criminal penalties.

We could be subject to significant costs related to environmental contamination from past operations, and environmental contamination caused by ongoing operations could subject us to substantial liabilities in the future.

The Company’s operations are subject to various federal, state, local, and foreign environmental laws, ordinances and regulations that limit discharges into the environment, establish standards for the handling, generation, use, emission, release, discharge, treatment, storage and disposal of, or exposure to, hazardous materials, substances and waste, and require cleanup of contaminated soil and groundwater.

Certain of our products and our business are subject to ITAR, Export Administration Regulations, Foreign Corrupt Practices Act and other U.S. and foreign government laws, regulations, policies and practices, and our failure to comply with such regulations could adversely affect our business, results of operations and financial condition.

Our international revenues, for which we also use foreign representatives and consultants, are subject to U.S. laws, regulations and policies, including the ITAR and the U.S. Foreign Corrupt Practices Act, or the FCPA, and other export laws and regulations, as well as foreign government laws, regulations and procurement policies and practices which may differ from the U.S. government regulations in this regard.

Compliance with the directives of the U.S. Department of State may result in substantial legal and other expenses and the diversion of management time. In the event that a determination is made that we or any entity we have acquired has violated the ITAR with respect to any matters, we may be subject to substantial monetary penalties that we are unable to quantify at this time, and/or suspension or revocation of our export privileges and criminal sanctions, which may have a material adverse effect on our business, results of operations and financial condition.

We can give no assurance that under either the ITAR or the EAR we will continue to be successful in obtaining the necessary licenses and authorizations or that certain revenues will not be prevented or delayed due to compliance issues related to the ITAR or the EAR.

We are also subject to, and must comply with, the FCPA and similar world-wide anti-corruption laws, including the U.K. Bribery Act of 2010. These acts generally prohibit both us and our third party intermediaries from making improper payments to foreign officials for the purpose of acquiring or retaining business or otherwise obtaining favorable treatment. We are required as well to maintain adequate record-keeping and internal accounting practices to fully and accurately reflect our transactions. We operate in many parts of the world that have experienced government corruption. In certain circumstances, the FCPA and our programs and policies may conflict with local customs and practices. If we or any of our local intermediaries have failed to comply with the requirements of the FCPA, governmental authorities in the United States could seek to impose severe criminal and civil penalties. The assertion of violations of the FCPA or other anti-corruption laws could disrupt our business and have a material adverse effect on our results of operations and financial condition.

We are subject to various other governmental regulations, compliance with which could cause us to incur significant expenses, and if we fail to maintain satisfactory compliance with certain regulations, we could be forced to recall products and cease their distribution, and we could be subject to civil or criminal penalties.

Our business is subject to various other significant international, federal, state and local regulations, including but not limited to health and safety, packaging, product content and labor regulations. These regulations are complex, change frequently and have tended to become more stringent over time. We may be required to incur significant expenses to comply with these regulations or to remedy violations of these regulations. Any failure by us to comply with applicable government regulations could also result in cessation of our operations or portions of our operations, product recalls or impositions of fines and restrictions on our ability to carry on or expand our operations.

We believe that the continued service of our executive officers will be important to our future growth and competitiveness. However, other than the employment agreement we entered into with Mr. Whelan, Chief Executive Officer, we currently do not have any other employment agreements with our executive officers. We cannot provide assurance that any named executive officer will remain employed by us. The Muzinich term loan facility includes a key executive retention provision. Specifically, the cessation of service of any two of Tim Whelan, Michael Kandell or Daniel Monopoli as Chief Executive Officer, Chief Financial Officer or Chief Technology Officer, respectively, as long as the Company’s consolidated leverage ratio is greater than 1.0 to 1.0 would constitute an event of default if those persons were not replaced with persons acceptable to Muzinich within 60 days.

Additionally, the design and manufacture of our products require substantial technical capabilities in many disparate disciplines, from engineering, mechanics and computer science to electronics and mathematics. We believe that the continued employment of key members of our technical and sales staffs will be important to us but, as with our executive officers, we cannot assure you that they will remain employed by us.

Furthermore, our ability to research and develop new technologies and products, or upgraded versions of existing products, will depend, in part, on our ability to hire personnel with knowledge and skills that our current personnel do not have. If we are unable to hire or retain such qualified personnel, our revenues could be negatively impacted, and our business could suffer.

~~We rely on manufacturers representatives to sell our products to key large accounts and the loss of a key manufacturers representative could have a material impact on our revenues~~

Our products are sold through a small in-house direct sales force as well as a network of industry specific manufacturers’ representatives that have established relationships with our largest customers. Our arrangements with our manufacturers’ representatives generally can be canceled by either party with advance written notice. The loss of a manufacturers representative could result in a material decline in revenues.

Third parties could claim that we are infringing on their intellectual property rights which could result in substantial costs, diversion of significant managerial resources and significant harm to our reputation.

The industries in which our company operates are characterized by the existence of a large number of patents and frequent litigation based on allegations of patent infringement. From time to time, third parties may assert patent, copyright, trademark and other intellectual property rights to technologies in various jurisdictions that are important to our business. Defending claims, including claims without merit, requires allocation of resources, including personnel and capital, which could adversely impact our results of operations. A successful claim of infringement against us could result in our being required to pay significant damages, enter into costly license agreements, or stop the sale of certain products, which could adversely affect our net revenues, gross margins and expenses and harm our future prospects.

We use specialized technologies and know-how to design, develop and manufacture our products. Our inability to protect our intellectual property could hurt our competitive position, harm our reputation and adversely affect our results of operations.

We believe that our intellectual property, including its methodologies, is critical to our success and competitive position. We rely on a combination of U.S. and foreign patent, copyright, trademark and trade secret laws, as well as confidentiality agreements to establish and protect our proprietary rights. If we are unable to protect our intellectual property against unauthorized use by third parties, our reputation among existing and potential customers could be damaged and our competitive position adversely affected.

Attempts may be made to copy aspects of our products or to obtain and use information that we regard as proprietary. Accordingly, we may not be able to prevent misappropriation of our technology or deter others from developing similar technology. Our strategies to deter misappropriation could be undermined if:

If these risks materialize, we could be required to spend significant amounts to defend our rights and to divert critical managerial resources. In addition, our proprietary methodologies could decline in value or our rights to them could become unenforceable. If any of the foregoing were to occur, our business could be materially adversely affected.

Attempts by others to gain unauthorized access to information technology systems are becoming more sophisticated and are sometimes successful. These attempts, which might be related to industrial or other espionage, include covertly introducing malware to our computers and networks and impersonating authorized users, among others. We seek to detect and investigate all security incidents and to prevent their recurrence, but in some cases, we might be unaware of an incident or its magnitude and effects. The theft, unauthorized use or publication of our intellectual property and/or confidential business information could harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives or otherwise adversely affect our business. To the extent that any security breach results in inappropriate disclosure of our customers’ or licensees’ confidential information, we may incur liability as a result. In addition, we might be required to devote significant additional resources to the security of our information technology systems.

~~We rely on our information technology systems to manage numerous aspects of our business and a disruption of these systems could adversely affect our business.~~

Environmental and other disasters, such as flooding, large earthquakes, hurricanes, volcanic eruptions or nuclear or other disasters, or a combination thereof, may negatively impact our business.

Although we manufacture our products in New Jersey and Colorado, we both source and ship our products globally. Environmental and other disasters could cause disruption to our supply chain or impede our ability to ship product to certain regions of the world. There can be no assurance that environmental and/or other such natural disasters will not have an adverse impact on our business in the future.

~~Our operating results may suffer because of our exposure to foreign currency exchange rate fluctuations.~~

Substantially all of our sales contracts with our U.S. and international based customers provide for payment in U.S. dollars. A strengthening of the U.S. dollar relative to other foreign currencies could increase the effective cost of our products to our international customers as their functional currency is typically not the U.S. dollar. This could have a potential adverse effect on our ability to increase or maintain average selling prices of our products to our foreign-based customers.

Our future revenue and expenses may be subject to volatility due to exchange rate fluctuations that could result in foreign exchange gains and losses associated with foreign currency transactions and the translation of assets and liabilities denominated in foreign currencies.

~~The success of our ability to grow revenues and develop relationships in Europe and Asia may be limited by risks related to conducting business in European and Asian markets.~~

Part of our strategy is to increase revenues and build our relationships in European and Asian markets. Risks inherent in marketing, selling and developing relationships in European and Asian markets include those associated with:

In addition, European and Asian intellectual property laws are different than and might not protect our proprietary rights to the same extent as do U.S. intellectual property laws, and we will have to ensure that our intellectual property is adequately protected in foreign jurisdictions and in the United States. If we do not adequately protect our intellectual property rights, competitors could use our proprietary technologies in non-protected jurisdictions and put us at a competitive disadvantage.

~~The uncertainty surrounding the implementation and effect of Brexit may cause increased economic volatility, affecting our operations and business.~~

In June 2016, a majority of voters in the United Kingdom (“U.K.”) elected to withdraw from the European Union (E.U.) in a national referendum (also referred to as “Brexit”). CommAgility is located in the U.K. The UK withdrew from the EU pursuant to Brexit on January 31, 2020, subject to a transition period that is set to end on December 31, 2020. During the transition period, the British government will continue to negotiate the terms of the U.K.’s future relationship with the EU. The outcome of these negotiations is uncertain and we do not know to what extent Brexit will ultimately impact the business and regulatory environment in the U.K., the rest of the E.U. or other countries.

The effects of Brexit will depend on any agreements the U.K. makes to retain access to E.U. markets. The measures could potentially disrupt the markets we serve and may cause us to lose customers, suppliers and employees. Additionally, disruptions and uncertainty caused by Brexit may cause our customers to closely monitor their costs and reduce their spending budget on our products and services. Brexit may also lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate. Any of these effects of Brexit, among others, could adversely affect our business, financial condition or future results.

~~Our results of operations could be affected by changes in tax-related matters.~~

A number of factors could cause our tax rate to increase, including a change in the jurisdictions in which our profits are earned and taxed; a change in the mix of profits from those jurisdictions; changes in available tax credits; changes in applicable tax rates; changes in accounting principles. We have deferred tax assets on our balance sheet. Changes in applicable tax laws and regulations or in our business performance could affect our ability to realize those deferred tax assets, which could also affect our results of operations.

~~Our stock price is volatile and the trading volume in our common stock is less than that of other larger companies in the wireless and advanced communications industries.~~

The market price of our common stock has experienced significant volatility and may continue to be subject to rapid swings in the future. From January 1, 2015 to February 21, 2020, the trading prices of our stock have ranged from $1.23 to $3.21 per share. There are several factors which could affect the price of our common stock unrelated to our financial performance, including announcements of technological innovations for new commercial products by us or our competitors, developments concerning propriety rights, new or revised governmental regulation or general conditions in the market or for our products, and the entrance of additional competitors into our markets.

Although our common stock is listed for trading on the NYSE American, the trading volume in our common stock is less than that of other, larger companies in the wireless and advanced communications industries. Traditionally, the trading volume of our common stock has been limited. For example, for the 90 trading days ending on February 21, 2020, the average daily trading volume was approximately 13,000 shares per day and ranged from between 300 shares per day and approximately 106,000 shares per day. Furthermore, we only have 21,647,571 shares of common stock outstanding as of the date of this report. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. Because of our limited trading volume, holders of our common stock may not be able to sell quickly any significant number of shares, and any attempted sales of a large number of our shares will likely have a material adverse impact on the price of our common stock.

New Jersey corporate law may delay or prevent a transaction that stockholders would view as favorable.

We are subject to the New Jersey Shareholders’ Protection Act (the “Act”), which could delay or prevent a change of control of us. In general, ~~that~~the Act prevents a shareholder owning 10% or more of a New Jersey public corporation’s outstanding voting stock from engaging in business combinations with that corporation for five years following the date the shareholder acquired 10% or more of the corporation’s outstanding voting stock, unless board approval is obtained prior to the time that the shareholder reaches the 10% threshold.

Failure to maintain effective internal controls in accordance with Sarbanes-Oxley could have a material adverse effect on our business and common stock price.

As a public company with SEC reporting obligations, we are required to document and test our internal control procedures to satisfy the requirements of Section 404(a) of Sarbanes-Oxley, which require annual assessments by management of the effectiveness of our internal control over financial reporting. As a smaller reporting company, we are exempt from the auditor attestation requirement of Section 404(b) of Sarbanes-Oxley.

During the course of our assessment, we may identify deficiencies that we are unable to remediate in a timely manner. Testing and maintaining our internal control over financial reporting may also divert management’s attention from other matters that are important to the operation of our business. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404(a) of Sarbanes-Oxley. If we conclude that our internal control over financial reporting is not effective, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or its effect on our operations. Moreover, any material weaknesses or significant deficiencies in our internal control over financial reporting may impede our ability to file timely and accurate reports with the SEC. Any of the above could cause investors to lose confidence in our reported financial information or our common stock listing on the NYSE American exchange to be suspended or terminated, which could have a negative effect on the trading price of our common stock.

The Company is subject to compliance with the policies and procedures of the NYSE American Exchange with respect to continued listing on the stock exchange and our failure to maintain our listing would make trades in our securities difficult for shareholders.

In considering whether a security warrants continued trading and/or listing on the NYSE American Exchange, many factors are taken into account, such as the degree of investor interest in the company, its prospects for growth, the reputation of its management, the degree of commercial acceptance of its products, and whether its securities have suitable characteristics for auction market trading. Thus, any developments which substantially reduce the size of a company, the nature and scope of its operations, the value or amount of its securities available for the market, or the number of holders of its securities, might occasion a review of continued listing by the Exchange. Moreover, events such as the sale, destruction, loss or abandonment of a substantial portion of a company’s business, the inability to continue its business, steps towards liquidation, or repurchase or redemption of its securities, may also give rise to such a review. The loss of our listing on the Exchange could have a material adverse effect on our shareholders’ ability to sell our shares or for others to purchase our shares. This could have an adverse effect on the market price of our stock.

~~We incur significant costs as a result of operating as a public company,~~International Risks

The conflict between Russia and ~~our management devotes substantial time~~Ukraine, and related sanctions could negatively impact us.

~~We have incurred~~ and ~~will~~is expected to continue to ~~incur significant legal, accounting~~lead to disruption, instability and volatility in global markets and industries. Our business could be negatively impacted by such conflict. The U.S. government and other ~~expenses~~governments in jurisdictions in which we operate have imposed severe sanctions and export controls against Russia and Russian interests and threatened additional sanctions and controls. The impact of these measures, as ~~a public company, including costs resulting from public company reporting obligations under the Exchange Act~~well as potential responses to them by Russia, is currently unknown and ~~regulations regarding corporate governance practices. The listing requirements~~they could adversely affect our business, supply chain, partners or customers.

Our operating results may suffer because of our exposure to foreign currency exchange rate fluctuations.

Substantially all of our sales contracts with our U.S. and international based customers provide for payment in U.S. dollars. A strengthening of the ~~NYSE American require that we satisfy certain corporate governance requirements relating~~U.S. dollar relative to ~~director independence, distributing annual and interim reports, stockholder meetings, stockholder approvals and voting, and soliciting proxies. Our management and~~ other ~~personnel will need to devote a substantial amount of time to ensuring compliance with all of these requirements.~~

~~We may be adversely affected by changes in LIBOR reporting practices,~~foreign currencies could increase the ~~method in which LIBOR is determined or the use of alternative reference rates.~~

~~Our credit facility with Bank of America and term loan facility with Muzinich BDC are indexed to the London Interbank Offered Rate (“LIBOR”).~~The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to stop encouraging or requiring banks to submit rates for the calculation of LIBOR rates after 2021, and it is unclear whether new methods of calculating LIBOR will be established, such that LIBOR may continue to exist after 2021. While there is no consensus on what rate or rates may become accepted alternatives to LIBOR, the Alternative Reference Rates Committee, a steering committee comprised of U.S. financial market participants, selected the Secured Overnight Finance Rate (“SOFR”) as an alternative to LIBOR. SOFR is a broad measure of theeffective cost of ~~borrowing cash in~~our products to our international customers as their functional currency is typically not the ~~overnight~~ U.S. treasury repo market, and the Federal Reserve Bank of New York started to publish the SOFR in May 2018. At this time, it is impossible to predict whether the SOFR or another reference rate will become an accepted alternative to LIBOR. The discontinuation, reform or replacement of LIBOR or any other benchmark rates may have an unpredictable impact on contractual mechanics in the credit markets or cause disruption to the broader financial markets, anddollar. This could have ana potential adverse effect on ~~LIBOR-based interest rates~~our ability to increase or maintain average selling prices of our products to our foreign-based customers.

The success of our ability to grow revenues and develop relationships in Europe and Asia may be limited by risks related to conducting business in European and Asian markets.

The uncertainty surrounding the implementation and effect of Brexit may cause increased economic volatility, affecting our operations and business.

In June 2016, a majority of voters in the United Kingdom (“U.K.”) elected to withdraw from the European Union (E.U.) in a national referendum (also referred to as “Brexit”). CommAgility is located in the U.K. Although the U.K. and E.U. entered into a trade and cooperation agreement, the political and economic instability created by Brexit may cause significant volatility in global financial markets in the future.

The volatility in financial markets due to Brexit could potentially disrupt the markets we serve and may cause us to lose customers, suppliers and employees. Additionally, disruptions and uncertainty caused by Brexit may cause our customers to closely monitor their costs and reduce their spending budget on our ~~current~~products and services. Any of these effects of Brexit, among others, could adversely affect our business, financial condition or future ~~debt obligations.~~results.

If securities or industry analysts do not publish research or reports about our business or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock might be influenced by the research and reports that industry or securities analysts publish about us or our business. If any analysts issue an adverse or misleading opinion regarding us, our business model, products or stock performance, our stock price could decline.

The statements contained in this Annual Report on Form 10-K 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 involves 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 are set forth in our annual report on Form 10-K and in this document.~~ 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. The Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments.

~~The Company leases a 45,700 square foot facility~~We currently lease our corporate headquarters located in Hanover Township, Parsippany, New Jersey which ~~is currently being used~~also serves as ~~its principal corporate headquarters and~~a manufacturing plant ~~with respect to the Network Solutions~~for our Noisecom and ~~Test and Measurement Segments. In May 2015, the Company and its landlord entered into a~~Boonton brands. We also lease ~~agreement to extend the lease term for its principal corporate headquarters in New Jersey through March 31, 2023.~~

~~The Company leases~~ office space in Leicestershire, England ~~consisting of 4,900 square feet~~ and ~~Duisburg,~~Duisberg, Germany ~~consisting of 7,446 square feet~~ for the ~~Embedded Solutions segment operations.~~CommAgility operations and office and manufacturing space in Boulder, Colorado for our Holzworth brand. The ~~Leicestershire lease expires in November 2020 and~~table below shows a summary of the ~~Duisburg lease is renewable every 3 months.~~square footage of these locations as of December 31, 2021:

The Company believes its properties are suitable and adequate for its current purposes.

Effective with the Microlab divestiture on March 1, 2022, the Company entered into a sublease with RF Industries, Ltd for approximately one-half of the square footage of our corporate headquarters in Parsippany, NJ.

As previously disclosed, on June 5, 2019 Harris Corporation (“Harris”) filed a request for arbitration before the American Arbitration Association inaccordance with the terms of an executed purchase order, statement of work and software license agreement (collectively referred to as “Agreements”) with CommAgility entered into in 2014. Harris claims that CommAgility breached the Agreements by offering for sale, marketing, and promoting techniques, capabilities, products and services that incorporate Work Product, as defined in the Agreements, owned by Harris. Harris claims that CommAgility has caused Harris monetary damages, the sum of which cannot be determined until such time as discovery has been conducted, but is estimated by Harris to be less than $250,000. Harris is also seeking an injunction against CommAgility’s use of the Work Product which includes rights to certain technology used for air-to-ground communications. The Company believes the claims are without merit and intends to defend all of the claims vigorously. The Company has not accrued any amounts in respect of this matter and cannot estimate the possible loss, if any, that the Company may incur with respect to it.

The ultimate outcome of this matter is unknown but, in the opinion of management, we do not believe this proceeding will have a material adverse effect upon our financial condition, cash flows or future results of operations. Legal expenses incurred in connection with the arbitration from August 2019 are covered by our professional indemnity insurance policy.

~~Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~

The common stock of the Company is traded on the NYSE American under the name Wireless Telecom Group, Inc. (Symbol: WTT). On March 6, ~~2020,~~2022, the Company had ~~364~~361 stockholders of record. These stockholders of record do not include beneficial owners whose shares are held in “nominee” or “street name”.

~~None~~As of December 31, 2021 the Company issued 143,514 shares of unregistered common stock to the Holzworth founders as part of the payment for the Year 1 Earnout, as defined, in ~~fiscal 2019.~~the Holzworth Stock Purchase Agreement.

The Company did not repurchase any securities during the year ended December 31, ~~2019.~~2021.

Set forth below is certain aggregated information with respect to the Company’s equity compensation plans.

~~Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

The Company is a global designer and manufacturer of advanced RF, microwave and millimeter wave components, modules, systems and instruments. Serving the wireless, telecommunication, satellite, military, aerospace, semiconductor and medical 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 analyzers, signal generators, phase noise analyzers, signal processing modules, LTE and 5G physical layer and stack software, power splitters and combiners, GPS repeaters, public safety monitors, noise sources, and programmable noise generators, Wireless Telecom Group supports the development, testing and deployment of wireless technologies around the globe.

In 2021, the Company was comprised of five brands – Microlab, Boonton, Noisecom, CommAgility and Holzworth organized as three product groups. Our product groups were organized as follows: Radio Frequency Components (“RFC”) was comprised of our Microlab brand; Radio, Baseband, Software (“RBS”) was comprised of our CommAgility brand; and Test and Measurement (“T&M”) was comprised of our Boonton, Noisecom and Holzworth brands. The financial condition and results of operations described in this Annual Report on Form 10-K include the 2021 results of Microlab. On March 1, 2022, we sold Microlab to RF Industries, Ltd. Accordingly, the Company currently is comprised of the T&M and RBS products groups.

~~Fiscal 2019 was a year with some disappointments as well as growth oriented investment. Consolidated and segment~~In 2021 our consolidated revenue ~~declined~~increased 18.0% from the prior year, ~~which negatively impacted profitability. These~~driven primarily by our T&M and RBS revenues, as we experienced a recovery from COVID-19 related declines ~~were~~as well as strong demand for our T&M and RBS solutions. T&M product demand was driven by ~~lower high margin software~~new product introductions, improved demand generation activities, and a rebound in customer spending outside the U.S. due in part to relaxed COVID-19 related restrictions. Also contributing to the overall increase in revenue were increased sales ~~and delays~~ of ~~certain large projects expected to be awarded in the year. Lower software revenue was caused by the slowdown of 4G software sales which was not offset by the adoption of emerging~~our LTE and 5G software and ~~standards. Despite these challenges,~~services driven by new customer contracts for specialized applications and RBS digital signal processing cards.

Our consolidated gross margins were 50.9% in 2021 compared to 50.2% for the ~~Company invested~~year ago period reflecting increased sales of our higher margin T&M solutions. Our 2021 GAAP operating loss decreased from $8.1 million in ~~future growth~~2020 to $145,000 in 2021. The 2021 GAAP operating loss included a non-cash indefinite lived intangible asset impairment charge of $258,000 and ~~profitability through acquisitions~~an increase in our contingent consideration liability related to the Holzworth earnout of $386,000. The intangible asset impairment charge was recorded as part of our required annual impairment testing and ~~R&D investments and believes~~was triggered primarily by the ~~revenue declines in 2019 can~~lower hardware sales at CommAgility as compared to prior years. We continue to be ~~overcome.~~

~~The decline in Embedded Solutions~~optimistic about CommAgility’s ability to grow software and services ~~revenue~~revenues as evidenced by our 2021 results which reflect a 140% growth from ~~prior years represented declines~~2020 driven by new customers and applications. In addition, our recent 2020 acquisition of Holzworth in our T&M product group, continues to outperform our expectations resulting in an increase in the ~~Company’s highest margin revenue streams. Further,~~contingent consideration liability noted above of $386,000 related to that brand’s financial performance in 2021. The 2021 earn-out is the ~~Test~~second and ~~Measurement segment experienced a 4.5% revenue decline as large government projects were delayed, but increased segment gross profit margin~~final earnout period for Holzworth.

In 2021 we generated $4.6 million of cash flow from ~~49.4%~~operations, an increase of $1.6 million from the prior year period, and we continued to ~~54.0%. The industry~~carefully manage our capital expenditures which totaled $524,000 for 2021. In June, we received forgiveness of our Paycheck Protection Program Loan in the amount of $2.0 million which ~~the Network Solutions segment operates was impacted by highly competitive pricing from offshore vendors as well~~is recognized as a ~~slowdown~~gain on extinguishment of debt in ~~large venue projects. The Test~~other income in the consolidated statement of operations. In the third quarter we raised $563,000 in cash, net of agent commissions and Measurement segment gross profit margin increased on higher demand of noise generation devices and real time power sensors. The Company also invested heavily in 5G NR product roadmap development in fiscal 2019 and, in January 2020, announced a collaboration with NXP Semiconductors to accelerate 5G hardware and software development. At the same time, the Company maintained an active merger and acquisition pipelineprofessional fees, as part of ~~its strategic plan to add complimentary, accretive~~our At-the-Market Common Stock Sales offering and ~~profitable businesses and drive growth opportunity through acquisitions. In connection with this, the Company signed a definitive agreement to purchase Holzworth Instrumentation, Inc.~~later in the ~~fourth~~third quarter ~~which closed on February 7,~~made a prepayment of our Muzinich term debt in the amount of $3.7 million. Overall, our debt less cash, or net debt, as of December 31, 2021 is zero, a reduction of $3.4 million of net debt from December 31, 2020. ~~Holzworth is a Colorado based provider of specialty noise analyzers and signal generators which is an adjacent product line to our Boonton brand.~~

The Company presents its operations in three reportable segments: (1) Network Solutions, (2) Test and Measurement and (3) Embedded Solutions. In fiscal 2019 the Network Solutions segment is comprised primarily of the operations of Microlab; the Test and Measurement segment is comprised of the operations of Boonton and Noisecom; and the Embedded Solutions segment is comprised of CommAgility.

The financial information presented herein includes: (i) Consolidated Balance Sheets as of December 31, ~~2019~~2021 and ~~2018;~~2020; (ii) Consolidated Statements of Operations and Comprehensive ~~Loss~~Income/(Loss) for the years ended December 31, ~~2019~~2021 and ~~2018;~~2020; (iii) Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, ~~2019~~2021 and ~~2018;~~2020; and (iv) Consolidated Statements of Cash Flows for the years ended December 31, ~~2019~~2021 and ~~2018.~~2020.

Management’s discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amount 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 our 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. Estimates and assumptions are made by management to assess the overall likelihood that an accounting estimate or assumption may require adjustment. It is reasonably possible that these estimates may ultimately differ materially from actual results. See Note 1 in the Notes to the Consolidated Financial Statements included elsewhere in this Form 10-K for a description of all of our significant accounting policies.

~~Effective January 1, 2018 the Company adopted~~ Accounting Standards Update (“ASU”) 2014-09, ~~“Revenue~~Revenue from Contracts with Customers (Topic 606)”, (“(“Topic 606”) ~~using the “modified retrospective” method, meaning the standard is applied only to the most current period presented in the financial statements. Topic 606~~ requires the Company to identify the performance obligations in our revenue arrangements – that is, those promised goods and services (or bundles of promised goods or services) that are distinct – and allocate the transaction price of the revenue arrangement to those performance obligations on the basis of estimated standalone selling prices (“SSP’s”).

Sales of hardware which include sales of radio frequency solutions, ~~in the Network Solutions segment,~~ digital signal processing hardware, ~~in the Embedded Solutions segment and~~ power meters, ~~and~~analyzers, noise/signal generators, phase noise analyzers and ~~noise generators and~~other components ~~in the Test and Measurement segment~~ generally consist of one performance obligation which is satisfied upon shipment to the customer. When contract terms require transfer of control upon delivery at a customer’s location, revenue is recognized on the date of delivery. Sales of hardware to distributors that include a limited right of return are recorded net of expected returns.

Sale of software licenses in the ~~Embedded Solutions segment~~CommAgility brand may involve multiple performance obligations including multiple software releases and consultancy services. In these cases transaction price is allocated to each distinct performance obligation on the basis of SSP and revenue is recognized when the distinct performance obligation is satisfied. The company determines performance obligations and SSP’s in arrangements with multiple performance obligations in accordance with Topic 606 which requires significant judgement.

Services arrangements involving repairs and calibrations inof the Company’s ~~Test and Measurement segment~~products are generally considered a single performance obligation and revenue is recognized as the services are rendered.

Certain software arrangements in the ~~Embedded Solutions segment~~CommAgility brand may involve the transfer of software along with significant customization services. In these cases the customization services and software licenses are combined as one distinct performance obligation and revenue is recognized over time as the project is completed. The duration of these performance obligations are typically one year or less.

We lease office space and certain equipment under non-cancelable lease agreements. ~~Prior to January 1, 2019, we applied the accounting guidance in ASC 840,~~We apply ASU No. 2016-02, Leases (Topic 842) , to our lease agreements. The leases were reviewed for classification as operating or capital leases. For operating leases, rent was recognized on a straight-line basis over the lease period. For capital leases, we recorded the leased assetarrangements. In accordance with a corresponding liability and amortized the asset over the lease term. Payments were recorded as reductions to the liability with an appropriate interest charge recorded based on the then-outstanding remaining liability.

~~Effective January 1, 2019, we adopted ASU No. 2016-02,~~~~Leases (Topic 842)~~using the modified retrospective transition method and established our lease accounting policy pursuant to this new standard. We initially applied the transition provisions at January 1, 2019, which allowed us to continue to apply the legacy guidance in ASC 840 for periods prior to 2019. Based on the new guidance,Topic 842, we assess all arrangements that convey the right to control the use of property, plant and equipment, at inception, to determine if it is, or contains, a lease based on the unique facts and circumstances present in that arrangement. For those leases identified, we determine the lease classification, recognition, and measurement at the lease commencement date. For arrangements that contain a lease we: (i) identify lease and non-lease components; (ii) determine the consideration in the contract; (iii) determine whether the lease is an operating or financing lease; and (iv) recognize lease Right of Use (“ROU”) assets and corresponding lease liabilities. Lease liabilities are recorded based on the present value of lease payments over the expected lease term. The corresponding ROU asset is measured from the initial lease liability, adjusted by (i) accrued or prepaid rents; (ii) remaining unamortized initial direct costs and lease incentives; and (iii) any impairments of the ROU asset. The interest rate implicit in our lease contracts is typically not readily determinable and as such, we use our incremental borrowing rate based on the information available at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment.

~~Business combinations are accounted under~~The Company uses the acquisition method of accounting ~~in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations”~~for business combinations which requires the tangible and intangible assets acquired and liabilities assumed to be recorded at their respective fair ~~values on~~market value as of the acquisition date. Goodwill represents the excess of the ~~purchase price~~consideration transferred over the fair value of the net assets acquired. The fair values of the assets acquired and liabilities assumed are determined based upon ~~management’s~~the Company’s valuation and involves making significant estimates and assumptions based on facts and circumstances that existed as of the acquisition date. ~~We use~~The Company uses a measurement period following the acquisition date to gather information that existed as of the acquisition date that is needed to determine the fair value of the assets acquired and liabilities assumed. The measurement period ends once all information is obtained, but no later than one year from the acquisition date.

Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase business combination. Goodwill is evaluated for impairment annually, or more frequently if events occur or circumstances change that would indicate that goodwill might be impaired, by first performing a qualitative evaluation of events and circumstances impacting the reporting unit to determine the likelihood of goodwill impairment. Based on that qualitative evaluation, if we determine it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, no further evaluation is necessary. Otherwise we perform a quantitative impairment test.

~~As of December 31, 2019 the Company’s consolidated~~The Company has three reporting units with goodwill ~~balance of $10.1 million is comprised of $1.4 million related to the~~– Holzworth, Microlab ~~reporting unit~~ and ~~$8.7 million related to the CommAgility reporting unit.~~CommAgility. The Company performed a qualitative assessment in the fourth quarter of ~~2019~~2021 of each reporting unit. The qualitative assessment of Holzworth and Microlab did not indicate any impairment of goodwill. As a result of ~~declining future demand of~~ the ~~CommAgility’s signal processing hardware and the uncertainty associated with new software license and services revenues to offset the signal processing~~reduced hardware sales ~~decline,~~from prior years, the Company performed a quantitative impairment test of the goodwill of the CommAgility reporting unit.

For goodwill impairment testing using the quantitative approach, the Company estimates the fair value of the selected reporting unit using the income approach and the market approach. Fair value under the income approach is derived primarily through the use of a discounted cash flow model based on our best estimate of amounts and timing of future revenues and cash flows and our most recent business and strategic ~~plans,~~plans. Fair value under the market approach is derived by applying a multiple to our best estimate of future revenue. The Company applies equal weighting to the income approach and ~~compares~~ the market approach to arrive at an estimated fair value. The estimated fair value is compared to the carrying value of the reporting unit, including goodwill. If the fair value of the reporting unit exceeds the carrying value, no impairment charge is recorded. If the carrying value of the reporting unit exceeds the fair value an impairment charge is recorded to goodwill in the amount by which carrying value exceeds fair value. ~~The discounted cash flow model requires~~Both the income approach and market approach require judgmental assumptions about projected revenue growth, future operating margins, discount rates and terminal values over a multi-year period. There are inherent uncertainties related to these assumptions and management’s judgment in applying them to the analysis of goodwill impairment. While the Company believes it has made reasonable estimates and assumptions to calculate the fair value of its reporting units, it is possible a material change could occur. ~~If actual results are not consistent with management’s estimates and assumptions, goodwill may be overstated and a charge would need to be taken against net earnings.~~

~~Changes in~~The result of our ~~projections used in the discounted cash flow model could affect~~quantitative analysis was that the estimated fair value of the Company’s reporting unit and could result in a goodwill impairment charge in a future period. In order to evaluate the sensitivity of the fair value calculations used in the quantitative goodwill impairment test, the Company applied a hypothetical 10% decrease to the fair value of the CommAgility reporting unit exceeded its carrying value thus no goodwill impairment charge was recorded in the fourth quarter of 2021. The excess of fair value above its carrying value was approximately 25% of the fair value. Recent operating performance, along with assumptions for specific customer opportunities, were considered in the key assumptions used during the fiscal 2021 impairment analysis. Management of the Company has determined the goodwill of CommAgility may have an increased likelihood of impairment if CommAgility is not able to execute against customer opportunities, and ~~compared those values~~the long-term outlook for their cash flows are adversely impacted. Furthermore, changes in the long-term outlook may result in a change to other valuation assumptions. Factors monitored by management which could result in a change to CommAgility estimates include the outcome of customer requests for proposals and subsequent awards, labor market conditions and levels of overall economic activity.

In the fourth quarter of 2020, the Company recorded a goodwill impairment charge of $4.7 million related to the ~~carrying value. Based~~CommAgility reporting unit. The non-cash impairment charge was due to a number of factors that arose as part of our quantitative assessment as of the valuation date in the prior year, including an assessment of our historical results and the significant decline in hardware sales in 2020, the difficulty of predicting future customer demand, the uncertainty of future sales of 4G hardware cards, the uncertainty of the growth of 5G software and services revenues due to the early stages of 5G adoption for new technology and expectations for 5G deployments, the uncertainty of the impact of the COVID 19 pandemic on ~~this sensitivity analysis,~~customer spending, and the ~~Company did not identify any goodwill impairment.~~ uncertainty for enterprise spending and longer-term investment.

Due to the many variables inherent in the estimation of a reporting unit’s fair value and the relative size of our recorded goodwill, differences in assumptions may have a material effect on the results of our impairment analysis.

As of December 31, ~~2018~~2021 and 2020, the Company’s consolidated goodwill balance of ~~$9.8~~$11.5 million was comprised of $1.4 million related to the Microlab reporting unit, $6.0 million related to the Holzworth reporting unit and ~~$8.4~~$4.1 million related to the CommAgility reporting unit. ~~Management’s qualitative assessment performed in the fourth quarters of 2018 did not indicate any impairment of goodwill.~~

Intangible assets include acquired technology, patents, non-competition agreements, customer relationships and ~~trademarks.~~tradenames. Intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which range from three to ~~five~~twelve years. Long-lived assets, including intangible assets with finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets that management expects to hold and use is based on the estimated fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or estimated fair value less costs to sell. The estimated useful lives of intangible and long-lived assets are based on many factors including assumptions regarding the effects of obsolescence, demand, competition and other economic factors, expectations regarding the future use of the asset, and our historical experience with similar assets. The assumptions used to determine the estimated useful lives could change due to numerous factors including product demand, market conditions, technological developments, economic conditions and competition. Intangible assets determined to have indefinite useful lives are not amortized but are tested for impairment annually and more frequently if events occur or circumstances change that indicate an asset may be impaired.

In the fourth quarter of 2021, the Company recorded an impairment charge of $258,000 related to the CommAgility tradename. The non-cash impairment charge was due to a number of factors that arose as part of our quantitative assessment, most notably declining hardware sales since 2019. Additionally, the continued emergence of technical standards and the complexity of the specialized applications that our CommAgility software and related services would be integrated with as part of new customer projects were a factor in the tradename impairment analysis.

The Company records deferred taxes in accordance with ASC 740, “Accounting for Income Taxes.” ASC 740 requires recognition of deferred tax assets and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. The Company periodically assesses the value of its deferred tax assets and determines the necessity for a valuation allowance.

Under ASC 740, the Company must recognize and disclose uncertain tax positions only if it is more-likely-than-not that the tax position will be sustained on examination by the taxing authority, based on the technical merits of the position. The amounts recognized in the financial statements attributable to such position, if any, are recorded if there is a greater than 50% likelihood of being realized upon the ultimate resolution of the position.

The Company has analyzed its filing positions in all of the jurisdictions where it is required to file income tax returns. As of December 31, ~~2019~~2021 and ~~2018,~~2020, the Company has identified its federal tax return, ~~and its~~the state tax ~~return~~returns in New Jersey and Colorado and the United Kingdom as “major” tax jurisdictions, as defined in ASC 740, in which it is required to file income tax returns. ~~Additionally, the Company has identified the United Kingdom as “major” tax jurisdiction as of December 31, 2019 and 2018.~~ Based on the evaluations noted above, the Company has concluded that there are no significant uncertain tax positions requiring recognition or disclosure in its consolidated financial statements.

Based on a review of tax positions for all open years and contingencies as set out in the Company’s Notes to the consolidated financial statements, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740 during the years ended December 31, ~~2019~~2021 and ~~2018,~~2020, and the Company does not anticipate that it is reasonably possible that any material increase or decrease in its unrecognized tax benefits will occur within the next twelve months.

The Company follows the provisions of ASC 718, “Compensation - Stock Compensation” which requires that compensation expense be recognized based on the fair value of ~~the stock awards. The fair value of the stock~~equity awards ~~is equal to the fair value of the Company’s stock~~ on the date of grant. The fair value of restricted share awards and restricted stock unit awards is determined using the market value of our common stock on the date of the grant. The fair value of stock options at the date of grant is estimated using the Black-Scholes option pricing model. When stock options are granted, the Company takes into consideration guidance under ASC 718 and SEC Staff Accounting Bulletin No. 107 (SAB 107) when determining assumptions. The expected option life is derived from assumed exercise rates based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding. The expected volatility is based upon historical volatility of our shares using daily price observations over an observation period that approximates the expected life of the options. The risk-free rate is based on the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the expected option life. The Company accounts for forfeitures for all equity awards when they occur.

Management estimates are necessary in determining compensation expense for stock options with performance-based vesting criteria. Compensation expense for this type of stock-based award is recognized over the period from the date the performance conditions are determined to be probable of occurring through the date the applicable conditions are expected to be met. If the performance conditions are not considered probable of being achieved, no expense is recognized until such time as the performance conditions are considered probable of being met, if ever. Management evaluates whether performance conditions are probable of occurring on a quarterly basis.

Inventories are stated at the lower of cost (average cost) or net realizable value. The Company reviews inventory for excess and obsolescence based on best estimates of future demand, product lifecycle status and product development plans.

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. A key consideration in estimating the allowance for doubtful accounts has been, and will continue to be, our customer’s payment history and aging of ~~its~~our accounts receivable balance.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted cash flows resulting from the use of the assets and their eventual disposition. Measurement of an impairment loss for long-lived assets that management expects to hold for sale is based on the fair value of the assets. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

The Company generally offers standard warranties against product defects. We estimate future warranty costs to be incurred based on historical warranty claims experience including estimates of material and ~~service~~labor costs over the warranty period.

Comparison of the results of operations for the year ended December 31, ~~2019~~2021 with the year ended December 31, ~~2018~~2020

Consolidated net revenues were impacted by declines in all three segments. Embedded Solutions revenue decreased from the prior year on lower sales of LTE software licenses and related services offset only partially by increased sales of digital processing hardware to our largest customer. We believe that the transition from 4G to 5G was a factor in the decline in software license revenue and related services. Test and Measurement revenues declined on fewer government orders and large projects. Network Solutions revenues were lower than the prior year due to fewer large venue projects and a highly competitive pricing environment impacting the entire industry.

As part of our 2020 planning process, the Company determined that demand for our Embedded Solutions digital signal processing hardware cards from the Company’s largest customer will be significantly reduced from levels in fiscal 2019 and 2018. The Company expects the decline in Embedded Solutions hardware revenue to be partially offset by increased higher margin software license and services specifically related to 5G NR private network projects. Overall, however, the Company expects a decline in revenues for Embedded Solutions in 2020 as compared to 2019.

Consolidated net revenues increased 18.0% due to higher sales of our T&M and RBS solutions from the prior year period. T&M sales increased due to new product introductions, improved demand generation activities, and a rebound in customer spending outside the U.S. due in part to relaxed COVID-19 related restrictions. RBS revenues increased due to higher sales of our LTE and 5G software and services driven by new customer contracts for specialized applications and higher sales of our digital signal processing cards. RFC revenues were flat with last year as carrier spending remained low in the first two quarters of 2021 due to the ongoing impacts of the COVID-19 pandemic but increased as compared to the prior year in the third and fourth quarters.

Consolidated gross profit increased $4.1 million primarily due to higher net revenues at our RBS and T&M product groups as compared to the prior year. Consolidated gross profit margin increased marginally from the prior year. RBS gross profit margin declined marginally due to higher mix of service revenues in ~~2019 was flat~~2021 as compared to ~~2018. Gross~~2020 which had a lower margin than software revenues. T&M gross profit margin ~~in the Test and Measurement segment~~ increased 200 basis points from the prior year, on favorable product mix as the Company sold higher margin Noisecom noise generation devices as well as Boonton power sensors. Network Solutions gross profit margins declined year over year due to a highly competitive pricing environment impacting the entire passive RF industry as well as lower volumes resulting in lower absorptionwhich included certain one-time non-cash purchase accounting adjustments of ~~fixed labor and overhead charges. Embedded Solutions~~$448,000. RFC gross profit margin declined ~~on product~~140 basis points from the prior year due to mix ~~as higher margin software~~ and ~~service sales declined year over year as well as lower volumes resulting in lower absorption of fixed labor and overhead charges.~~continued market pricing pressures.

~~Research and development expenses overall increased $1.0 million primarily due to increased expenses in the Embedded Solutions segment. Embedded Solutions segment~~Consolidated research and development expenses ~~increased $1.4 million~~decreased $839,000 or 13.1% from the prior year period due primarily ~~for headcount deployment on product roadmap initiatives, specifically the 5G NR product roadmap. The increase in the Embedded Solutions segment~~to lower third party research and development expenses ~~was offset~~of $543,000 related to 2020 product development initiatives in our Boonton and CommAgility brands. The mix of third-party research and development expenses to internal expenses varies by ~~a $0.4 million decrease~~project. We expect to continue third party investments in research and development dependent upon project deadlines, new product development opportunities and longer term product roadmap dependencies which, in turn, may create increases and decreases to research and development expenses as a percentage of revenue. Additionally, salaries expense declined from the prior year due primarily to our RBS engineers spending more time on customer service projects resulting in ~~the Network Solutions~~their salaries being classified as costs of revenue rather than research and ~~Test and Measurement segments~~development expense. These decreases were offset by an unfavorable foreign exchange impact of approximately $226,000 due to ~~headcount reductions and lower third party spend.~~the strengthening of the Great British Pound (“GBP”) against the U.S. dollar as compared to the prior year.

Sales and marketing expenses increased ~~$0.1 million~~$214,000 or 3.1% due primarily to higher commissions expense of $217,000 and unfavorable foreign exchange impact of $56,000 due to ~~increased headcount in~~ the ~~Test and Measurement and Network Solutions segments~~strengthening of the GBP to the U.S. dollar as compared to the prior year offset by ~~lower commission expense~~other miscellaneous declines in sales and marketing expenses from the ~~Embedded Solutions segment due to lower volumes.~~prior year.

General and administrative expenses ~~decreased $0.1~~increased $2.0 million or 19.8% due primarily to higher salaries and benefits of $695,000 due to ~~lower~~headcount increases at our RBS product group and the full year impact of our Chief Revenue Officer, a higher bonus accrual of $434,000, higher legal and merger and acquisition expenses of $514,000 related to the sale of Microlab, higher insurance costs of $122,000, higher consulting and other market research expenses related to our strategic review process of $300,000 and an unfavorable foreign exchange impact of $126,000 related to the strengthening of the GBP as compared to the prior year. This was partially offset by a reduction in stock compensation ~~expenses offset by higher mergers~~expense of $217,000 due to the reversal of expense related to certain performance based stock options which are not probable to vest due to the Microlab divestiture as well as the deferred Form S-3 cost expense of $255,000 that was incurred in the prior year.

Goodwill and ~~acquisitions expenses.~~intangible impairment charges in the current year relate to an impairment charge taken on our indefinite lived tradename asset at our CommAgility reporting unit as a result of our annual impairment testing. The goodwill and intangible impairment charge in the prior year relate to our CommAgility reporting unit and is the result of our annual goodwill impairment analysis.

~~In 2018 the Company recorded a~~The loss on change in fair value of contingent consideration ~~of $0.6 million as our estimate of the earn-out payment related~~in both 2020 and 2021 relate to the ~~CommAgility acquisition was increased from our original estimate recorded at~~earnout consideration to be paid in connection with the ~~time~~Holzworth acquisition. The loss recognized in 2021 of ~~acquisition due~~$386,000 relates to the ~~then improved financial results~~additional consideration earned in relation to the better than expected performance in fiscal year 2021, and the loss of $1.1 million recognized in 2020 relates to the ~~business.~~ better than expected performance in fiscal year 2020.

The ~~contingent consideration~~Company recorded a $2.0 million gain on extinguishment of debt in 2021, as we received notice from the SBA that our PPP loan was fully forgiven.

Other income decreased $117,000 from the prior year due primarily to gains on sales of assets realized in 2020 and lower foreign currency exchange gains.

Interest expense increased $158,000 due primarily to the higher interest rate on our term loan facility with Muzinich and the prepayment fee associated with the loan payment ~~was~~ made in ~~Q1 2019.~~the third quarter of 2021.

Consolidated tax benefit decreased $136,000 from the prior year due primarily to higher taxable income in the US jurisdiction partially offset by taxable losses in the UK due in part to research and development deductions.

The Company ~~undertook restructuring actions and cost and expense reductions across all~~generated net income for the year of ~~its segments to drive efficiency and improved operation leverage. These actions are expected to reduce consolidated costs and expenses in fiscal 2020 by approximately~~ $1.5 million as compared to ~~fiscal 2019.~~an $8.1 million net loss in the prior year due to higher gross profit and lower impairment and contingent consideration charges as compared to the prior year and the gain recognized on extinguishment of the PPP loan in the current year which were only partially offset by higher interest expense and a lower tax benefit in the current year.

As of December 31, 2021, the Company had three credit facilities – an asset based revolving loan which was subject to a borrowing base calculation (as defined) with Bank of America, N.A. (the “Credit Facility” or the “Revolver”), a term loan facility with Muzinich BDC Inc. (“Muzinich”) (the “Term Loan Facility”) which was used to finance the Holzworth acquisition in February 2020, and the Coronavirus Business Interruption Loan Agreement (“CIBLS Loan”) with Lloyds Bank PLC (“Lloyds”).

~~Other expenses decreased $0.1~~On March 1, 2022 the Company completed the divestiture of Microlab and received proceeds of $23.9 million ~~due~~which is subject to ~~lower foreign exchange unrealized and realized losses on transactions denominated~~final purchase price adjustments in ~~currencies other than our functional currencies.~~

~~Interest expense decreased $0.3~~accordance with the Purchase Agreement. Simultaneous with the Microlab close the Company used $4.2 million ~~primarily due~~of such proceeds to ~~lower interest expense~~repay its term loan related to the ~~CommAgility contingent consideration liability~~Term Loan Facility and approximately $700,000 to repay its outstanding revolver balance related to the Credit Facility and terminated both the Term Loan Facility and Credit Facility. The Microlab transaction generated approximately $18.0 million of cash net of certain expenses and holdbacks. We expect our cash balance and cash generated by operations will be sufficient to meet our liquidity needs for the next twelve months. Our ability to meet our cash requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control, including the fact that the Company will no longer benefit from the performance of the Microlab brand which historically accounted for a substantial portion of our consolidated revenue and that we will be entirely dependent on the RBS and T&M product groups.

The Microlab divestiture will be treated as ~~final payment was made in March 2019.~~

a sale of the assets and liabilities of Microlab to RF Industries for U.S. federal and applicable state income tax purposes. The Company ~~recorded a tax benefit in fiscal 2019~~has approximately $15.0 million of ~~$1.4~~U.S. federal net operating loss carryforwards and approximately $41.3 million ~~due primarily~~of New Jersey state net operating loss carryforwards as of December 31, 2021. We expect to autilize all of our federal net operating loss carryforwards and approximately 50% of our state net operating loss carryforwards to offset the taxable ~~loss~~gain generated from the Microlab divestiture. Accordingly, in the ~~U.K. driven by deductible~~future, the Company could be subject to cash income taxes which would reduce our liquidity. Additionally, CommAgility benefits from a research and development ~~expenses as compared~~deduction which significantly reduces the cash needed to ~~a tax expense in fiscal 2018 of $48,000 due to deferred federal~~pay taxes in the ~~U.S. offset by current and deferred tax benefits related to the U.K.~~UK.

The Company ~~recorded a net loss in~~entered into the ~~amount~~Credit Facility with Bank of ~~$0.4 million in fiscal 2019 as compared to net income~~America, N.A. (“Bank of ~~$35,000 in fiscal 2018 due to lower consolidated gross profit and higher operating expenses partially offset by lower consolidated interest expense and the recognition of a tax benefit.~~

~~As disclosed in Note 4 to the Consolidated Financial Statements,~~America”) on February 16, ~~2017 the Company entered into a~~2017. The Credit Facility ~~which~~ provided for a term loan in the aggregate principal amount of ~~$0.8 million~~$760,000 (the “Term Loan”) and an asset based revolving loan (the “Revolver”), which iswas subject to a Borrowing Base Calculation (as defined in the Credit Facility) of up to a maximum availability of ~~$9 million.~~$9.0 million (“Revolver Commitment Amount”). The borrowing base was calculated as a percentage of eligible accounts receivable and inventory, as defined, subject to certain caps and limits. The borrowing base was calculated on a monthly basis and interest was calculated at LIBOR plus a margin. The proceeds of the Term Loan and Revolver were used to finance the acquisition of CommAgility. On February 26, 2019 the Company entered into Amendment No. 3 to the Credit Facility which extended the term of the Revolver to March 31, 2020, and on November 8, 2019 the Company entered into Amendment No. 4 to the Credit Facility which extended the maturity date of the Term Loan to March 31, 2020 to coincide with that of the Revolver. As described more fully below, on February 7, 2020,CommAgility in 2017.

In connection with the Holzworth acquisition, on February 7, 2020, the Company and certain of its subsidiaries (the “Borrowers”), and Bank of America entered into Amendment No. 5 to the Credit Facility ~~which, inter alia, extended~~(“BOA Amendment 5”). By entering into BOA Amendment 5, Holzworth, together with CommAgility Limited, became borrowers under the ~~Revolver maturity date to March 31, 2023.~~Credit Facility. The obligations of the Borrowers under the Credit Facility were 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 Term Loan in the amount of ~~$0.3 million.~~$304,000.

~~As of December 31, 2019~~On May 4, 2020, the Company, ~~had consolidated net cash (consolidated cash~~its subsidiaries and ~~cash equivalents less consolidated debt outstanding)~~Bank of ~~$1.5 million~~America entered into Amendment No. 6 which, among other things, amended the definition of “Debt” to include the PPP loan as ~~compared to net cash of $3.0 million~~long as ~~of December 31, 2018. The decrease in net cash was primarily attributable to a net loss in 2019 as compared to net earnings in 2018~~the proceeds were used for allowable purposes under the CARES Act (as defined below) and the ~~payment~~Company promptly submitted an application for forgiveness and substantially all of the loan was forgiven. The Company received notice in June 2021 that the loan and accrued interest were fully forgiven, as described below.

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 ~~contingent consideration in~~notes with the ~~first quarter~~Holzworth sellers, as described above, and provided Bank of ~~2019 related~~America’s consent to the ~~CommAgility acquisition offset by lower working capital~~Company entering into the Muzinich Second Amendment, as described below.

On September 28, 2021, the Company and ~~lower capital expenditures as compared~~its subsidiaries entered into Amendment No. 8 (“BOA Amendment 8”) in which Bank of America consented to the ~~prior year. As~~aforementioned principal prepayment of ~~December 31, 2019, substantially all~~the Muzinich Term Loan Facility and amended the definition of ~~our cash and cash equivalents are held outside~~Fixed Charge Coverage Ratio to treat the ~~United States. As~~Muzinich principal prepayment as being made on October 1, 2020. Additionally, Bank of ~~December 31, 2019, $2.4 million was outstanding on our asset based Revolver and $0.3 million was outstanding on our Term Loan. As of December 31, 2019 and 2018,~~America and the ~~date hereof, the~~ Company is in compliance with the covenants of the Credit Facility. The asset based Revolver under our Credit Facility is secured by the Company’s U.S. assets. Income taxes have been provided on foreign earnings suchagreed that, ~~there would be no significant income tax expense to repatriate the portion of this cash that is not required to meet operational needs of our international subsidiary.~~

Cash provided by operating activities was $80,000 for the year ended December 31, 2019 as compared to cash provided by operating activities of $4.0 million for the year ended December 31, 2018. The decline was primarily due to lower operating income, the payment of contingent consideration, a portion of which is included as cash used from operations in accordance with ~~ASU 2016-15, payment~~the Credit Facility, the LIBOR should be replaced with a successor rate in accordance with the provisions of ~~deferred purchase price~~BOA Amendment 5. Accordingly, BOA Amendment 8 defines the LIBOR successor rate for loans denominated in U.S. dollars to be the Bloomberg Short-Term Bank Yield Index rate (“BSBY”), loans denominated in Sterling to be the Sterling Overnight Index Average Reference Rate (“SONIA”) and ~~2018 bonuses, which are reflected~~loans denominated in Euros to be the Euro Interbank Offered Rate (“EURIBOR”). Loans drawn after the effective date of BOA Amendment 8 bear interest as ~~a decrease in accrued expenses and other current liabilities offset by cash generated from working capital.~~the successor rates named above plus the applicable margin, as defined.

~~Cash used by investing activities was $0.8 million for the year ended~~As of December 31, ~~2019~~2021, the Company had no balance drawn on the Revolver and the interest rate was primarily comprised of cash used for capital expenditures of $0.4 million and payment of deferred purchase price related to the CommAgility acquisition of $0.4 million. For the year ended December 31, 2018 cash used by investing activities was $1.7 million and was primarily related to cash used for the payment of the CommAgility deferred purchase price of $0.8 million and capital expenditures of $0.9 million.2.00%.

Cash used by financing activities was $0.2 million for the year ended December 31, 2019 as compared to cash provided by financing activities of $0.5 million for the year ended December 31, 2018. During the year ended December 31, 2019, cash used by financing included net borrowings under the Credit Facility of $0.8 million offset by payment of contingent consideration related to the CommAgility acquisition, of which $0.8 million is included in financing activities, payment of fees related to our new term loan and amended credit facility of $0.1 million, and term loan payments of $0.2 million. During the year ended December 31, 2018, net borrowings under the Credit Facility were $0.3 million and proceeds from stock option exercises were $0.3 million which were both partially offset byMuzinch Term Loan ~~principal payments of $0.2 million.~~Facility

In connection with the Holzworth ~~Acquisition,~~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~~were $21,000 per quarter with a balloon payment at ~~maturity. The term loan bears interest at LIBOR (subject to a floor of 1.0%) plus a margin of 7.25%.~~maturity which was February 7, 2025. The Term Loan Facility ~~includes~~included an upfront fee of 2.50% of the aggregate principal amount of the Initial Term Loan.

The Company may prepay the Initial Term Loan at any time. Prepayments made prior to (a) February 7, 2022 are subject to a prepayment premium in the amount of 2.0% of the prepaid principal amount and (b) February 7, 2023 are subject to a prepayment premium in the amount of 1.0% of the prepaid principal amount. The Company is required to make prepayments of the Initial Term Loan In connection with the proceeds of certain asset dispositions, insurance recoveries and extraordinary receipts, subject to specified reinvestment rights. The Company is also required to make prepayments of the Initial Term Loan upon the issuance of certain indebtedness and to make an annual prepayment based upon the Company’s excess cash flow. Mandatory prepayments with asset sale, insurance or condemnation proceeds and excess cash flow may be made without penalty. Mandatory prepayments with the proceeds of indebtedness are subject to the same prepayment penalties as are applicable to voluntary prepayments. The maturity date for the Initial Term Loan is February 7, 2025.

~~The~~ Term Loan Facility, ~~provides for an additional $11.6 term loan (the “Second Term Loan”) to be used for a second unannounced acquisition for which~~ the Company ~~has~~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 ~~a confidential, non-binding letter-of-intent (the “Additional Acquisition”). There can be no assurance that~~ the ~~Additional Acquisition will be completed. In the event the Additional Acquisition is completed, the Second Term Loan will be made available~~First Amendment to the Company on the same terms and conditions as the Initial Term Loan, including interest rate, amortization schedule and financial covenants, subject to the payment of an additional upfront fee and satisfaction of customary conditions to funding.

~~The~~ Term Loan Facility ~~is secured by liens on~~which, among other things, amended the definition of “Indebtedness” to include the PPP (as defined below) loan as long as the proceeds were used for allowable purposes under the CARES Act, the receipt of the loan did not violate the Credit Facility and the Company submitted an application for forgiveness and substantially all of the ~~Company’s~~loan was forgiven. The Company received notice in June 2021 that the loan and accrued interest were fully forgiven, as described below.

On February 25, 2021, the Company and its ~~subsidiaries’ assets including a pledge of~~subsidiaries entered into the ~~equity interests~~Second Amendment to the Credit Agreement and Limited Waiver (“Amendment 2”) with Muzinich, in which Muzinich agreed to waive the Company’s ~~subsidiaries. The Term Loan Facility contains customary affirmative and negative covenants for a transaction of this type, including, among others,~~obligation to comply with the provision of annual, quarterly and monthly financial statements and compliance certificates, maintenance of property, insurance, compliance with laws and environmental matters, restrictions on incurrence of indebtedness, granting of liens, making investments and acquisitions, paying dividends, entering into affiliate transactions and asset sales. In addition, the Company must maintain certain financial covenants typical for this type of arrangement, including a consolidated leverage ratio ~~a consolidated~~and fixed charge coverage ratio ~~and minimum liquidity of its foreign subsidiaries. The consolidated leverage ratio is defined as~~financial covenants in the ~~ratio of total consolidated indebtedness, as defined, to consolidated EBITDA, as defined. The required leverage ratio starts at 4.75 to 1.0~~Term Loan Facility for the ~~twelve month periods ended March 31, 2020 and June 30, 2020, and decrease in various increments to 3.75 to 1.0 for the twelve months ended~~fiscal quarter ending December 31, ~~2020, 2.75 to 1.0 for~~2020. We were not in compliance with such covenants primarily as a result of the ~~twelve months ended December 31, 2021 and 2.0 to 1.0 for~~impact the ~~twelve months ended December 31, 2022 and thereafter. The~~COVID-19 pandemic had on our consolidated ~~fixed charge coverage ratio is~~financial results. Amendment 2, among other things, amended the ~~ratio~~definition of consolidated EBITDA ~~as defined, less~~to include certain cash tax benefits related to our U.K. tax jurisdiction and reduced our consolidated ~~capital expenditures and cash income taxes paid to consolidated fixed charges, as defined, calculated on a twelve month basis. The consolidated fixed charge coverage~~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, ~~2020,~~2022 from 2.50 to 2.00 and June 30, ~~2020~~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 ~~September 30, 2020 must be 1.35~~would step down to 18.50% and ~~increases in various increments~~7.25% upon the Company achieving consolidated EBITDA on a ~~quarterly~~trailing twelve-month basis ~~to 1.5 to 1.0~~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 2.

On May 27, 2021, the Company and its subsidiaries entered into the Third Amendment to the Credit Agreement and Limited Waiver (“Amendment 3)” with Muzinich in which Muzinich, among other things, permitted CommAgility to enter into the CIBLS Loan Agreement with Lloyds Bank Plc. See description below.

On September 28, 2021, the Company and its subsidiaries entered into the Fourth Amendment to Credit Agreement and Limited Waiver (“Amendment 4”) with Muzinich. Amendment 4 was executed in connection with a prepayment of the principal balance of the Muzinich term loan in the amount of $3.7 million and accrued interest thereon of $95,000 on September 28, 2021. Additionally, the Company paid a prepayment fee of 2% of the prepayment amount or $74,000.

Under the terms of Amendment 4, the interest rate margin was decreased from 9.25% to 8.75% when trailing twelve month ~~period ended December~~Consolidated EBITDA, as defined, excluding the U.K. R&D tax credit, was less than or equal to $4.0 million and decreased from 8.50% to 8.00% when trailing twelve month Consolidated EBITDA, as defined, excluding the U.K. R&D tax credit, is greater than $4.0 million but equal to or less than $6.3 million. Muzinich also agreed to waive compliance with the financial covenant set forth in Section 7.11(c) of the Credit Agreement from September 28, 2021 until March 31, ~~2020 and 2021, and to 1.75 to 1.0 for~~2022. Section 7.11(c) required the ~~twelve months ending December 31, 2022 and thereafter. Lastly, the Company must maintain minimum~~trailing four week average liquidity, ~~defined as cash and availability under the UK borrowing base,~~ as defined, of $1.0 million over any trailing four-week period until such time as the foreign subsidiary has positive EBITDA, as defined, for three consecutive quarters and the Holzworth deferred purchase price has been paid in full. The Term Loan Facility also provides for a number of events of default, including, among others, nonpayment, bankruptcy, inaccuracy of representations and warranties, breach of covenant, change in control, entry of final judgement or order, breach of material contracts, and as long as the Company’s ~~consolidated leverage ratio is greater~~CommAgility subsidiary to be no less than ~~1.0~~$1.0 million. The waiver of this covenant could be extended upon the consent of Muzinich. Additionally, under Amendment 4, the definition of Consolidated Interest Charges was amended to ~~1.0 (as calculated in accordance with~~treat the ~~terms~~aforementioned principal prepayment of $3.7 million as being made on October 1, 2020.

As of December 31, 2021, the Term Loan Facility), the cessation of service of any two of Tim Whelan, Michael Kandell or Daniel Monopoli as Chief Executive Officer, Chief Financial Officer or Chief Technology Officer, respectively, of the Borrower without acceptable replacements within 60 days. Any exercise of remedies by Muzinich is subject to compliance with the intercreditor agreement entered into at the closing ofprincipal balance on the Term Loan Facility ~~among the Company, Muzinich~~was $4.1 million and ~~Bank of America, N.A., as lender under the Credit Facility referenced below.~~

Also 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, and 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.

Amendment No. 5 (a) effected certain modifications to the Credit Facility to accommodate the Holzworth Acquisition, the Company’s incurrence of the Initial Term Loan and the granting of the related liens and security interests, (b) subject to the satisfaction of certain conditions precedent, made available to CommAgility an asset based revolving loan, subject to a borrowing base calculation applicable to CommAgility’s assets, of up to a maximum availability of $5.0 million (the “UK Revolver Commitment”), (c) reduced the interest rate ~~margin applicable to revolving loans made under~~was 9.75%. On March 1, 2022 the ~~Credit Facility from a range of 2.75% to 3.25% to a range of 2.00% to 2.50%, based~~Company repaid the outstanding principal balance and accrued interest on the Borrowers’ Fixed Charge Coverage Ratio (as defined in the Credit Facility) of the most recently completed fiscal quarter, (d) extended the Revolver Termination Date to March 31, 2023 and (e) conditioned the Borrowers’ ability to make certain debt payments under the Term Loan Facility ~~(described above) upon compliance with a liquidity test. In all other material respects, the Credit Facility remains unchanged.~~

Effectiveness of Amendment No. 5 was conditioned upon, among other things, the prepayment of the remaining principal balance (approximately $0.3 million) of the $0.8 million term loan made available under the Credit Facility and the ~~payment of~~Term Loan Facility was terminated.

On May 4, 2020, the Company received $2.0 million pursuant to a ~~closing fee in the amount of $25,000. The Borrowers satisfied all such conditions on February 7, 2020.~~

~~Any exercise of remedies by~~loan from Bank of America N.A. under the ~~Credit Facility~~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 had an interest rate of 1% and a term of 24 months. A repayment schedule was not provided by Bank of America. Accordingly, as of December 31, 2020 the full amount of the term loan was shown as due in May 2022. Funds from the loan were used only for certain permitted purposes, including payroll, benefits, rent and utilities. The CARES Act and the PPP provided a mechanism for forgiveness of up to the full amount of the loan upon application to the SBA for forgiveness by the Company. The Company applied for forgiveness of the loan and received notice that the loan and accrued interest were fully forgiven. The Company elected to account for the loan in accordance with Accounting Standard Codification 470 Debt. Accordingly, the Company recorded a gain on extinguishment of debt on the Consolidated Statement of Operations and Comprehensive Income/(Loss) in the twelve months ended December 31, 2021.

On May 27, 2021, CommAgility entered into the Coronavirus Business Interruption Loan Agreement (“CIBLS Loan”) with Lloyds Bank PLC (“Lloyds”). Under the terms of the CIBLS Loan, CommAgility can draw up to a maximum of £250,000 for purposes of supporting daily business cash flow. The CIBLS Loan is repayable in 48 consecutive equal monthly installments beginning in month 13 after the initial loan drawdown (12 month principal repayment holiday). Interest is payable monthly at the official bank rate of the Bank of England plus an interest margin of 2.35% per annum. Interest payments are due monthly beginning in month 13 after the initial loan drawdown. The first twelve months of interest payments are paid by the U.K. government. The CIBLS Loan is secured by the assets of CommAgility subject to ~~compliance with~~a Deed of Priority between Muzinich, Bank of America and Lloyds. The CIBLS Loan ranks subordinate to both the ~~intercreditor agreement entered into at~~Muzinich Term Loan and Bank of America Credit Facility.

On July 1, 2021 CommAgility executed a draw down of the ~~closing~~maximum amount of ~~Amendment No. 5 among~~£250,000. As of December 31, 2021, $42,000 is included in short term debt and $295,000 is included in long term debt on the ~~Company, Muzinich,~~Consolidated Balance Sheet.

As of December 31, 2021, the Company’s consolidated cash balance was $4.5 million as ~~lender~~compared to $4.9 million as of the prior year. No funds were drawn on our Revolver and we had availability under ~~the~~our borrowing base of $6.1 million as of December 31, 2021. The outstanding balances of our Term Loan Facility and ~~Bank~~CIBLS Loan were $4.1 million and $337,000, respectively.

Our primary sources of ~~America, N.A.~~cash were cash generated from operations of $4.6 million, $562,000 of net proceeds related to shares sold under our at the market common stock offering and $345,000 related to the receipt of the CIBLS Loan, which was used to fund additional payments on the Muzinich term loan in the amount of $4.1 million and $1.3 million of payments related to Holzworth acquisition.

Cash provided by operating activities increased from $3.0 million to ~~realize tax benefits in future periods~~$4.6 million primarily due to ~~the available net~~improved operating ~~loss carryforwards resulting from the disposition of a former wholly owned subsidiary in 2010. Accordingly, future taxable~~ income ~~is expected to be~~ offset by lower cash generated from working capital as compared to the ~~utilization of operating loss carryforwards and as a result will increase~~prior year.

Cash used by investing activities decreased from $8.6 million to $724,000 due to cash paid for the ~~Company’s liquidity as cash needed to pay federal and state income taxes will be substantially reduced. Additionally, CommAgility benefits~~Holzworth acquisition in 2020 only partially offset by increased capital expenditures.

Cash from ~~a research and development deduction which significantly reduces the cash needed to pay taxes~~financing activities decreased from $6.3 million in the ~~UK.~~prior year to $4.2 million of cash used in the current year due primarily to the receipt of the $8.4 million Term Loan Facility, net of debt issuance costs and $2.0 million PPP loan in 2020 compared to $4.2 million of term loan repayments and $1.1 million of contingent consideration payments related to the Holzworth acquisition made in 2021.

On February 19, 2021, the Company entered into the Second Amendment with Holzworth and Sellers. The ~~Company may pursue strategic opportunities, including potential acquisitions, mergers, divestitures~~Second Amendment, among other things, converts 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 first earnout payment based on the financial results of the calendar year ended 2020 (“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 ~~other activities, which may require significant use~~shares of the Company’s ~~capital resources.~~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 ~~Company may incur costs as a result~~estimated payment for the Year 1 Earnout is $3.4 million. The payment date for the second earnout payment which is based on the financial results of ~~such activities~~the calendar year ended 2021 (“Year 2 Earnout”) has been amended from March 31, 2022 to four equal quarterly installments payable on the last business day of each calendar quarter between March 31, 2022 and ~~such activities may affect~~December 31, 2022. The Year 2 Earnout is also payable in cash or stock at the Company’s ~~liquidity~~discretion. The aggregate earnout payments of the Year 1 Earnout and the Year 2 Earnout cannot exceed $7.0 million. As of December 31, 2021, the Earnout accrual was $2.9 million, of which $2.5 million is related to the Year 1 Earnout and $386,000 is related to the Year 2 Earnout and is included in ~~future periods. In order~~accrued expenses and other current liabilities in the consolidated balance sheet.

The parties also amended the provisions with respect to ~~fund such activities,~~restrictions on transfer to adjust for the change in timing of earnout payments, as described above. Finally, the parties added a requirement that any earned but unpaid earnout consideration will be accelerated in the event the Company ~~may need~~desires to ~~incur additional debt~~enter into a material asset or ~~issue additional securities if market conditions are favorable. However, there can be no certainty that such funding will be available~~equity acquisition in ~~needed quantities on terms favorable to~~ the ~~Company or at all.~~future.

On August 27, 2018 the Company filed a shelf registration statement on Form S-3 which was declared effective on September 17, 2018. ~~The Form S-3 will permit~~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 ~~from time to time, up to $40 million in aggregate value of~~through the Agent, shares of its common stock through one or more methods of distribution, subject to applicable SEC limits on the value of securities that the Company, as a smaller reporting company, may sell during an applicable period, market conditions, and the Company’s capital desires and needs. The Company has no current plans to offer any common stock under the shelf registration statement. The terms of any offering of the Company’s common stock, ~~and~~par value $0.01 per share, having an aggregate offering price of up to $12,000.000 (the “Shares”), as described in Note 4 – Equity. From July 21, 2021 through August 6, 2021, the ~~intended use~~Agent sold 254,701 shares of the company’s common stock for net proceeds ~~resulting therefrom, will be established at~~of $739,000 after deducting sales commissions paid to the ~~times~~Agent in accordance with the terms of the ~~offerings~~Sales Agreement and ~~will be described in prospectus supplements filed~~$560,000 after deducting direct legal and accounting fees associated with the ~~SEC at the times of the offerings.~~offering. The shelf registration statement ~~is intended to provide financial flexibility to access capital in a competitive~~expired on September 17, 2021 and ~~expeditious manner when market conditions are appropriate.~~was not renewed by the Company.

The Company expects demand for its Embedded Solutions signal processing hardware cards from the Company’s largest customer to be significantly lower in fiscal 2020 as compared to fiscal 2019. The Company expects this hardware revenue decline to be partially offset by increased Embedded Solutions software and services revenue but expects this transition to take several quarters. Additionally, the Company undertook restructuring actions and cost and expense reductions across all of its segments in early 2020 to drive efficiency and improved operating leverage.

We expect borrowings available to us under our Credit Facility, our existing cash balance and cash generated by operations will be sufficient to meet our liquidity needs for the next twelve months. The Company expects the cash flow of Holzworth to fund the deferred purchase price related to the Holzworth Acquisition. Our ability to meet our cash requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

Purchase obligations consist of inventory that arises in the normal course of business operations. Future obligations and commitments as of December 31, ~~2019~~2021 consisted of the following:

~~Table~~The table of ~~Contractual Obligations~~contractual obligations includes the Muzinich term loan facility which was repaid and terminated on March 1, 2022, in connection with the Microlab divestiture.

Other than contractual obligations incurred in the normal course of business, the Company does not have any off-balance sheet arrangements.

~~The Company does not anticipate that inflation or other expected changes in prices will significantly impact its business.~~

A discussion of recent accounting pronouncements is included in Note 1 to the Consolidated Financial Statements.

We have audited the accompanying consolidated balance sheets of Wireless Telecom Group, Inc. and subsidiaries (the “Company”) as of December 31, ~~2019~~2021 and ~~2018, and~~2020, the related consolidated statements of operations, ~~and~~ comprehensive ~~income/~~income (loss), changes in shareholders’ equity and cash flows for each of the two years in the period ended December 31, ~~2019,~~2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2019~~2021 and ~~2018,~~2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, ~~2019,~~2021, in conformity with accounting principles generally accepted in the United States of America.

~~As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.~~

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

As described in Notes 1 and 7 to the consolidated financial statements, the Company’s balance of goodwill, net as of December 31, 2021 was $11.5 million. Management evaluates goodwill, at the reporting unit level, for impairment annually during the fourth quarter of its reporting period, or more frequently, if events occur or circumstances change which would indicate that goodwill might be impaired. As a result of the Company’s qualitative evaluation of goodwill, the Holzworth and Microlab reporting units did not indicate any impairment of goodwill. As a result of the factors identified in Note 1, the Company performed a quantitative impairment test of the goodwill of one of the Company’s reporting units, CommAgility as of October 1, 2021. Fair value of the reporting unit was estimated using a combination of the income approach and the market approach methods. The Company used a discounted cash flow model for the income approach method and the guideline public company method for the market approach method. The determination of the fair value of the reporting unit required management to make significant estimates and assumptions related to projected revenue growth, future operating margins, discount rates and terminal values. As disclosed by management, changes in these estimates and assumptions could have a significant impact on the fair value of the reporting unit, the amount of any goodwill impairment, or both. As a result of the quantitative impairment assessment discussed above, the Company determined the excess of fair value above its carrying value was approximately 25% of the fair value at the measurement date.

The principal considerations for our determination that performing procedures relating to the impairment assessment of the CommAgility reporting unit is a critical audit matter are (i) the significant judgments by management when developing the fair value measurements of the reporting unit; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant estimates and assumptions in determining the fair value of the reporting unit; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures related to, among others, management’s evaluation of impairment including (i) evaluating the appropriateness of the income approach and market approach methods; (ii) testing the underlying data used by the Company in its analysis; and (iii) evaluating the reasonableness of significant estimates and assumptions used by management. Evaluating the reasonableness of management’s estimates and assumptions involved evaluating whether the estimates and assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit and (ii) whether these assumptions were consistent with evidence obtained in other areas of the audit. We evaluated the experience, qualifications and objectivity of management’s third-party expert and utilized our valuation specialist to assist in evaluating the reasonableness of the Company’s valuation methodology. Furthermore, we assessed the appropriateness of the disclosures in the consolidated financial statements.

As described in Note 14 to the consolidated financial statements, as of December 31, 2021, the Company has $5.6 million of total deferred tax assets, including $3.5 million for State net operating loss carryforwards. The deferred tax assets for State net operating loss carryforwards is partially offset by a valuation allowance of $2.1 million. As disclosed by management, 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 utilization of net operating losses. In determining whether a valuation allowance is warranted, management evaluates factors such as prior earnings history, expected future earnings, carryback and carryforward periods, and tax strategies that could potentially impact the likelihood of realization of a deferred tax asset. After evaluating the sale of Microlab FXR/LLC, as well as other opportunities that may be available that will impact the utilization of the Company’s State net operating loss carryforwards, management expects to be able to realize some, but not all, of the State net operating loss carryforwards.

The principal considerations for our determination that performing procedures relating to the valuation allowance on State net operating loss carryforwards is a critical audit matter include the significant judgments by management when assessing factors related to expected future earnings, which in turn led to a high degree of auditor judgment, subjectivity, and audit effort in performing procedures and evaluating management’s significant assumptions related to expected future earnings.

Addressing the matter involved performing procedures related to, among others, evaluating management’s assessment of the realizability of the deferred tax assets, including (i) testing the underlying data used by the Company in its analysis and (ii) evaluating the reasonableness of expected future earnings during the applicable periods. Evaluating the reasonableness of management’s estimates and assumptions related to expected future earnings involved evaluating whether the estimates and assumptions used by management were reasonable considering (i) the current and past performance of the Company as filed in historical state income tax returns, (ii) expected future events that could impact state apportionment of income in future periods and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

The accompanying notes are an integral part of these consolidated financial statements.

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.

The accompanying notes are an integral part of these consolidated financial statements.

NOTE 1 - DESCRIPTION OF COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING ~~POLICIES:~~POLICIES:

Wireless Telecom Group, Inc., a New Jersey corporation, together with its subsidiaries (“we”, “us”, “our” or the “Company”), ~~is a global designer~~specializes in the design and ~~manufacturer~~manufacture of advanced ~~RF,~~radio frequency (“RF”) and microwave devices which enable the development, testing and ~~millimeter wave components, modules, systems~~deployment of wireless technology. The Company provides unique, highly customized and instruments and currently markets its products and services worldwide under the Boonton, Microlab, Noisecom and CommAgility brands. Serving the wireless, telecommunication, satellite, military, aerospace, and semiconductor industries, Wireless Telecom Group products enableconfigured solutions which drive innovation across a wide range of traditional and emerging wireless technologies. ~~With a unique set~~

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 ~~high-performance~~wireless connectivity and communication development, deployment and testing. Our customers use these products ~~including peak power meters, signal analyzers, signal processing modules, long term~~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”) ~~physical layer (“PHY”)~~ and stack software, power splitters and combiners, global positioning system (“GPS”) repeaters, public safety monitors, noise sources, and programmable noise generators, Wireless Telecom Group supports5G 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 ~~deployment of wireless technologies around the globe.~~ avionics.

The accompanying consolidated financial statements include the accounts of Wireless Telecom Group, Inc., doing business as and operating under the trade name, ~~Noise Com, Inc. (“Noisecom”),~~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”).

~~The accompanying Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. The Consolidated Financial Statements~~ They have been prepared using accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany ~~accounts~~transactions and ~~transactions~~balances have been eliminated in consolidation.

~~The~~In June 2020 the Company completed an internal reorganization and now presents its operations as one reportable segment. Prior to June 2020 the Company presented its operations in three reportable ~~segments: (1) Network Solutions, (2) Test~~segments. The Company identifies segments in accordance with ASC 280 Segment Reporting (“ASC 280”). As a result of internal reorganizations that occurred over the six to nine months prior to June 30, 2020 the Company evaluated its segment reporting. We determined that the Chief Operating Decision Maker (“CODM”) as defined in ASC 280 evaluates operating results and ~~Measurement~~makes decisions on how to allocate resources at the consolidated level. Although the CODM reviews key performance indicators including bookings, shipments and ~~(3) Embedded Solutions. The Network Solutions segment~~gross profit at a product group level, this information by itself is ~~comprised~~not sufficient enough to make operating decisions. Rather, operating decisions are made based on review of consolidated profitability metrics rather than the ~~operations~~individual results of ~~Microlab. The Test and Measurement segment is comprised of the operations of Boonton and Noisecom. The Embedded Solutions segment is comprised of the operations of CommAgility.~~each product group.

Certain account balances from prior periods have been reclassified in these financial statements so as to conform to current period classifications.

The accompanying financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent ~~assets and~~ liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. We base our assumptions, judgements and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Accordingly, actual results could differ from those estimates. The most significant estimates and assumptions include management’s analysis in support of inventory valuation, accounts receivable valuation, valuation of deferred tax assets, returns reserves, warranty accruals, goodwill and intangible assets, estimated fair values of stock options and vesting periods of performance-based stock options and restricted stock. At least quarterly, we evaluate our assumptions, judgements and estimates, and make changes as deemed necessary.

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.

For the ~~years~~twelve months ended December 31, ~~2019~~2021 and ~~2018~~December 31, 2020, no one customer ~~from the Embedded Solutions segment,~~ accounted for ~~24.8% and 22.0%~~more than 10% of the Company’s total consolidated ~~revenues, respectively.~~revenues. At December 31, ~~2019,~~2021 no one customer accounted for more than 10% of consolidated gross accounts receivable. At December 31, 2020, one customer exceeded ~~10%~~10% of consolidated gross accounts receivable at ~~12.9%~~12.7%. ~~At December 31, 2018 one customer exceeded 10% of consolidated gross accounts receivable at 32.1%.~~

For the year ended December 31, ~~2019, three~~2021, two suppliers ~~comprised or~~ exceeded ~~10%~~10% of consolidated inventory purchases at ~~18%, 14%, and 10% respectively.~~12% each. For the year ended December 31, ~~2018~~2020, two suppliers ~~comprised or~~ exceeded ~~10%~~10% of consolidated inventory purchases at ~~15% and 13%, respectively.~~14% each.

~~The Company considers all~~Cash and cash equivalents represent deposits in banks and highly liquid investments purchased with maturities of three months or less at the date of ~~purchase to be cash equivalents. Cash and cash equivalents consist of operating accounts.~~purchase.

Trade accounts receivable and contract assets for unbilled receivables are ~~recorded~~stated at the ~~invoiced~~ amount ~~and do not bear interest. The Company maintains~~owed by the customer, net of allowances for doubtful accounts, ~~for estimated losses resulting from the inability of its customers to make required payments.~~returns and rebates. Estimated allowances for doubtful accounts are reviewed periodically taking into account the customer’s recent payment history, the customer’s current financial statements and other information regarding the customer’s credit worthiness. Account balances are charged off against the allowance when it is determined the receivable will not be recovered.

Inventories are stated at the lower of cost ~~(average cost)~~ or net realizable value. Inventory cost is determined on an average cost basis. Net realizable value is based upon an estimated average selling price reduced by estimated costs of completion, disposal and transportation. Reductions in inventory valuation are included in cost of revenues in the accompanying Consolidated Statements of Operations and Comprehensive Income/Loss. Finished goods and work-in-process include material, labor and overhead expenses.

The Company reviews inventory for excess and obsolescence based on best estimates of future demand, product lifecycle status and product development plans. The Company uses historical information along with these future estimates to reduce the inventory cost basis. Subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Inventory carrying value is net of inventory reserves of approximately ~~$1.0~~$909,000 as of December 31, 2021 and $1.1 million as of December 31, ~~2019 and $1.9 million as of December 31, 2018.~~2020.

Prepaid expenses and other current assets generally consist of income tax receivables, contract assets for unbilled receivables, prepaid insurance, prepaid maintenance agreements and the short term portion of debt issuance costs. The income tax receivable balance included in prepaid and other current assets was ~~$1.1~~$826,000 and $1.2 million as of December 31, ~~2019 as compared to a balance of $0.8 million as of~~2021 and December 31, ~~2018.~~2020, respectively.

Property, plant and equipment are reflected at cost, less accumulated depreciation. Upon application of acquisition accounting, property, plant and equipment are measured at estimated fair value as of the acquisition date to establish a new historical cost basis.

Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets. The estimated useful lives for the property, plant and equipment are:

Leasehold improvements are amortized over the shorter of the remaining term of the lease or the estimated economic life of the improvement. Repairs and maintenance are charged to operations as incurred; renewals and betterments are capitalized.

The Company uses the acquisition method of accounting for business combinations which requires the tangible and intangible assets acquired and liabilities assumed to be recorded at their respective fair market value as of the acquisition date. Goodwill represents the excess of the consideration transferred over the fair value of the net assets acquired. The fair values of the assets acquired and liabilities assumed are determined based upon the Company’s valuation and involves making significant estimates and assumptions based on facts and circumstances that existed as of the acquisition date. The Company uses a measurement period following the acquisition date to gather information that existed as of the acquisition date that is needed to determine the fair value of the assets acquired and liabilities assumed. The measurement period ends once all information is obtained, but no later than one year from the acquisition date.

Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase business combination. Goodwill is evaluated for impairment annually, or more frequently if events occur or circumstances change that would indicate that goodwill might be impaired, by first performing a qualitative evaluation of events and circumstances impacting the reporting unit to determine the likelihood of goodwill impairment. Based on that qualitative evaluation, if ~~we determine~~the Company determines it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, no further evaluation is necessary. Otherwise, we perform a quantitative impairment test.

~~As of December 31, 2019 the Company’s consolidated~~The Company has three reporting units with goodwill ~~balance of $10.1 million is comprised of $1.4 million related to the~~– Holzworth, Microlab ~~reporting unit~~ and ~~$8.7 million related to the CommAgility reporting unit.~~CommAgility. The Company performed a qualitative assessment in the fourth quarter of ~~2019~~2021 of each reporting unit. The qualitative assessment of Holzworth and Microlab did not indicate any impairment of goodwill. As a result of declining ~~future demand of the CommAgility’s signal processing~~ hardware sales and the ~~uncertainty associated with new product revenues to offset the signal processing hardware sale decline,~~early stages of adoption of software and services for specialized applications the Company performed a quantitative impairment test of the goodwill of the CommAgility reporting unit.

As of December 31, ~~2018~~2021 and 2020, the Company’s consolidated goodwill balance of ~~$9.8~~$11.5 million was comprised of ~~$1.4~~$1.4 million related to the Microlab reporting unit, $6.0 million related to the Holzworth reporting unit and ~~$8.4~~$4.1 million related to the CommAgility reporting unit. ~~Management’s qualitative assessment performed in the fourth quarters of 2018 did not indicate any impairment of goodwill.~~

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 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 approximated fair value due to the expected short term nature of the loan.

During the fourth quarter of 2021, the Company recorded an impairment charge related to an indefinite lived intangible asset related to the CommAgility reporting unit as part of our annual impairment analysis. The Company used the relief from royalty calculation method which is based on estimated after tax royalty savings of estimated future revenues. Significant assumptions and estimates utilized in the model include the royalty and discount rates and estimated future revenues. The determination of the impairment charge was based on Level 3 valuation inputs.

During the fourth quarter of 2020, the Company recorded a goodwill impairment charge of $4.7 million related to the CommAgility reporting unit. The determination of the impairment charge was based on the income and market approaches which are based on the present value of future cash flows and an estimated multiple of future revenues, respectively. The determination of the impairment charge was based on Level 3 valuation inputs.

Under the terms of the Holzworth Share Purchase Agreement (as defined in Note 2) the Company is required to pay additional purchase price in the form of deferred purchase price payments and an earnout if certain financial targets are achieved for the years ended December 31, 2020 and December 31, 2021 (see Note 2). As of the acquisition date, the Company estimated the fair value of the deferred purchase price and earnout remaining to be paid related to the 2020 and 2021 financial targets to be $660,000 and $2.4 million, respectively. The earnout may be paid in cash or common stock at the Company’s option. The Company is required to reassess the fair value of the contingent consideration at each reporting period.

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.

Due to the better than expected financial performance of the Holzworth reporting unit during fiscal 2020 and 2021, the Company recorded an increase to the contingent consideration liabilities in the amount of $1.1 million and $386,000 in 2020 and 2021, respectively. The adjustments were recorded as a loss on change in fair value of contingent consideration in the Consolidated Statement of Operations and Comprehensive Income/(Loss).

As of December 31, 2021, amounts due for the Holzworth deferred purchase price and earnout were $250,000 and $2.9 million, respectively.

Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where the local currency is the functional currency, are translated from foreign currencies into U.S. dollars at period-end exchange rates while income and expenses are translated at the weighted average spot rate for the periods presented. Translation gains or losses related to net assets located outside the U.S. are shown as a component of accumulated other comprehensive income in the Consolidated Statements of Changes in Shareholders’ Equity. ~~Gains~~

Aggregate foreign currency gains and losses, such as those resulting from ~~foreign~~the settlement of receivables or payables in a currency ~~transactions, which are denominated in currencies~~ other than the ~~Company’s~~subsidiary’s functional currency, are ~~included~~recorded in the Consolidated Statements of Operations and Comprehensive ~~Loss.~~Income/(Loss) (included in other income/expense). Foreign ~~exchange~~currency transaction ~~losses~~gains were ~~not material~~$13,000 and $64,000 in fiscal ~~2019~~2021 and ~~were $0.1 million in 2018.~~2020, respectively.

Other comprehensive ~~income~~ income/(loss) is recorded directly to a separate section of shareholders’ equity in accumulated other comprehensive income and includes unrealized gains and losses excluded from net income/(loss). These unrealized gains and losses consist of changes in foreign currency translation.

Research and development (R&D) costs are charged to operations when incurred. R&D costs include salaries and benefits, depreciation expense on equipment used for R&D purposes and third-party material and consulting costs, if clearly related to an R&D activity. Salaries and benefits of engineers working on customer contracts for which the Company is earning services or consulting revenues are allocated to costs of revenues. The amounts charged to operations for R&D costs for the years ended December 31, ~~2019~~2021 and ~~2018~~2020 were ~~$5.9~~$5.6 million and ~~$4.9~~$6.4 million, respectively.

Advertising expenses are charged to operations during the year in which they are incurred and ~~aggregated $0.1 million~~were $279,000 and $235,000 for the years ended December 31, ~~2019~~2021 and ~~2018.~~2020, respectively.

The Company follows the provisions of Accounting Standards Codification (“ASC”) 718, “Compensation – Stock Compensation” which requires that compensation expense be recognized, based on the fair value of the ~~stock awards. The fair value of the stock~~equity awards ~~is equal to the fair value of the Company’s stock~~ on the date of grant. The fair value of restricted share awards and restricted stock unit awards is determined using the market value of our common stock on the date of the grant. The fair value of stock options at the date of grant are estimated using the Black-Scholes option pricing model. When performance-based stock options are granted, the Company takes into consideration guidance under ASC 718 and SEC Staff Accounting Bulletin No. 107 (SAB 107) when determining assumptions. The expected option life is derived from assumed exercise rates based upon historical exercise patterns and represents the period of time that options granted are expected to be outstanding. The expected volatility is based upon historical volatility of our shares using daily price observations over an observation period that approximates the expected life of the options. The risk-free rate is based on the U.S. Treasury yield curve rate in effect at the time of grant for periods similar to the expected option life. The Company accounts for forfeitures for all equity awards when they occur.

Management estimates are necessary in determining compensation expense for stock options with performance-based vesting criteria. Compensation expense for this type of stock-based award is recognized over the period from the date the performance conditions are determined to be probable of occurring through the implicit service period, which is the date the applicable conditions are expected to be met. If the performance conditions are not considered probable of being achieved, no expense is recognized until such time as the performance conditions are considered probable of being met, if ever. If the award is forfeited because the performance condition is not satisfied, previously recognized compensation cost is reversed. Management evaluates performance conditions on a quarterly basis.

In the fourth quarter 2021, management deemed the revenue performance targets related to certain performance option grants dated April 7, 2020 and August 4, 2020 as not probable of being met. This was primarily due to the pending divestiture of Microlab and its related revenues. Accordingly, the Company reversed $217,000 of stock compensation expense previously recognized related to these grants.

The Company records deferred taxes in accordance with ASC 740, “Accounting for Income Taxes”. This ASC requires recognition of deferred tax assets and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company periodically assesses the value of its deferred tax asset, a majority of which has been generated by a history of net operating losses and determines the necessity for a valuation allowance. The Company evaluates which portion, if any, will more likely than not be realized by offsetting future taxable income, taking into consideration any limitations that may exist on its use of its net operating loss carry-forwards.

Under ASC 740, the Company must recognize and disclose uncertain tax positions only if it is more-likely-than-not the tax position will be sustained on examination by the taxing authority, based on the technical merits of the position. The amounts recognized in the financial statements attributable to such position, if any, are recorded if there is a greater than 50% likelihood of being realized upon the ultimate resolution of the position. Based on the evaluations noted above, the Company has concluded that there are no significant uncertain tax positions requiring recognition or disclosure in its consolidated financial statements.

Basic ~~earnings~~ earnings/(loss) per share is calculated by dividing net ~~income~~ income/(loss) available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted ~~earnings~~ earnings/(loss) per share is calculated by dividing net ~~income~~ 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, ~~and~~ the weighted-average number of restricted stock units and the weighted average number of warrants to purchase common stock outstanding for the period. Shares from stock options and warrants 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.

The weighted average number of options and warrants to purchase common stock not included in diluted loss per share because the effects are anti-dilutive, or the performance condition was not met in ~~2019~~2021, was ~~1,324,548.~~ 1,205,000. The estimated number of shares issuable under the terms of the Holzworth earnout, if the balance of the earnout was paid in shares of common stock (see Note 2) at December 31, 2021 was 1,340,637.

The weighted average number of options and warrants to purchase common stock not included in diluted loss per share ~~in 2018,~~ because the effects are anti-dilutive, or the performance condition was not met in 2020 was ~~285,000.~~3,114,792. The estimated number of shares issuable under the terms of the Holzworth earnout, if the entire earnout was paid in shares of common stock, (see Note 2) at December 31, 2020 was 1,559,807.

In ~~February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02,~~~~Leases (Topic 842)~~, which created new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases.

~~The Company adopted the requirements of the new standard effective January 1,~~December 2019, using the modified retrospective transition method, which applies the provisions of the standard at the effective date without adjustment to the comparative periods presented. The Company adopted the following practical expedients and elected the following accounting policies related to this standard:

Adoption of this standard resulted in the recognition of operating lease right-of-use assets and corresponding lease liabilities of $1.9 million on the consolidated balance sheet as of January 1, 2019. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 2.

~~On June 20, 2018,~~ the FASB issued ASU ~~2018-07,~~2019-12, ~~Compensation - Stock Compensation~~Income Taxes (Topic ~~718)~~740): ~~Improvements to Nonemployee Share-Based Payment Accounting.~~Simplifying the Accounting for Income Taxes (“ASU ~~2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to nonemployees. This ASU expands the scope of ASC Topic 718,~~~~Compensation - Stock Compensation~~2019-12”), which ~~currently only includes share-based payments issued to employees, to also include share-based payments issued to nonemployees for goods and services. Consequently,~~simplifies the accounting for ~~share-based payments~~income taxes by removing certain exceptions related to ~~nonemployees~~the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and ~~employees will be substantially aligned.~~the recognition of deferred tax liabilities for outside basis differences. The new ASU ~~2018-07 supersedes ASC~~~~Subtopic 505-50, Equity - Equity-Based Payments~~also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates. These changes aim to ~~Non-Employees~~.improve the overall usefulness of disclosures to financial statement users and reduce unnecessary costs to companies when preparing the disclosures. The ~~amendments in this ASU are~~guidance was effective for ~~public companies for fiscal years~~the Company beginning ~~after December 15, 2018, including interim periods within that fiscal year. The Company adopted this standard~~ on January 1, ~~2019~~2021 and ~~it did not have an~~prescribes different transition methods for the various provisions. The adoption of this standard had no material impact on ~~our~~the Company’s financial statements ~~as we did not issue share-based awards to nonemployees during the year.~~or related disclosures.

~~In January, 2017, FASB issued ASU 2017-04,~~~~“Intangibles – Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment.”~~ ASU 2017-04 removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This pronouncement is effective for the Company’s 2020 calendar year, with early adoption permitted. The Company has elected to adopt this standard effective with the December 31 2019, financials and its valuation of the CommAgility and Microlab goodwill assessment in the fourth quarter of fiscal 2019.

In June 2016, the FASB issued ASU 2016-13,Financial Instruments – Credit Losses (Topic 326). ASU 2016-13 changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured as amortized cost. This pronouncement is effective for small reporting companies for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2022. The Company plans to adopt the standard effective January 1, 2023. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In ~~August 2018,~~March 2020, the FASB issued ASU ~~2018-13,~~2020-04, ~~Fair Value Measurement, Disclosure Framework – Changes~~Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are intended to ease the ~~Disclosure Requirements~~potential burden in accounting for, ~~Fair Value Measurement (Topic 820)~~. ASU 2018-13 eliminates, modifies and adds disclosure requirements for fair value measurements. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. We are currently in the process of evaluatingor recognizing the effects of, reference rate reform on financial reporting. The new standard is effective March 12, 2020 through December 31, 2022, with the adoption date being dependent upon the Company’s election. We do not expect the adoption of this ~~pronouncement~~standard to have a material impact on our consolidated financial ~~statements~~statements.

~~In August 2018, the FASB issued ASU 2018-15,~~~~“Intangibles – Goodwill and Other – Internal-Use Software, Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.”~~ ASU 2018-15 aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This pronouncement is effective for the Company’s 2023 calendar year, with early adoption permitted. The Company is in the process of evaluating the impact of ASU 2018-15 on its consolidated financial statements.

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 labs, automated test environments and military and aerospace production applications. 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. Accounting for acquisitions requires us to recognize separately from goodwill, the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the acquisition date fair values of the assets acquired and the liabilities assumed.

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 was 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 was 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, at the Company’s option, 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 total payment for the Year 1 Earnout is $3.4 million, of which $552,000 was paid in cash and $315,000 was issued in common stock as of December 31, 2021. The Year 1 Earnout accrual is $2.6 million as of December 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.

Due to the anticipated better than expected financial performance of the Holzworth reporting unit for fiscal year 2021, the Company recorded an increase to the contingent consideration liabilities in the amount of $386,000 related to the Year 2 Earnout. The adjustment was recorded as a loss on change in contingent consideration in the Consolidated Statement of Operations and Comprehensive Income/(Loss).

The total accrual as of December 31, 2021 related to the Year 1 and Year 2 Earnout is $2.9 million and is recorded in accrued expenses and other current liabilities on the consolidated balance sheet.

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):

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 tax deductible.

In accordance with ASC 805 adjustments to contingent consideration after the measurement period closes are recorded in the statement of operations rather than through goodwill. Due to the better than expected financial performance of Holzworth in 2020 and 2021, we recorded an increase through the consolidated statement of operations to our initial estimates of the Year 1 Earnout and Year 2 Earnout in the amounts of $1,073,000 and $386,000, respectively. Taking into account these adjustments to the contingent consideration liability the total purchase price for Holzworth was approximately $13.5 million. There are no additional earnout payments due related to the Holzworth acquisition.

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 provided 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 on 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 were used for allowable purposes under the CARES Act, the receipt of the loan did not violate the Credit Facility and the Company submitted an application for forgiveness and substantially all of the loan was forgiven. The Company received notice in June 2021 that the loan and accrued interest were fully forgiven, as described below.

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 would 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 2.

Under the terms of Amendment 4, the interest rate margin was decreased from 9.25% to 8.75% when trailing twelve month Consolidated EBITDA, as defined, excluding the U.K. R&D tax credit, was less than or equal to $4.0 million and decreased from 8.50% to 8.00% when trailing twelve month Consolidated EBITDA, as defined, excluding the U.K. R&D tax credit, was greater than $4.0 million but equal to or less than $6.3 million. Muzinich also agreed to waive compliance with the financial covenant set forth in Section 7.11(c) of the Credit Agreement from September 28, 2021 until March 31, 2022. Section 7.11(c) required the trailing four week average liquidity, as defined, of the Company’s CommAgility subsidiary to be no less than $1.0 million. The waiver of this covenant could be extended upon the consent of Muzinich. Additionally, under Amendment 4, the definition of Consolidated Interest Charges was amended to treat the aforementioned principal prepayment of $3.7 million as being made on October 1, 2020.

The Company entered into a Credit Facility with Bank of America, N.A. (“Bank of America”) 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 was calculated on a monthly basis and interest was 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 Holzworth acquisition, on February 7, 2020, the Company and certain of its subsidiaries (the “Borrowers”), and Bank of America entered into Amendment No. 5 to the Credit Facility (“BOA Amendment 5”). By entering into BOA Amendment 5, Holzworth, together with CommAgility Limited, became borrowers under the Credit Facility. The obligations of the Borrowers under the Credit Facility were 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 were used for allowable purposes under the CARES Act and the Company promptly submitted an application for forgiveness and substantially all of the loan was forgiven. The Company received notice in June 2021 that the loan and accrued interest were fully forgiven, as described below.

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.

On September 28, 2021, the Company and its subsidiaries entered into Amendment No. 8 (“BOA Amendment 8”) in which Bank of America consented to the aforementioned principal prepayment of the Muzinich term loan and amended the definition of Fixed Charge Coverage Ratio to treat the Muzinich principal prepayment as being made on October 1, 2020. Additionally, Bank of America and the Company agreed that, in accordance with the Credit Facility, the LIBOR would be replaced with a successor rate in accordance with the provisions of BOA Amendment 5. Accordingly, BOA Amendment 8 defined the LIBOR successor rate for loans denominated in U.S. dollars to be the Bloomberg Short-Term Bank Yield Index rate (“BSBY”), loans denominated in Sterling to be the Sterling Overnight Index Average Reference Rate (“SONIA”) and loans denominated in Euros to be the Euro Interbank Offered Rate (“EURIBOR”). Loans drawn after the effective date of BOA Amendment 8 would bear interest as the successor rates named above plus the applicable margin, as defined.

As of December 31, 2021, the principal balance on the Term Loan Facility was $4.1 million and the interest rate was 9.75%. As of December 31, 2021, the Company had no balance drawn on the Revolver and the interest rate was 2.00%. Additionally, the Company was in compliance with all debt covenants.

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 had an interest rate of 1% and a term of 24 months. A repayment schedule was not provided by Bank of America. Accordingly, as of December 31, 2020 the full amount of the term loan was shown as due in May 2022. Funds from the loan were used only for certain permitted purposes, including payroll, benefits, rent and utilities. The CARES Act and the PPP provided a mechanism for forgiveness of up to the full amount of the loan upon application to the SBA for forgiveness by the Company. The Company applied for forgiveness of the loan and received notice that the loan and accrued interest were fully forgiven on June 5, 2021. The Company elected to account for the loan in accordance with Accounting Standard Codification 470 Debt. Accordingly, the Company recorded a gain on extinguishment of debt in the amount of $2.0 million on the Consolidated Statement of Operations and Comprehensive Income/(Loss) in the twelve months ended December 31, 2021.

On May 27, 2021, CommAgility entered into the Coronavirus Business Interruption Loan Agreement (“CIBLS Loan”) with Lloyds Bank PLC (“Lloyds”). Under the terms of the CIBLS Loan CommAgility can draw up to a maximum of £250,000 for purposes of supporting daily business cash flow. The CIBLS Loan is repayable in 48 consecutive equal monthly installments beginning in month 13 after the initial loan drawdown (12 month principal repayment holiday). Interest is payable monthly at the official bank rate of the Bank of England plus an interest margin of 2.35% per annum. Interest payments begin in month 13 after the initial loan drawdown. The first twelve months of interest payments are paid by the U.K. government. The CIBLS Loan is secured by the assets of CommAgility subject to a Deed of Priority between Muzinich, Bank of America and Lloyds. The CIBLS Loan ranks subordinate to both the Muzinich Term Loan and Bank of America Credit Facility.

On July 1, 2021 CommAgility executed a draw down of the maximum amount of £250,000. As of December 31, 2021, $42,000 is included in short term debt and $295,000 is included long term debt on the Consolidated Balance Sheet.

Pursuant to the Term Loan Facility, the Company issued a Warrant, dated February 7, 2020 (the “Warrant”), to Muzinich. Under the Warrant, Muzinich has the right to purchase 266,167 shares of common stock of the Company at an exercise price of $1.3923 per share (an aggregate value of approximately $370,588), based on a 90-day volume weighted average price for shares of stock of the Company (the “Warrant Stock”). The Warrant is exercisable for an indefinite period from the date of the Warrant and may be exercised on a cashless basis. The number of shares of common stock deliverable upon exercise of the Warrant is subject to adjustment for subdivision or consolidation of shares and other standard dilutive events. Additionally, the exercise price may be adjusted based on a formula in the event of a common stock offering by the Company at an offering price below fair market value, as defined, and below exercise price. In connection with the issuance of the Warrant, the Company granted Muzinich one demand registration right and piggyback registration rights with respect to the Warrant Stock, subject to certain exceptions.

If the Additional Acquisition (as defined in Term Loan Facility above) is consummated, the Company has agreed to issue to Muzinich at the closing of the Additional Acquisition an additional Warrant for the right to purchase 367,564 shares of common stock of the Company at an exercise price of $1.3923 per share (an aggregate value of approximately $511,765), based upon a 90-day volume weighted average price for shares of stock of the Company as of February 7, 2020 (the “Additional Warrant”). The Additional Warrant will contain the same terms and conditions as the Warrant, except that Muzinich will have only one demand registration right, subject to certain exceptions, with respect to shares of common stock of the Company issued under the Warrant and the Additional Warrant. No further acquisitions were undertaken under the Term Loan Facility and as such no additional warrants will be issued.

The stock warrants issued to Muzinich are classified as equity. The fair value of the warrants, as calculated using the Black Scholes model as of the issuance date, was approximately $150,000 and was recorded as a reduction to the carrying value of the debt. The significant inputs included in the Black Scholes calculation were a risk free rate of 1.41%, volatility of 48.7% and the stock price on date of grant of $1.34.

On July 21, 2021, the Company entered into a Sales Agreement with B. Riley Securities, Inc. (the “Agent”), to issue and sell through the Agent, shares of the Company’s common stock, having an aggregate offering price of up to $12,000,000. The Agent was not required to sell any specific number of shares. Shares sold under the Sales Agreement were issued and sold pursuant to the Company’s previously filed registration statement on Form S-3 (File No. 333-227051) filed with the Securities and Exchange Commission (the “Commission”) on August 27, 2018 and declared effective on September 17, 2018. A prospectus supplement relating to the offering of the Shares was filed with the Commission on July 21, 2021.

From July 21, 2021 through August 6, 2021 the Agent sold 264,701 shares of the Company’s common stock for net proceeds of $739,000, after deducting sales commissions paid to the Agent in accordance with the terms of the Sales Agreement and $563,000 after deducting legal and other expenses.

The registration statement pursuant to which the shares were sold expired on September 17, 2021 and was not renewed.

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.~~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 sheet~~Consolidated Balance Sheets as of December 31, ~~2019.~~2021 and 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~~Consolidated Statement of ~~operations~~Operations and ~~comprehensive income/(loss)~~Comprehensive Income/(Loss).

An initial right-of-use asset of ~~$1.9~~$1.9 million was recognized as a non-cash asset addition with the adoption of the new lease accounting ~~standard. Subsequent to~~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 ~~standard there were no new right-of-use assets recognized during the twelve months ended December 31, 2019.~~lease standard. Cash paid for amounts included in the present value of operating lease liabilities was ~~$0.5~~$668,000 and $648,000 during the twelve months ended December 31, 2021 and 2020, respectively, and is included in operating cash flows.

Operating lease costs were $1.1 million and $1.0 million during the twelve months ended December 31, ~~2019~~2021 and ~~is included in operating cash flows.~~2020, respectively.

~~Operating lease costs were $0.8 million during the twelve months ended December 2019.~~

The following table presents information about the amount and timing of cash flows arising from the Company’s operating leases as of December 31, ~~2019.~~2021.

~~Total annual commitments under non-cancelable lease agreements as of December 31, 2018 under the previous accounting guidance were as follows:~~

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 ~~99%~~96% and ~~95%~~99% of the Company’s total revenue for the twelve months ended December 31, ~~2019~~2021 and ~~2018,~~2020, respectively.

The Company generally has one performance obligation in its arrangements involving the sales of radio frequency solutions, ~~in the Network Solutions segment,~~ digital signal processing hardware, ~~in the Embedded Solutions segment~~power meters, analyzers, noise/signal generators, phase noise analyzers and ~~noise generators and components and power meter and analyzers in the Test and Measurement segment.~~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 control has transferred to the customer, the Company also considers:

Arrangements involving licenses of software in the ~~Embedded Solutions segment~~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 ~~in the Embedded Solutions segment~~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.

Arrangements involving calibration and repair services inof the Company’s ~~Test and Measurement segment~~products are generally considered a single performance obligation and are recognized as the services are rendered.

Shipping and handling activities performed after the customer obtains control are accounted for as fulfillment activities and recognized as cost of revenues.

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.

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 a contract asset when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. ~~Contract assets are~~Unbilled revenue is $292,000 and $260,000 as of December 31, 2021 and 2020, respectively, and recorded in prepaid expenses and other current ~~assets~~assets. Deferred revenue is $408,000 and ~~are $0.1 million and $0.3 million~~$924,000 as of December 31, ~~2019~~2021 and ~~2018,~~2020, respectively. ~~Deferred~~The decrease in deferred revenue from the prior year is ~~$42,000 and $0.1 million as~~primarily due to recognition of billings in advance of revenue recognition for certain CommAgility projects involving multiple performance obligations which were deferred at December 31, ~~2019 and 2018, respectively.~~2020, only partially offset by new contract billings in advance of revenue recognition in 2021.

We disaggregate our revenue from contracts with customers by product family and geographic location ~~for each of our segments~~ 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).

~~Debt consists~~Net revenues are attributable to a geographic area based on the destination of the ~~following (in thousands):~~product shipment.

The ~~Company entered into a Credit Facility with Bank~~majority of ~~America, N.A. (the “Lender”) on February 16, 2017 (the “Credit Facility”), which provided for a term loan~~shipments in the ~~aggregate principal amount of $0.8 million (the “Term Loan”)~~Americas are to customers located within the United States. For the years ended December 31, 2021 and ~~an asset based revolving loan (the “Revolver”), which is subject to a Borrowing Base Calculation (as defined~~2020, sales in the ~~Credit Facility) of up~~United States amounted to ~~a maximum availability of $9.0~~$33.8 million ~~(“Revolver Commitment Amount”). The borrowing base is calculated as 85% of eligible accounts receivable~~ and ~~inventory, as defined, subject to certain caps and limits. The borrowing base is calculated on a monthly basis. The proceeds of~~$30.6 million, respectively.

For the ~~Term Loan and Revolver were used to finance the acquisition of CommAgility.~~

~~In connection with the issuance of the Credit Facility, the Company paid lender and legal fees of $0.2 million which were primarily related~~year ended December 31, 2021 shipments to the ~~Revolver and are capitalized and presented as other current and non-current assets~~EMEA region were largely concentrated in the Consolidated Balance Sheets. These costs are recognized as additional interest expense over the term of the related debt instrument using the straight line method which approximates the effective interest method.

~~The Company must repay the Term Loan in installments of $38,000 per quarter due on the first day of each fiscal quarter beginning April 1, 2017~~UK and continuing until the Term Loan maturity date, on which the remaining balance is due in a final installment. The future principal payments under the Term Loan are $0.3 million in 2020. The Term Loan and Revolver were both scheduled to mature on November 16, 2019. On February 26, 2019 the Company entered into Amendment No. 3Germany. Shipments to the ~~Credit Facility which extends~~UK and Germany in 2021 amounted to $5.3 million and $1.0 million, respectively. For the ~~termination date of the Revolver from November 16, 2019 to March~~year ended December 31, 2020 ~~(See Note 15). On November 8, 2019 the Company entered into Amendment No. 4~~shipments to the Credit Facility which extends the maturity date of the Term Loan to coincide with the extension of the Revolver at March 31, 2020, and then on February 7, 2020, entered into Amendment No. 5 (see Note 15 Subsequent Event), which, inter alia, extended the maturity date of the Revolver to March 31, 2023.

~~The Term Loan and Revolver bear interest at the LIBOR rate plus a margin. The margin on the outstanding balance of the Company’s Term Loan and Revolver~~EMEA region were fixed at 3.50% and 3.00% per annum, respectively, through September 30, 2017. Thereafter, the margins were subject to increase or decrease by Lender on the first day of each of the Borrowers’ fiscal quarters based upon the Fixed Charge Coverage Ratio (as definedlargely concentrated in the ~~Credit Facility) as~~UK, Russia and France. Shipments to the UK, Russia and France in 2020 amounted to $1.7 million, $897,000 and $859,000, respectively.

The largest concentration of shipments in the ~~most recently~~APAC region is to China, where shipments amounted to $2.0 million for both years ended fiscal quarter falling into three levels. If the Company’s Fixed Charge Coverage Ratio is greater than or equal to 1.25 to 1.00, a margin of 3.25% and 2.75%, respectively, is added to LIBOR rate with a step up to 3.50% and 3.00%, respectively, if the ratio is greater than or equal 1.00 to 1.00 but less than 1.25 to 1.00 and another step up to 3.75% and 3.25%, respectively, if the ratio is less than 1.00 to 1.00. The Company is also required to pay a commitment fee on the unused commitments under the Revolver at a rate equal to 0.50% per annum and early termination fee of (a) 2% of the Revolver Commitment Amount and Term Loan if termination occurs before the first anniversary of the Credit Facility or (b) 1% of the Revolver Commitment Amount and Term Loan if termination occurs after the first anniversary of the Credit Facility but before the second anniversary of the Credit Facility. The Company’s interest rate plus margin as of December 31, ~~2019 was 4.63%~~2021 and ~~5.13% for the Revolver and Term Loan, respectively. The Company’s interest rate plus margin as of December 31, 2018 was 5.38% and 5.88% for the Revolver and Term Loan, respectively.~~

~~The Credit Facility is secured by liens on substantially all of the Company’s and its domestic subsidiaries’ assets including a pledge of 66 1/3% of the equity interests~~2020 There were no other shipments significantly concentrated in one country in the Company’s Foreign Subsidiaries (as defined in the Credit Facility). The Credit Facility contains customary affirmative and negative covenants for a transaction of this type, including, among others, the provision of annual, quarterly and monthly financial statements and compliance certificates, maintenance of property, insurance, compliance with laws and environmental matters, restrictions on incurrence of indebtedness, granting of liens, making investments and acquisitions, paying dividends, entering into affiliate transactions and asset sales. Events of default under the Credit Facility include but are not limited to: failure to pay obligations when due, breach or failure of any covenant, insolvency or bankruptcy, materially misleading representations or warranties, occurrence of a Change in Control (as defined) or occurrence of conditions that have a Material Adverse Effect (as defined).APAC region.

~~As of December 31, 2019, and the date hereof, the Company is in compliance with the covenants of the Credit Facility.~~

Amortization of acquired intangible assets was ~~$1.1~~$1.3 million for each of the twelve months periods ended December 31, ~~2019~~2021 and ~~2018.~~2020. In the fourth quarter of 2021, the Company recorded a $258,000 impairment related to the CommAgility tradename. Amortization of proprietary technology is included in costs of revenues in the Consolidated Statements of Operations and Comprehensive Income/(Loss). Amortization of all other acquired intangible assets is included ~~as part of~~in general and administrative ~~expenses in the accompanying consolidated statements of operations and comprehensive loss.~~expenses.

The estimated future amortization expense related to intangible assets is as follows as of December 31, ~~2019~~2021 (in thousands):

Property, plant and equipment, consist of the following as of December 31 (in thousands):

Depreciation expense of ~~$0.8 million~~$772,000 and ~~$1.0 million~~$884,000 was recorded for the years ended December 31, ~~2019~~2021 and ~~2018,~~2020, respectively.

Product demo assets are net of accumulated amortization expense of ~~$0.3 million~~$459,000 and ~~$1.2 million~~$397,000 as of December 31, ~~2019~~2021 and ~~2018,~~2020, respectively. Amortization expense related to demo assets was ~~$0.3 million~~$49,000 and ~~$0.2 million~~$84,000 in ~~2019~~2021 and ~~2018,~~2020, respectively.

Accrued expenses and other current liabilities consist of the following as of December 31 (in thousands):

The Company follows the provisions of ASC ~~718.~~718 Compensation-Stock Compensation. The Company’s results for the years ended December 31, ~~2019~~2021 and December 31, ~~2018~~2020 include stock based compensation expense totaling ~~$0.6 million~~$316,000 and ~~$0.7 million,~~$474,000, respectively. Such amounts have been included in the ~~consolidated statement~~Consolidated Statement of ~~operations~~Operations and ~~comprehensive loss~~Comprehensive Income/(Loss) within ~~operating~~general and administrative expenses.

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 December 31, ~~2019,~~2021, there are ~~approximately 1.7 million~~0 shares available for issuance under the 2012 Plan.

In the second quarter of 2021, the Company’s Board of Directors and shareholders approved the 2021 Long Term Incentive Plan (the “2021 Incentive Plan”), which provides for the grant of equity-based and cash incentives, including stock awards, stock unit awards, performance unit awards, non-qualified stock options, incentive stock options and cash awards, including dividend equivalent rights to employees, officers, directors or other service providers of the Company who are expected to contribute to the Company’s future growth and success. The 2021 Incentive Plan provides for the grant of awards relating to 1.5 million shares of common stock. As of December 31, 2021, there are 892,500 shares available for grant under the 2021 Incentive Plan.

All service-based (time vesting) options granted have ten-year terms from the date of grant and typically vest annually and become fully exercisable after a maximum of five years. However, vesting conditions are determined on a grant by grant basis. Performance-based options granted have ten-year terms and vest and become fully exercisable when determinable performance targets are achieved. Performance targets are approved by the Company’s compensation committee of the Board of Directors. Under the 2012 Plan and 2021 Incentive Plan, options may be granted to purchase shares of the Company’s common stock exercisable only at prices equal to or above the fair market value on the date of the grant.

The following summarizes the components of ~~share-based~~stock-based compensation expense for the years ending December 31 (in thousands):

As of December 31, ~~2019, $0.1 million~~2021, $2,000 of unrecognized compensation costs related to unvested stock options is expected to be recognized over a remaining weighted average period of ~~1.8~~1.0 years ~~$0.2 million~~, $451,000 of unrecognized compensation costs related to unvested restricted shares is expected to be recognized over a remaining weighted average period of ~~1.6~~1.8 years and ~~$0.1 million~~$253,000 of unrecognized compensation costs related to unvested restricted stock units is expected to be recognized over 6 ~~months.~~months.

During the twelve months ended December 31, ~~2019~~2020 the Company reversed ~~$0.1 million~~$6,000 and $16,000 in share based compensation expense related to ~~240,000~~6,250 unvested stock options ~~that~~and 16,667 unvested restricted shares, respectively, which were forfeited as a result of ~~employees~~an employee exiting the company.

~~The company had no stock option or restricted share forfeitures during the twelve months ended December 31, 2018.~~

A summary of the status of the Company’s non-vested restricted common stock, as granted under the Company’s approved equity compensation plans, as of December 31, ~~2019~~2021 and ~~2018,~~2020, and changes during the twelve months ended December 31, ~~2019~~2021 and ~~2018,~~2020, are presented below:

In the fourth quarter 2021, the Company granted 23 employees restricted common stock awards that vest over 2 years subject to continued employment through each vesting date. If an employee’s service with the Company terminates before the restricted awards are fully vested, then the shares that are not then fully vested are forfeited and immediately returned to the Company.

The following table summarizes the restricted common stock awards granted ~~to certain employees and officers of the Company~~ during the years ended December 31, ~~2019~~2021 and ~~2018~~2020 under the ~~2012 Plan:~~Company’s approved equity compensation plans:

SCHEDULE OF SHARE-BASED COMPENSATION, RESTRICTED STOCK AND RESTRICTED STOCK UNITS ACTIVITY

In fiscal ~~2018~~2021 and fiscal ~~2019~~2020 the Company granted Restricted Stock Units (“RSU”) to each of our board members. Each RSU represents the Company’s obligation to issue one share of the Company’s common stock subject to the RSU award agreement and the 2021 Inventive Plan and 2012 ~~Plan.~~Plan, respectively. The ~~RSU’s~~RSUs vest on the day before the first anniversary of the grant date or, if earlier, the effective date of a separation of service due to death or disability, provided the board member has rendered continuous service to the Company as a member of the board of directors from grant date to vesting date. Once vested, the RSU will be settled by delivery of shares to the board member no later than 30 days following: 1) the third anniversary of the grant date, 2) separation from service following, or coincident with, a vesting date, or 3) a change in control.

A summary of the status of the Company’s non-vested restricted stock units, as granted under the Company’s approved equity compensation plans, as of December 31, ~~2019~~2021 and ~~2018,~~2020, and changes during the twelve months ended December 31, ~~2019~~2021 and ~~2018,~~2020, are presented below:

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~The following table summarizes the restricted common stock units granted during the years ended December 31, 2021 and 2020 under the Company’s approved equity compensation plans:

On August 4, 2020 the Company granted 150,000 performance-based stock options to our Chief Revenue Officer under the 2012 Plan.

On April 7, 2020 the Company granted 970,000 performance-based stock options to various employees under the 2012 Plan.

The performance options granted on both August 4 and April 7, 2020 vest when the Company achieves consolidated revenue targets as outlined in the schedule below:

Consolidated annualized gross revenues include revenue from Holzworth from acquisition date (February 7, 2020) forward, but do not include any additional acquisitions from February 7, 2020 forward. Consolidated annualized gross revenues is calculated on a calendar year basis (i.e. twelve months ended December 31).

In accordance with ASC 718, compensation expense is recognized over the period from the date the performance conditions are determined to be probable of occurring through the implicit service period, which is the date the applicable conditions are expected to be met. If the performance conditions are not considered probable of being achieved, no expense is recognized until such time as the performance conditions are considered probable of being met, if ever. If the award is forfeited because the performance condition is not satisfied, previously recognized compensation cost is reversed. Management evaluates performance conditions on a quarterly basis. Prior to the fourth quarter of 2021, the estimated implicit service period is April 2020 thru December 2025 for the April performance-based options and August 2020 thru December 2025 for the August performance-based options. In the fourth quarter of 2021 we deemed the performance conditions related to these grants not probable of being met due to the pending Microlab divestiture and the resulting reduction of consolidated revenue in the future. Accordingly, $217,000 of stock compensation expense was reversed in the fourth quarter of 2021.

A summary of performance-based stock option activity, and related information for the years ended December 31, ~~2019~~2021 and December 31, ~~2018~~2020 follows:

As of December 31, 2021, none of the performance-based stock options outstanding were exercisable as the performance conditions were not met. The aggregate intrinsic value of performance-based stock options outstanding that were “in the money” (exercise price was lower than market price) as of December 31, 2021 was $862,000 and the weighted average remaining life was 7.9 years.

As of December 31, 2020, none of the performance-based stock options outstanding were exercisable as the performance metrics were not met. The aggregate intrinsic value of performance-based stock options outstanding that were “in the money” (exercise price was lower than market price) as of December 31, 2020 was $325,000 and the weighted average remaining life was 7.7 years.

The range of exercise prices of outstanding performance-based options at December 31, 2021 is $1.20 to $1.83 with a weighted average exercise price of $1.52 per share.

A summary of service-based stock option activity and related information for the years ended December 31, 2021 and 2020 follows:

The aggregate intrinsic value of exercisable and non-exercisable service-based stock options outstanding that were “in the money” (exercise price was lower than the market price) as of December 31, ~~2019~~2021 was ~~$13,000~~$1.2 million and the weighted average remaining contractual life was ~~1.0 years. All of the aforementioned performance-based stock options were exercisable as of December 31, 2019.~~5.0 years.

~~The range of exercise prices of outstanding performance-based options at December 31, 2019 is $0.78 to $1.83 with a weighted average exercise price of $1.61 per share.~~

Under the terms of the performance-based stock option agreements, the awards will fully vest and become exercisable on the date on which the Company’s Board of Directors shall have determined that specific financial performance milestones have been met, provided the employee remains in the employ of the Company at such time; provided, however, upon a Change in Control (as defined in the stock option agreements and the 2012 Plan), the stock options shall automatically vest as permitted by the 2012 Plan. As of December 31, 2019 and 2018, the Company has determined that the performance conditions on 85,000 and 285,000 options, respectively, granted in 2013 and later are probable of being achieved by the year ending 2021. The Company’s performance-based stock options granted prior to 2013 (consisting of 20,000 options) are fully amortized.

~~A summary of service-based stock option activity and related information for the years ended December 31, 2019 and 2018 follows:~~

The aggregate intrinsic value of service-based stock options outstanding that were “in the money” (exercise price was lower than the market price) as of December 31, ~~2019~~2020 was ~~$77,600~~$455,000 and the weighted average remaining contractual life was ~~2.6 years.~~6 years. The aggregate intrinsic value of exercisable “in the money” service-based stock options as of December 31, ~~2019~~2020 was ~~$72,225~~$415,000 and the weighted average remaining contractual life was ~~3.0 years.~~6 years.

The range of exercise prices of outstanding service-based options at December 31, ~~2019~~2021 is ~~$1.30~~$1.30 to ~~$1.92~~$1.92 with a weighted average exercise price of ~~$1.52~~$1.53 per share.

The following table presents the assumptions used to estimate the fair value of stock option awards granted during the twelve months ended December 31, ~~2019~~2021 and ~~2018:~~2020:

~~Financial~~In June 2020, as a result of certain internal reorganizations completed over the prior six to nine months, the Company concluded it operates as 1 reportable segment in accordance with ASC 280 Segment Reporting. Prior to June 2020 the Company operated as three reportable segments. In June 2020 we determined that the Chief Operating Decision Maker (“CODM”) as defined in ASC 280 evaluates operating results and makes decisions on how to allocate resources at the consolidated level. Although the CODM reviews key performance indicators including bookings, shipments and gross profit at a product group level, this information by ~~segment~~

~~The~~itself is not sufficient enough to make operating ~~businesses of the Company~~decisions. Rather, operating decisions are ~~segregated into three reportable segments: (i) Network Solutions, (ii) Test and Measurement and (iii) Embedded Solutions.~~

The Network Solutions segment is comprised primarily of the operations of the Company’s subsidiary, Microlab. Network Solutions designs and manufactures a wide selection of RF passive components and integrated subsystems for signal conditioning and distribution in the wireless infrastructure markets, particularly for small cell deployments, distributed antenna systems (“DAS”), the in-building wireless solutions industry and radio base-station market. Network Solutions also offers active solution sets to assist in network timing for tunnels and in-building wireless signaling. Network Solutions customers include telecommunications service providers, systems integrators, neutral host operators and distributors.

The Test and Measurement segment is comprised primarily of the Company’s operations of the Noisecom product line and the operations of its subsidiary, Boonton. Noisecom designs and produces noise generation equipment and instruments, calibrated noise sources, noise modules and diodes. Noise components and instruments are used as a method to provide wide band signals for sophisticated telecommunication and defense applications, and as a stable reference standard for instruments and systems, including radar and satellite communications. Boonton products are also used to test terrestrial and satellite communications, radar and telemetry. Certain power meter products are designed for measuring signalsmade based on ~~wideband modulation formats, allowing a variety~~review of ~~measurements to be made, including maximum power, peak power, average power and minimum power. Customers~~consolidated profitability metrics rather than the individual results of ~~the Test and Measurement segment include large defense contractors and the U.S. and foreign governments.~~each product group.

The Embedded Solutions segment is comprised of the operations of CommAgility. Embedded Solutions supplies signal processing technology for network validation systems supporting LTE and emerging 5G networks. Additionally, this segment licenses, implements and configures LTE PHY layer and stack software for private LTE networks supporting satellite communications, the military and aerospace industries. Customers include wireless communication test equipment companies, defense subcontractors and global technology and services companies.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. The Company allocates resources and evaluates the performance of segments based on income or loss from operations, excluding interest, corporate expenses and other income (expenses).

~~Financial information by reportable segment as of and for the years ended December 31, 2019 and 2018 is presented below (in thousands):~~

~~Net consolidated revenues from operations by region were as follows (in thousands):~~

~~Net revenues are attributable to a geographic area based on the destination of the product shipment.~~

The majority of shipments in the Americas are to customers located within the United States. For the years ended December 31, 2019 and 2018, sales in the United States amounted to $30.0 and $31.9 million, respectively.

For the year ended December 31, 2019 shipments to the EMEA regions for all reportable segments were largely concentrated in the UK, Germany and Italy. Shipments to the UK, Germany and Italy in 2019 amounted to $12.7 million, $0.7 million and $0.5 million, respectively. For the year ended December 31, 2018 shipments to the EMEA region for all reportable segments were largely concentrated in the UK, Italy and Ireland. Shipments to the UK, Italy and Ireland in 2018 amounted $12.4 million, $0.5 million and $0.5 million, respectively.

The largest concentration of shipments in the APAC region is to China. For the years ended December 31, 2019 and 2018, shipments to China amounted to $1.3 million and $2.0 million, of all shipments to the APAC region, respectively. There were no other shipments significantly concentrated in one country in the APAC region.

The Company has a 401(k) profit sharing plan covering all eligible U.S. employees. Company contributions to the plan for the years ended December 31, ~~2019~~2021 and ~~2018~~2020 amounted to ~~$0.3 million~~$128,000 and ~~$0.2 million,~~$44,000, respectively.

The components of income tax (benefit) related to net income/(loss) from operations are as follows (in thousands):

~~The components of income tax (benefit)/expense related to net income (loss) from operations are as follows:~~

The following is a reconciliation of the maximum statutory federal tax rate to the Company’s effective tax relative to operations:

SCHEDULE OF EFFECTIVE TAX RELATIVE OPERATIONS RECONCILIATION OF MAXIMUM STATUTORY FEDERAL TAX RATE

In ~~2019,~~2021, the difference between the statutory and effective tax rate is due primarily to permanent differences between U.S. GAAP book income and taxable income including research and development deductions in the United Kingdom, the gain on extinguishment of the PPP Loan and a reduction in the state net operating loss valuation allowance. In ~~2018,~~2020, the difference between the statutory and effective tax rate is due primarily to ~~global intangible low-taxed income,~~the goodwill impairment charge for the CommAgility reporting unit, the loss on contingent consideration related to the Holzworth earnout, the increase in state net operating loss valuation allocation and the research and development deductions in the United ~~Kingdom, foreign tax rate differences and a reduction in the state valuation allowance.~~Kingdom.

The components of deferred income taxes are as ~~follows:~~follows (in thousands):

The Company has domestic federal and state net operating loss carryforwards atas of December 31, ~~2019~~2021 of approximately ~~$18.2~~$15.0 million and ~~$44.1~~$41.3 million, respectively, which begin to expire in ~~2029. $0.6 million~~2029. $689,000 of the federal net operating loss carryforward ~~has~~have no expiration. The Company also has foreign net operating loss carryforwards at December 31, ~~2019~~2021 of approximately ~~$15.0~~$15.7 million for German trade tax purposes, which has no expiration. ~~The Company has domestic federal interest expense carryforward at December 31, 2019 of approximately $0.2 million which has no expiration.~~

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 valuation allowances of ~~$6.7~~$7.1 million and $7.7 million at December 31, ~~2019~~2021 and ~~2018~~2020, respectively, are 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 amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed. As of December 31, ~~2019,~~2021, management believes that it is more likely than not that the Company will fully realize the benefits of its deferred tax assets associated with its domestic federal net operating loss carryforward.

The Company does not have any ~~significant~~material unrecognized tax positions and does not anticipate a significant increase or decrease in unrecognized tax positions within the next twelve months.

The Company has elected to record taxes related to the global intangible low-taxed income as a period cost.

Fair value is defined by ASC 820 “Fair Value Measurement” as the price that would be received upon selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

	●	~~Level 1 - Quoted prices in active markets for identical assets and liabilities.~~
	●	Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
	●	Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Wireless Telecom Group, Inc.~~

Payment of a portion of the CommAgility purchase price was contingent on the achievement of certain financial targets for the years ending December 31, 2017 and 2018. The Company estimated the fair value of contingent consideration at acquisition date to be $0.8 million. During the twelve months ended December 31, 2018 the Company reassessed the fair value of the contingent consideration and recorded a loss in the amount of $0.6 million as a result of the improved financial results at CommAgility as compared to prior estimates. The significant inputs used in the fair value estimate included anticipated gross revenues and Adjusted EBITDA, as defined, and scenarios for the earn-out periods for which probabilities are assigned to each scenario to arrive at a single estimated outcome. The estimated outcome was then discounted based on individual risk analysis of the liability which was 15% at December 31, 2018 and was paid in March 2019. The contingent consideration liability is considered a Level 3 fair value measurement.

NOTE 1415 - COMMITMENTS AND CONTINGENCIES

Warranties

~~Legal Proceeding~~

On June 5, 2019 Harris Corporation (“Harris”) filed a request for arbitration before the American Arbitration Association in accordance with the terms of an executed purchase order, statement of work and software license agreement (collectively referred to as “Agreements”) with CommAgility entered into in 2014. Harris claims that CommAgility breached the Agreements by offering for sale, marketing, and promoting techniques, capabilities, products and services that incorporate Work Product, as defined in the Agreements, owned by Harris. Harris claims that CommAgility has caused Harris monetary damages, the sum of which cannot be determined until such time as discovery has been conducted, but is estimated by Harris to be less than $250,000. Harris is also seeking an injunction against CommAgility’s use of the Work Product which includes rights to certain technology used for air-to-ground communications. The Company believes the claims are without merit and intends to defend all of the claims vigorously. The Company has not accrued any amounts in respect of this matter and cannot estimate the possible loss, if any, that the Company may incur with respect to it.

Risks and Uncertainties

The conflict between Russia and Ukraine has led to and is expected to continue to lead to disruption, instability and volatility in global markets and industries. Our operations could be negatively impacted by the conflict. The U.S. government and other governments in jurisdictions in which we operate have imposed severe sanctions and export controls against Russia and Russian interests and threatened additional sanctions and controls. The impact of these measures, as well as potential responses to them by Russia, is currently unknown and they could adversely affect our business, supply chain, partners or customers.

The Company has been and continues to be unable to accurately predict the full impact that the COVID-19 Pandemic will have on our results of operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic, the nature and length of actions taken by governments, businesses and individuals to contain or mitigate its impact, the severity and duration of the economic impact caused by the pandemic, the uncertainty surrounding possible treatments and rollout of vaccines, along with the effectiveness of our response.

Proprietary information and know-how are important to the Company’s commercial success. There can be no assurance that others will not either develop independently the same or similar information or obtain and use proprietary information of the Company. Certain key employees have signed confidentiality and non-compete agreements regarding the Company’s proprietary information.

The Company believes that its products do not infringe the proprietary rights of third parties. There can be no assurance, however, that third parties will not assert infringement claims in the future.

The Company’s deferred tax asset is recorded at tax rates expected to be in existence when those assets are utilized. Should the tax rates change materially in the future the amount of deferred tax asset could be materially impacted.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Wireless Telecom Group, Inc.~~

NOTE 1516 – SUBSEQUENT EVENTS

~~Holzworth Acquisition~~Sale of Microlab/FXR LLC to RF Industries, Ltd.

On ~~November 13, 2019~~December 16, 2021, the Company and its wholly owned subsidiary Microlab entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with RF Industries, Ltd., a Nevada corporation (the “Buyer”) whereby the Buyer agreed to purchase 100% of the membership interests in Microlab for a purchase price of $24,250,000, subject to certain closing adjustments as forth in the Purchase Agreement. The board of directors of each of the Company and the Buyer has unanimously approved the Purchase Agreement and the transactions contemplated thereby (collectively, the “Transaction”). On February 25, 2022, the shareholders of the Company approved the transaction at a special meeting of shareholders held virtually via live webcast and on March 1, 2022, the Transaction closed.

At closing the Company received approximately $23.9 million, net of certain holdback amounts placed in escrow accounts, of which $4.2 was used to repay our outstanding Term Loan Facility with Muzinich BDC, approximately $700,000 was used to repay our outstanding revolver balance related to the Bank of America Credit Agreement, and $486,000 was used to pay our advisors. The Company will pay approximately $455,000 in certain transaction bonuses resulting in $18.0 million in cash to the balance sheet. The Company terminated the Term Loan Facility with Muzinich BDC and the Revolver with Bank of America N.A. as of the Transaction close date. Additionally, concurrent with the closing, the Company entered into a ~~Share Purchase Agreement~~sublease with Holzworth Instrumentation Inc., a Colorado corporation (“Holzworth”), Jason Breitbarth, Joe Koebel, and Leyla Bly (collectively, the “Sellers”), and Jason Breitbarth, as the designated representativeRF Industries, Ltd for approximately one-half of the ~~Sellers, as amended by a First Amendment to Share Purchase Agreement, dated January 31, 2020 (collectively,~~square footage of our corporate headquarters in Parsippany, NJ.

After close of the ~~“Share Purchase Agreement”). On February 7, 2020,~~Transaction the Company ~~completed the acquisition (the “Acquisition”) of all~~is comprised of the ~~outstanding shares~~RBS and T&M product groups. We believe the Transaction allows us to prepare for the next stage of ~~Holzworth, from~~transformation with a stronger concentration of revenues in specialized 5G software and services for 5G private networks and test and measurement applications for the ~~Sellers. The Acquisition was completed pursuant to~~satellite communications, semiconductor and aerospace and defense industries. Furthermore, with the ~~terms~~repayment of the Share Purchase Agreement. 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 Test and Measurement segment with a common customer base and channel partners. Holzworth revenues for the year end fiscal 2018 were $4.0 million and for the nine months ended September 30, 2019 were $4.3 million. For the fiscal year ended December 31, 2020, the Company will report the financial results of Holzworth in our Test and Measurement segment.

The aggregate purchase price for the Acquisition is a maximum of $17.0 million, consisting of payments in cash and stock, deferred purchase price payments and contingent consideration in the form of an earnout. At the closing, the Company issued a promissory note, which required the Company to pay on the next business day $0.5 million of the purchase price by issuing 347,318 shares of its common stock (the “Stock Consideration”), and $8.0 million in cash (the “Cash Consideration”), reduced by an indemnification holdback of $0.8 million and payment of certain of Sellers’ transaction expenses and indebtedness of Holzworth. The parties intend to make a 338(h)(10) election to treat the Acquisition as a purchase and sale of assets, and the Company has agreed to pay any incremental taxes of Sellers resulting from that election.

The first deferred purchase price payment of $750,000 is due in three equal quarterly installments on March 31, 2020, June 30, 2020 and September 30, 2020, respectively. The second deferred purchase price payment of $750,000 is payable on March 31, 2021. Each deferred payment may be reduced as provided in the Purchase Agreement if Holzworth’s EBITDA (as defined in the Purchase Agreement) for each fiscal year ending December 31, 2019 and December 31, 2020, respectively, is less than $1.25 million.

The Company may also be required to pay additional amounts in cash and stock as earnout consideration. The first earnout payment will be equal to two times the amount, if any, by which Holzworth’s EBITDA for the fiscal year ending December 31, 2020 exceeds $1.25 million. The second earnout payment will be equal to two times the amount, if any, by which Holzworth’s EBITDA for the fiscal year ending December 31, 2021 exceeds the greater of $1.25 million or Holzworth’s EBITDA for the prior fiscal year. The aggregate earnout payments, if any, cannot exceed $7.0 million.

Pursuant to the Purchase Agreement the Company entered into a lock-up and voting agreement (the “Lock-up and Voting Agreement”) with each of the Sellers. Pursuant to the Lock-up and Voting Agreement, each Seller agrees to restrict the sale, assignment, transfer, encumbrance or other disposition of its portion of the Stock Consideration (the “Lock-up Shares”). For a period commencing on the closing date of the Acquisition (the “Effective Date”) and ending on the date which is 36 calendar months following the Effective Date, each Seller agrees that, without prior written consent by the Company, such Seller shall not sell, assign, transfer, encumber or otherwise dispose of the Lock-up Shares or enter into any swap, option or short sale, among other transactions. Upon the prior written consent of the Company, a Seller may transfer Lock-up Shares as a bona fide gift, by will or intestacy or to a family member or trust for the benefit of the Seller or a family member;~~provided~~ that any recipient of the Lock-up Shares sign and deliver to the Company a lock-up and voting agreement substantially in the form of the Lock-up and Voting Agreement. The Lock-up Shares cease to be locked up in the event of a Change of Control (as defined in the Lock-up and Voting Agreement).

In addition, each Seller, subject to certain limitations, agrees, among other things, to appear at each meeting of the shareholders of the Company and vote all of such Seller’s Lock-up Shares (a) in favor or against any proposal presented to the shareholders in the same manner that the Company’s Board of Directors (the “Board”) recommends shareholders vote on such proposal and (b) in favor of any proposal presented to the shareholders with respect to an action of the Company, which the Board has approved, but as to which the Board has not made any recommendation, including in favor of any proposal to adjourn or postpone any meeting of the Company’s shareholders if such adjournment or postponement is conducted in accordance with the terms of the Lock-up and Voting Agreement.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Wireless Telecom Group, Inc.~~

To the extent any shares of Company common stock are issued in payment of any Earnout Consideration (as defined in the Share Purchase Agreement) in accordance with the terms of the Share Purchase Agreement, such shares shall be subject to all applicable transfer restrictions, voting and other provisions set forth in the Lock-up and Voting Agreement, with the Effective Date with respect to such shares being the date such shares were issued; provided that, to the extent the portion of the first $1.5 million of Earnout Consideration that is paid in cash represents less than 30% of such Earnout Consideration, the portion of shares of Company common stock issued as Earnout Consideration constituting the difference between the cash percentage paid and 30% of the first $1.5 of Earnout Consideration shall not be considered Lock-Up Shares.

~~New Term Loan Facility and Amended Credit Facility~~

~~In connection with the Acquisition, on February 7, 2020, the Company, as borrower, and its subsidiaries, as guarantors, and~~ Muzinich ~~BDC, Inc., as lender (“Muzinich”), entered into the Term Loan Facility, which provides for a~~ term loan in the principal amount of $8.4 million (the “Initial Term Loan”). Principal payments on the Initial Term Loan are $21,000 per quarter with a balloon payment at maturity. The term loan bears interest at LIBOR (subject to a floor of 1.0%) plus a margin of 7.25%. The Term Loan Facility includes an upfront fee of 2.50% of the aggregate principal amount of the Initial Term Loan.

The Company may prepay the Initial Term Loan at any time. Prepayments made prior to (a) February 7, 2022 are subject to a prepayment premium in the amount of 2.0% of the prepaid principal amount and (b) February 7, 2023 are subject to a prepayment premium in the amount of 1.0% of the prepaid principal amount. The Company is required to make prepayments of the Initial Term Loan with the proceeds of certain asset dispositions, insurance recoveries and extraordinary receipts, subject to specified reinvestment rights. The Company is also required to make prepayments of the Initial Term Loan upon the issuance of certain indebtedness and to make an annual prepayment based upon the Company’s excess cash flow. Mandatory prepayments with asset sale, insurance or condemnation proceeds and excess cash flow may be made without penalty. Mandatory prepayments with the proceeds of indebtedness are subject to the same prepayment penalties as are applicable to voluntary prepayments. The maturity date for the Initial Term Loan is February 7, 2025.

The Term Loan Facility provides for an additional $11.6 term loan (the “Second Term Loan”) to be used for a second unannounced acquisition for which the Company has entered into a confidential, non-binding letter-of-intent (the “Additional Acquisition”). There can be no assurance that the Additional Acquisition will be completed. In the event the Additional Acquisition is completed, the Second Term Loan will be made available to the Company on the same terms and conditions as the Initial Term Loan, including interest rate, amortization schedule and financial covenants, subject to the payment of an additional upfront fee and satisfaction of customary conditions to funding.

The Term Loan Facility is secured by liens on substantially all of the Company’s and its subsidiaries’ assets including a pledge of the equity interests in the Company’s subsidiaries. The Term Loan Facility contains customary affirmative and negative covenants for a transaction of this type, including, among others, the provision of annual, quarterly and monthly financial statements and compliance certificates, maintenance of property, insurance, compliance with laws and environmental matters, restrictions on incurrence of indebtedness, granting of liens, making investments and acquisitions, paying dividends, entering into affiliate transactions and asset sales. In addition, the Company must maintain certain financial covenants typical for this type of arrangement, including a consolidated leverage ratio, a consolidated fixed charge coverage ratio and minimum liquidity of its foreign subsidiaries. The consolidated leverage ratio is defined as the ratio of total consolidated indebtedness, as defined, to consolidated EBITDA, as defined. The required leverage ratio starts at 4.75 to 1.0 for the twelve month periods ended March 31, 2020 and June 30, 2020, and decrease in various increments to 3.75 to 1.0 for the twelve months ended December 31, 2020, 2.75 to 1.0 for the twelve months ended December 31, 2021 and 2.0 to 1.0 for the twelve months ended December 31, 2022 and thereafter. The consolidated fixed charge coverage ratio is the ratio of consolidated EBITDA, as defined, less consolidated capital expenditures and cash income taxes paid to consolidated fixed charges, as defined, calculated on a twelve month basis. The consolidated fixed charge coverage ratio for the twelve month periods ended March 31, 2020, June 30 2020 and September 30, 2020 must be 1.35 to 1 and increases in various increments on a quarterly basis to 1.5 to 1.0 for the twelve month period ended December 31, 2020 and 2021, and to 1.75 to 1.0 for the twelve months ending December 31, 2022 and thereafter. Lastly, the Company must maintain minimum liquidity, defined as cash and availability under the UK borrowing base, as defined, of $1.0 million over any trailing four-week period until such time as the foreign subsidiary has positive EBITDA, as defined, for three consecutive quarters and the Holzworth deferred purchase price has been paid in full. The Term Loan Facility also provides for a number of events of default, including, among others, nonpayment, bankruptcy, inaccuracy of representations and warranties, breach of covenant, change in control, entry of final judgement or order, breach of material contracts, and as long as the Company’s consolidated leverage ratio is greater than 1.0 to 1.0 (as calculated in accordance with the terms of the Term Loan Facility), the cessation of service of any two of Tim Whelan, Michael Kandell or Daniel Monopoli as Chief Executive Officer, Chief Financial Officer or Chief Technology Officer, respectively, of the Borrower without a satisfactory replacement within 60 days. Any exercise of remedies by Muzinich is subject to compliance with the intercreditor agreement entered into at the closing of the Term Loan Facility among the Company, Muzinich and Bank of America ~~N.A., as lender under the~~ Credit ~~Facility referenced below.~~Agreement, we have strengthened our balance sheet and increased our liquidity allowing us flexibility to invest in our higher margin product groups.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Wireless Telecom Group, Inc.~~

Also 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.

The Amendment (a) effected certain modifications to the Credit Facility to accommodate the Acquisition, the Company’s incurrence of the Initial Term Loan and the granting of the related liens and security interests, (b) subject to the satisfaction of certain conditions precedent, made available to CommAgility an asset based revolving loan, subject to a borrowing base calculation applicable to CommAgility’s assets, of up to a maximum availability of $5.0 million (the “UK Revolver Commitment”), (c) reduced the interest rate margin applicable to revolving loans made under the Credit Facility from a range of 2.75% to 3.25% to a range of 2.00% to 2.50%, based on the Borrowers’ Fixed Charge Coverage Ratio (as defined in the Credit Facility) of the most recently completed fiscal quarter, (d) extended the Revolver Termination Date to March 31, 2023 and (e) conditioned the Borrowers’ ability to make certain debt payments under the Term Loan Facility (described above) upon compliance with a liquidity test. In all other material respects, the Credit Facility remains unchanged.

Effectiveness of the Amendment was conditioned upon, among other things, the prepayment of the remaining principal balance (approximately $0.3 million) of the $0.8 million term loan made available under the Credit Facility and the payment of a closing fee in the amount of $25,000. The Borrowers satisfied all such conditions on February 7, 2020.

~~Issuance of Stock Warrants~~

Pursuant to the Term Loan Facility, the Company issued a Warrant, dated February 7, 2020 (the “Warrant”), to Muzinich. Under the Warrant, Muzinich has the right to purchase 266,167 shares of common stock of the Company at an exercise price of $1.3923 per share (an aggregate value of approximately $370,588), based on a 90-day volume weighted average price for shares of stock of the Company (the “Warrant Stock”). The Warrant is exercisable for an indefinite period from the date of the Warrant and may be exercised on a cashless basis. The number of shares of common stock deliverable upon exercise of the Warrant is subject to adjustment for subdivision or consolidation of shares and other standard dilutive events. In connection with the issuance of the Warrant, the Company granted Muzinich one demand registration right and piggyback registration rights with respect to the Warrant Stock, subject to certain exceptions.

If the Additional Acquisition is consummated, the Company has agreed to issue to Muzinich at the closing of the Additional Acquisition an additional Warrant for the right to purchase 367,564 shares of common stock of the Company at an exercise price of $1.3923 per share (an aggregate value of approximately $511,765), based upon a 90-day volume weighted average price for shares of stock of the Company as of February 7, 2020 (the “Additional Warrant”). The Additional Warrant will contain the same terms and conditions as the Warrant, except that Muzinich will have only one demand registration right, subject to certain exceptions, with respect to shares of common stock of the Company issued under the Warrant and the Additional Warrant.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~Wireless Telecom Group, Inc.~~

~~NOTE 16 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)~~

~~The following is a summary of selected quarterly financial data from operations (in thousands, except per share amounts).~~

2019 Quarter
1st 2nd 3rd 4th
Net revenues $ 13,032 $ 13,508 $ 10,812 $ 11,569
Gross profit 5,727 6,133 4,825 5,604
Operating income/(loss) (398 ) 146 (677 ) (550 )
Net income/(loss) (345 ) 157 (460 ) 234
Diluted earnings/(loss) per share $ (0.02 ) $ 0.01 $ (0.02 ) $ 0.01

2018 Quarter
1st 2nd 3rd 4th
Net revenues $ 13,264 $ 13,414 $ 14,019 $ 12,091
Gross profit 6,268 6,171 6,464 5,264
Operating income/(loss) 568 33 919 (741 )
Net income/(loss) 374 (179 ) 558 (718 )
Diluted earnings/(loss) per share $ 0.02 $ (0.01 ) $ 0.03 $ (0.03 )

The Transaction will be treated as a sale of the assets and liabilities of Microlab to RF Industries for U.S. federal and applicable state income tax purposes. The Company has approximately $14.9 million of U.S. federal net operating loss carryforwards and approximately $41.2 million of New Jersey state net operating loss carryforwards as of December 31, 2021. We expect to utilize all of our federal net operating loss carryforwards and approximately 50% of our state net operating loss carryforwards to offset the taxable gain generated from the Microlab divestiture.

The following unaudited pro forma condensed financial results have been derived from the historical consolidated financial statements of the Company, as adjusted to give effect to our sale of Microlab, and are intended to reflect the impact of the Transaction on the Company on a pro forma basis as of and for the periods indicated. The unaudited pro forma financial information reflects the Transaction as if it had been consummated on January 1, 2020 and includes pro forma adjustments for preliminary estimates made by management and are intended for informational purposes only. They are not necessarily indicative of the financial results that would have occurred if the Transaction had taken place on the date indicated, nor are they indicative of the future consolidated results of the Company.

Pro-forma results for the years ended December 31, 2021 and 2020 are presented below (in thousands, except per share amounts):

SCHEDULE OF PRO FORMA

	Year ended December 31
	2021			2020
(Unaudited)
Net Revenues	$	31,489		$	24,081
Gross Profit		17,411			13,094
Gross Profit Margin		55	%		54	%
Net (loss)		(900	)		(10,661	)
Loss per share - Basic		(0.04	)		(0.49	)
Loss per share - Diluted	$	(0.04	)	$	(0.49	)

Current Assets	$	32,074		$	34,364
Total Assets		53,939			58,714
Total Liabilites	$	9,796		$	13,222

Grant of Restricted Share Awards to Named Executive Officers

On January 6, 2022 the Compensation Committee of the Board of Directors approved the grant of restricted common stock awards to named executive officers Tim Whelan, Mike Kandell, Dan Monopoli and Alfred Rodriguez of 125,000, 75,000, 50,000 and 50,000 shares respectively. If an executive’s service with the Company terminates before the restricted awards are fully vested, then the shares that are not then fully vested are forfeited and immediately returned to the Company. The grant date value per share was $2.11.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

~~Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~None.

~~None.~~

Item 9A.

Controls and Procedures

~~Item 9A.Controls and Procedures~~

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, as of the end of the period covered by this report, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be included in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, relating to Wireless Telecom Group, Inc. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the period covered by this report, our disclosure controls and procedures are effective.

(b) Management’s Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurances with respect to financial statement preparation and presentation. Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of December 31, ~~2019,~~2021, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, ~~2019.~~2021.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the Dodd-Frank Wall Street and Consumer Protection Act, which exempts non-accelerated filers and smaller reporting companies from the auditor attestation requirement of Section 404 (b) of the Sarbanes-Oxley Act.

There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.

Other Information

~~Item 9B.Other Information~~None.

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

~~None.~~Not applicable.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

~~Item 10.Directors, Executive Officers and Corporate Governance~~

The information required under this item is set forth under “Director Nominees and Executive Officers of the Company”, “Code of Business Conduct and Ethics” and “Corporate Governance Guidelines and Committees of the Board of Directors” in the ~~2020~~2022 Proxy Statement and is incorporated herein by reference.

Item 11.

Executive Compensation

~~Item 11.Executive Compensation~~

The information required under this item is set forth under “Executive Compensation”, “Compensation for the Named Executive Officers in ~~2019~~2021 and ~~2018”~~2020”, “Director Compensation for ~~2019”~~2021” and “Certain Relationships and Related Transactions” in the ~~2020~~2022 Proxy Statement and is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

~~Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~

The information about our equity compensation plans is set forth under “Equity Compensation Plan Information” in Item 5 of this annual report on Form 10-K and is incorporated herein by reference.

The information about security ownership of certain beneficial owners and management is set forth under “Security Ownership of Certain Beneficial Owners” in the ~~2020~~2022 Proxy Statement and is incorporated herein by reference.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

~~Item 13.Certain Relationships and Related Transactions, and Director Independence~~

The information required under this item is set forth under “Certain Relationships and Related Transactions” and “Corporate Governance Guidelines and Committees of the Board of Directors” in the ~~2020~~2022 Proxy Statement and is incorporated herein by reference.

Item 14.

Principal Accountant Fees and Services

~~Item 14.Principal Accountant Fees and Services~~

The information required under this item is set forth under “Fees Paid to Principal Accountants” and “Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors” in the ~~2020~~2022 Proxy Statement and is incorporated herein by reference.

PART IV

Item 15.

Exhibits and Financial Statement Schedules

~~Item 15.Exhibits and Financial Statement Schedules~~

(a)	(1)	Report of Independent Registered Public Accounting Firm
		Consolidated Balance Sheets as of December 31, ~~2019~~2021 and ~~2018~~2020
		Consolidated Statements of Operations and Comprehensive Loss for the Two Years ended December 31, ~~2019~~2021
		Consolidated Statements of Changes in Shareholders’ Equity for the Two Years ended December 31, ~~2019~~2021
		Consolidated Statements of Cash Flows for the Two Years ended December 31, ~~2019~~2021
		Notes to Consolidated Financial Statements

	(2)	All other schedules have been omitted because the required information is included in the financial statements or notes thereto or because they are not required.

	(3)	Exhibits

	3.1	Restated Certificate of Incorporation of Wireless Telecom Group, Inc. (incorporated herein by reference to Exhibit 3.1 to Wireless Telecom Group Inc.’s Annual Report on Form 10-K/A filed on April 22, 2005, Commission File No. 1-11916)

	3.2	Amended and Restated By-laws (incorporated herein by reference to Exhibit 3.1 to Wireless Telecom Group, Inc.’s Current Report on Form 8-K, filed on July 1, 2016, Commission File No. 011-11916)

	10.1*	~~Wireless Telecom Group, Inc. 2000 Stock Option Plan (incorporated herein by reference to Annex B to the Definitive Proxy Statement of Wireless Telecom Group, Inc., filed with the SEC on July 17, 2000)~~

	10.2*	Amended and Restated Severance Agreement, dated December 10, 2012, between Wireless Telecom Group, Inc. and Paul Genova (incorporated herein by reference to Exhibit 10.8 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on April 1, 2013, Commission File No. 1-11916)

	10.3*	Severance Agreement, dated December 10, 2012, between Wireless Telecom Group, Inc. and Joseph Debold (incorporated herein by reference to Exhibit 10.9 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on April 1, 2013, Commission File No. 1-11916)

	10.4*	2012 Incentive Compensation Plan of Wireless Telecom Group, Inc. (incorporated herein by reference to Annex A to the Definitive Proxy Statement of Wireless Telecom Group, Inc., filed with the SEC on April 30, 2012)

	10.510.2	Form of Restricted Stock Award Agreement under 2012 Incentive Compensation Plan (incorporated herein by reference Exhibit 10.11 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on April 1, 2013, Commission file No. 1-11916)

	10.610.3	Severance Agreement, dated June 14, 2013, between Wireless Telecom Group, Inc. and Robert Censullo (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q, filed on August 14, 2013, Commission File No. 1-11916)

	10.7*	Form of Stock Option Agreement under the Wireless Telecom Group Inc.’s 2012 Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Quarterly Report on Form 10-Q, filed on November 14, 2013, Commission File No. 1-11916)

10.8*	10.4*	Amended and Restated 2012 Incentive Compensation Plan of Wireless Telecom Group, Inc. (incorporated herein by reference to Appendix A to Wireless Telecom Group Inc.’s Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 30, 2014)

	10.9*10.6	Officer Incentive Compensation Plan of Wireless Telecom Group, Inc., dated April 22, 2015 (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 10-Q, filed with the SEC on May 13, 2015)

	~~10.10~~	Fifth Amendment to Lease Agreement, dated May 1, 2015 and retroactively effective as of April 1, 2015, by and between Icon Keystone NJP III Owner Pool 4 NJ, LLC and Boonton Electronics Corporation (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on May 12, 2015, Commission File No. 001-11916)

	10.1110.7	Executive Employment Agreement, dated June 30, 2016, between Wireless Telecom Group, Inc. and Timothy Whelan (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on July 7, 2016, Commission File No. 001-11916)

	10.1210.8	Employment Letter Agreement, dated December 1, 2016, between Wireless Telecom Group, Inc. and Michael Kandell (incorporated herein by reference to Exhibit 10.12 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 20, 2017, Commission File No. 001-11916)

	10.13*10.9	Letter Agreement, dated December 1, 2016, between Wireless Telecom Group, Inc. and Robert Censullo (incorporated herein by reference to Exhibit 10.13 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 20, 2017, Commission File No. 001-11916)

	~~10.14~~	Settlement Agreement and Site Release, dated December 16, 2016, by and among Wireless Telecom Group, Inc., Boonton Electronics Corp., WTT Acquisition Corp., Century Indemnity Company, as successor to Insurance Company of North America and Federal Insurance Company (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on December 22, 2016, Commission File No. 001-11916)

	10.15*10.10	Separation Agreement and General Release, dated February 10, 2017, between Wireless Telecom Group, Inc. and Robert Censullo (incorporated herein by reference to Exhibit 10.15 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 20, 2017, Commission File No. 001-11916)

	~~10.16~~	Share Purchase Agreement, dated February 17, 2017, by and among Wireless Telecom Group, Inc., Wireless Telecommunications, Ltd., Edward De Salis Young, Paul Moakes, Simon Pack and Martin Hollinshead (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 21, 2017, Commission File No. 001-11916)

	~~10.17~~10.11	Registration Rights Agreement, dated February 17, 2017, by and among Wireless Telecom Group, Inc., Edward De Salis Young, Paul Moakes, Simon Pack and Martin Hollinshead (incorporated herein by reference to Exhibit 10.2 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 21, 2017, Commission File No. 001-11916)

	~~10.18~~10.12	Lock Up Agreement, dated February 17, 2017, by and among Wireless Telecom ~~8roup,~~Group, Inc., Edward De Salis Young, Paul Moakes, Simon Pack and Martin Hollinshead (incorporated herein by reference to Exhibit 10.3 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 21, 2017, Commission File No. 001-11916)

~~10.19~~	10.13	Voting Agreement, dated February 17, 2017, by and among Wireless Telecom Group, Inc., Edward De Salis Young, Paul Moakes, Simon Pack and Martin Hollinshead (incorporated herein by reference to Exhibit 10.4 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 21, 2017, Commission File No. 001-11916)

	~~10.20~~10.14	Loan and Security Agreement, dated February 16, 2017, Wireless Telecom Group, Inc. Boonton Electronic Corporation, Microlab/FXR and Bank of America, N.A. (incorporated herein by reference to Exhibit 10.5 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 21, 2017, Commission File No. 001-11916)

	~~10.21~~10.15	Amendment No. 1 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronic Corporation, Microlab/FXR and Bank of America, N.A. dated August 3, 2017 (incorporated herein by reference to Exhibit 10.6 to Wireless Telecom Group’s Quarterly Report on Form 10-Q filed on August 9, 2017, Commission File No. 001-11916)

	10.22*	Separation Agreement and General Release by and between Wireless Telecom Group, Inc. and Paul Steven Genova dated May 22, 2017 (incorporated herein by reference to Exhibit 10.7 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 9, 2017, Commission File No. 001-11916)
	10.16*
	10.23*	Amendment to Executive Employment Agreement by and between Wireless Telecom Group, Inc. and Timothy Whelan dated June 9, 2017 (incorporated herein by reference to Exhibit 10.8 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 9, 2017, Commission File No. 001-11916)

	10.24*	Separation Agreement and General Release by and between Wireless Telecom Group, Inc. and Joseph Debold dated November 30, 2017 (incorporated herein by reference to Exhibit 10.24 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K filed on March 12, 2018, Commission File No. 001-11916)
	10.17*
	10.25*	Form of non-employee director Restricted Stock Unit grant agreement (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed August 8, 2018, Commission File No. 001-11916)

	10.2610.18	Form of Stock Option Agreement under the Wireless Telecom Group Inc.’s 2012 Incentive Compensation Plan for grants after February 11, 2019 (incorporated herein by reference to Exhibit 10.26 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2020, Commission File No. 001-11916)

	10.2710.19	Form of Restricted Stock Award Agreement under the Wireless Telecom Group Inc.’s 2012 Incentive Compensation Plan for grants after February 11, 2019 (incorporated herein by reference to Exhibit 10.27 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2020, Commission File No. 001-11916)

	~~10.28~~10.20	Amendment No. 3 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronic Corporation, Microlab/FXR and Bank of America, N.A. dated February 26, 2019 (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group’s Quarterly Report on Form 10-Q filed on March 5, 2019, Commission File No. 001-11916)

	~~10.29~~10.21	Amendment No. 4 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronic Corporation, Microlab/FXR and Bank of America, N.A. dated November 8, 2019 (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group’s Quarterly Report on Form 10-Q filed on November 14, 2019, Commission File No. 001-11916)

	~~10.30~~10.22	Share Purchase Agreement, dated as of November 13, 2019, among Wireless Telecom Group Inc., Holzworth Instrumentation Inc., Jason Breitbarth, Joe Koebel and Leyla Bly, and Jason Breitbarth as the designated representative of Sellers (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on November 18, 2019, Commission File No. 001-11916)

	~~10.31~~10.23	Form of Lock-up and Voting Agreement (incorporated herein by reference to Exhibit 99.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on November 18, 2019, Commission File No. 001-11916)

	~~10.32~~
	10.24	First Amendment to Share Purchase Agreement, dated January 31, 2020, by and among Wireless Telecom Group, Inc. and Holzworth Instrumentation Inc., Jason Breitbarth, Joe Koebel and Leyla Bly (“Sellers”), and Jason Breitbarth as the designated representative of Sellers (incorporated herein by reference to Exhibit 10.2 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 3, 2020, Commission File No. 001-11916)


10.25	~~10.33~~	Credit Agreement, dated as of February 7, 2020, among Wireless Telecom Group, Inc., as the Borrower, and Certain Subsidiaries of the Borrower Identified Herein, as the Guarantors, and Muzinich BDC, Inc., as the Lender dated February 7, 2020. Schedules and exhibits omitted pursuant to Regulation S-K, Item 601(a)(5); will be furnished to the Securities and Exchange Commission upon request. (incorporated herein by reference to Exhibit 10.33 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2020, Commission File No. 001-11916)

	~~10.34~~10.26	Amendment No. 5 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronics Corporation, Microlab/FXR LLC, Holzworth Instrumentation, Inc., CommAgility Limited, and Bank of America, N.A. dated February 7, 2020 (incorporated herein by reference to Exhibit 10.34 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2020, Commission File No. 001-11916)

	~~10.35~~10.27	Warrant dated February 7, 2020, by Wireless Telecom Group, Inc. in favor of Muzinich BDC, Inc. (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 13, 2020, Commission File No. 001-11916)

	10.28	Bank of America Promissory Note in the principal amount of $2,044,935.00(incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on May 7, 2020, Commission File No. 001-11916)

	10.29	Amendment No. 6 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronics Corporation, Microlab/FXR LLC, Holzworth Instrumentation, Inc., CommAgility Limited, and Bank of America, N.A. dated May 4, 2020 (incorporated herein by reference to Exhibit 10.2 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on May 7, 2020, Commission File No. 001- 11916)

	10.30	First Amendment to Credit Agreement among Wireless Telecom Group, Inc., as the Borrower, and Certain Subsidiaries of the Borrower Identified Herein, as the Guarantors, and Muzinich BDC, Inc., as the Lender dated May 4, 2020 (incorporated herein by reference to Exhibit 10.3 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on May 7, 2020, Commission File No. 001-1916)

	10.31	Amendment No. 7 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., BoontonElectronics Corporation, Microlab/FXR LLC, Holzworth Instrumentation, Inc., CommAgility Limited, and Bank of America, N.A. dated February 25, 2021 (incorporated herein by reference to Exhibit 10.31 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2021, Commission File No. 001-11916)

	10.32	Second Amendment to Credit Agreement among Wireless Telecom Group, Inc., as the Borrower, and CertainSubsidiaries of the Borrower Identified Herein, as the Guarantors, and Muzinich BDC, Inc., as the Lender dated February 25, 2021 (incorporated herein by reference to Exhibit 10.32 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2021, Commission File No. 001-11916)

	10.33	Second Amendment to Share Purchase Agreement, dated February 19, 2021, by and among Wireless Telecom Group, Inc. and Holzworth Instrumentation Inc., Jason Breitbarth, Joe Koebel and Leyla Bly (“Sellers”), and Jason Breitbarth as the designated representative of Sellers (incorporated herein by reference to Exhibit 10.33 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2021, Commission File No. 001-11916)

	10.34*	Wireless Telecom Group, Inc. 2021 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 11, 2021, Commission File No. 001-11916)

	~~21.1~~10.35*	Form of Restricted Stock Award Agreement under Wireless Telecom Group, Inc. 2021 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.2 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 11, 2021, Commission File No. 001-11916)

	10.36*	Form of Stock Option Award Agreement under Wireless Telecom Group, Inc. 2021 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.3 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 11, 2021, Commission File No. 001-11916)

	10.37*	Form of Non-Employee Director Restricted Stock Unit Award Agreement under Wireless Telecom Group, Inc. 2021 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.4 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 11, 2021, Commission File No. 001-11916)

	10.38	Third Amendment to Credit Agreement and Limited Waiver by and between Wireless Telecom Group, Inc., the Borrower’s subsidiaries and Muzinich BDC, Inc. dated May 27, 2021 (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on November 10, 2021, Commission File No. 001-11916)

	10.39	Business Loan Agreement by and between Lloyds Bank PLC and CommAgility Limited dated May 27, 2021 (incorporated herein by reference to Exhibit 10.2 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on November 10, 2021, Commission File No. 001-11916)

	10.40	Deed of Priority by and between CommAgility Limited, Lloyds Bank PLC, Muzinich BDC, Inc. and Bank of America, N.A. dated June 17, 2021 (incorporated herein by reference to Exhibit 10.3 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on November 10, 2021, Commission File No. 001-11916)

	10.41	Fourth Amendment to the Credit Agreement by and between Wireless Telecom Group, Inc., the Borrower’s subsidiaries and Muzinich BDC, Inc. dated as of September 28, 2021 (incorporated herein by reference to Exhibit 10.4 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on November 10, 2021, Commission File No. 001-11916)

	10.42	Amendment No. 8 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronics Corp., Microlab/FXR LLC, Holzworth Instrumentation Inc., CommAgility Limited and Bank of America, N.A., dated September 28, 2021 (incorporated herein by reference to Exhibit 10.5 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on November 10, 2021, Commission File No. 001-11916)

	10.43*	Amended and Restated Executive Employment Agreement by and between Wireless Telecom Group, Inc. and Timothy Whelan dated January 31, 2022

	10.44*	Amended Employment Letter Agreement, dated January 31, 2022, between Wireless Telecom Group, Inc. and Michael Kandell

	10.45*	Amended Employment Letter Agreement, dated January 31, 2022, between Wireless Telecom Group, Inc. and Daniel Monopoli

	10.46*	Amended Employment Letter Agreement, dated January 31, 2022, between Wireless Telecom Group, Inc. and Alfred Rodriguez

	21.1	List of subsidiaries

	23.1	Consent of Independent Registered Public Accounting Firm (PKF O’Connor Davies, LLP)

	31.1	Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002

	31.2	Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002

	32.1	Certification pursuant to 18 U.S.C. section 1350

	32.2	Certification pursuant to 18 U.S.C. section 1350

	100.1	The following financial statements from Wireless Telecom Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2021, filed on March ~~19, 2020,~~17, 2022, formatted in Inline Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Loss, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statement of Changes in Shareholders’ Equity, and (v) the ~~notes~~Notes to the ~~consolidated financial statements.~~Consolidated Financial Statements. As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Securities 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934

* Denotes a management contract or compensatory plan or arrangement.

*	Denotes a management contract or compensatory plan or arrangement.

S I G N A T U R E S

Pursuant to the requirements of Section 13 or 15(d) 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.

Date: March ~~19, 2020~~17, 2022	By:	/s/ Timothy Whelan
		Timothy Whelan
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date

/s/ Alan L. Bazaar	Chairman of the Board	March ~~19, 2020~~17, 2022
Alan L. Bazaar

/s/ Timothy Whelan	Chief Executive Officer	March ~~19, 2020~~17, 2022
Timothy Whelan

/s/ Michael Kandell	Chief Financial Officer	March ~~19, 2020~~17, 2022
Michael Kandell

~~/s/ Joseph Garrity~~	~~Director~~	~~March 19, 2020~~
~~Joseph Garrity~~

/s/ Mitchell Herbets	Director	March ~~19, 2020~~17, 2022
Mitchell Herbets

/s/ Michael Millegan	Director	March ~~19, 2020~~17, 2022
Michael Millegan

/s/ Allan D.L. Weinstein	Director	March ~~19, 2020~~17, 2022
Allan D.L. Weinstein

/s/ ~~Joseph Manko~~Jennifer Fritzsche	Director	March ~~19, 2020~~17, 2022
~~Joseph Manko~~Jennifer Fritzsche

/s/ Scott Gibson	Director	March 17, 2022
Scott Gibson

New Jersey		22-2582295
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)


25 Eastmans Road,
Parsippany, New Jersey		07054
(Address of principal executive offices)		(Zip Code)

Title of each class		Trading Symbol		Name of each exchangeon which registered
Common Stock, par value $.01 per share		WTT		NYSE American

Large accelerated filer ~~[ ]~~☐	Accelerated filer ~~[ ]~~☐

Non-accelerated filer ~~[ ]~~ ☐	Smaller reporting company [X]☒	Emerging growth company ~~[ ]~~☐

	Leased
Parsippany NJ (corporate headquarters)		45,700
Leicestershire, UK		3,045
Duisberg, DE		7,446
Boulder, CO		6,647

		Page

	PART I

Item 1.	Business	3

Item 1A.	Risk Factors	89

Item 1B.	Unresolved Staff Comments	18

Item 2.	Properties	18

Item 3.	Legal Proceedings	18

Item 4.	Mine Safety Disclosures	18

	PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19

Item 6.	~~Selected Financial Data~~[Reserved]	19

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	2931

Item 8.	Financial Statements and Supplementary Data	3031

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	6466

Item 9A.	Controls and Procedures	6466

Item 9B.	Other Information	6466

~~PART III~~ Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	66

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	6567

Item 11.	Executive Compensation	6567

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	6567

Item 13.	Certain Relationships and Related Transactions, and Director Independence	6567

Item 14.	Principal Accountant Fees and Services	6567

PART IV

Item 15.	Exhibits and Financial Statement Schedules	6668

Signatures			7073

	●	simulate challenging signaling conditions in data and radio frequency transmission systems, such as jitter testing for high speed data lines used in modern computer architecture;

	●	send signals for noise measurement to allow wireless receivers and transmitters to be optimized;


●	●	are used for jamming radio frequency signals, blocking or disturbing enemy radar and other communications and insulating and protecting friendly communications; and

	●	comprise components in radar systems as part of built-in test equipment to continuously monitor the radar receiver and in-satellite communications where the use of back-up receivers ~~are~~is becoming more common.

	●	long-standing relationships with a core group of diverse customers in the wireless, telecommunication, satellite, military, aerospace, semiconductor and medical industries

	●	agility in providing highly customized and configured solutions to the customer’s technical specifications

	●	a long tradition of developing highly engineered wireless solutions through our strong design capabilities and technology know-how

	●	long-standing, well-established sales channels and relationships which allow us to bring new solutions to market quickly

	●	diversification across multiple customer segments, providing solutions to enable development, testing and deployment

	●	~~being an approved vendor at all four of the major U.S. carriers with hundreds of approved Network Solutions products~~

	●	an embedded base of products and instruments ~~in our Test & Measurement segment~~ which leads to recurring purchases of our Boonton, Noisecom and Holzworth products

	●	extensive knowhow and IP ~~in the Embedded Solutions segment~~ related to 3^rd ~~Generation Partnership Project (“3GPP”) 4G~~3GPP, LTE and 5G wireless standards which enable us to address complex and customized requirements for specialized networks

	●	are not cost effective;
	●	are not brought to market in a timely manner;
	●	are not in accordance with evolving industry standards; or
	●	fail to achieve market acceptance or meet customer requirements.

	●	competing technologies;
	●	timing and adoption of global rollout of new technologies, including ~~4G/~~LTE/5G;
	●	customer specific financial or market conditions;
	●	governmental budget levels and regulation;
	●	demand for network services; and
	●	acceptance of new services offered by our customers.

	●	~~making it more difficult for us to make payment on our indebtedness;~~
	●	~~increasing our vulnerability to general economic and industry conditions;~~
	●	requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures, research and development and future business opportunities;
	●	~~exposing us to the risk of increased interest rates;~~
	●	~~limiting our ability to make strategic acquisitions and investments;~~
	●	~~limiting our ability to refinance our indebtedness as it becomes due; and~~
	●	~~limiting our ability to adjust quickly or at all to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged.~~

	●	difficulties and increased costs in connection with integration of the personnel, operations, technologies and products of acquired businesses;
	●	diversion of management’s attention from other operational matters;
	●	the potential loss of key employees of acquired businesses;
	●	lack of synergy, or the inability to realize expected synergies, resulting from the acquisition;
	●	implementation or remediation of controls, procedures and policies of the acquired company;
	●	failure to commercialize purchased technology;
	●	liability for activities of the acquired company prior to the acquisition, including violations of law, commercial disputes, escheat and tax and other known and unknown liabilities; and
	●	the impairment of acquired intangible assets and goodwill that could result in significant charges to operating results in future periods.

	●	~~are not cost effective;~~
	●	~~are not brought to market in a timely manner;~~
	●	~~are not in accordance with evolving industry standards; or~~
	●	~~fail to achieve market acceptance or meet customer requirements.~~

	●	~~LTE, a wireless standard, is not widely deployed or commercial deployment is delayed;~~
	●	~~wireless operators delay moving customers to 4G or 5G devices;~~
	●	~~wireless operators delay 4G or 5G deployments, expansions or upgrades;~~
	●	~~government regulators delay the reallocation of spectrum to allow wireless operators to upgrade to 4G or 5G, which will restrict the expansion of 4G or 5G wireless connectivity;~~
	●	~~wireless operators are unable to drive improvements in 4G or 5G network performance and/or capacity;~~
	●	~~wireless operators and other industries using these technologies deploy other technologies; or~~
	●	~~wireless operators choose to spend their capital on their core network or limit their expenditures on radio access network (RAN).~~

	●	the proprietary nature or protection of our methodologies is not recognized in the United States or foreign countries;
	●	third parties misappropriate our proprietary methodologies and such misappropriation is not detected; and
	●	competitors create applications similar to ours but which do not technically infringe on our legally protected rights.

	●	economic conditions in European and Asian markets, including the impact of recessions in European and Asian economies and fluctuations in the relative values of the U.S. dollar, the Euro and Asian currencies;
	●	~~taxes and fees imposed by European and Asian governments that may increase the cost of products and services;~~
	●	~~greater difficulty in accounts receivable collection and longer collection periods;~~
	●	~~seasonal reductions in business activities in some parts of the world;~~
	●	~~laws and regulations imposed by individual countries and by the European Union, particularly with respect to intellectual property, license requirements and environmental requirements; and~~
	●	~~political and economic instability, terrorism and war.~~

	●	economic conditions in European and Asian markets, including the impact of recessions in European and Asian economies and fluctuations in the relative values of the U.S. dollar, the Euro and Asian currencies;
	●	taxes and fees imposed by European and Asian governments that may increase the cost of products and services;
	●	greater difficulty in accounts receivable collection and longer collection periods;
	●	seasonal reductions in business activities in some parts of the world;
	●	laws and regulations imposed by individual countries and by the European Union, particularly with respect to intellectual property, license requirements and environmental requirements; and
	●	political and economic instability, terrorism and war.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in the previous columns)
Equity compensation plans approved by security holders		3,256,167	$	1.65		442,500

Equity compensation plans not approved by security holders		-		-		-

Total		3,256,167	$	1.65		442,500

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in the previous columns)
Equity compensation plans approved by security holders		2,055,000	$	1.53		1,695,079

Equity compensation plans not approved by security holders		-		-		-

Total		2,055,000	$	1.53		1,695,079

	Twelve months ended December 31
	Revenue				% of Revenue						Change
	2019		2018		2019			2018			Amount			Pct.
Network Solutions	$	21,830	$	22,275		44.6	%		42.2	%	$	(445	)		-2.0	%
Test and Measurement		13,566		14,212		27.7	%		26.9	%		(646	)		-4.5	%
Embedded Solutions		13,525		16,301		27.7	%		30.9	%		(2,776	)		-17.0	%
Total Net Revenues	$	48,921	$	52,788		100.0	%		100.0	%	$	(3,867	)		-7.3	%

	Twelve months ended December 31
	Gross Profit				Gross Profit %						Change
	2019		2018		2019			2018			Amount			Pct.
Network Solutions	$	9,216	$	9,756		42.2	%		43.8	%	$	(540	)		-5.5	%
Test and Measurement		7,320		7,018		54.0	%		49.4	%		302			4.3	%
Embedded Solutions		5,753		7,393		42.5	%		45.4	%		(1,640	)		-22.2	%
Total Gross Profit	$	22,289	$	24,167		45.6	%		45.8	%	$	(1,878	)		-7.8	%

	Twelve months ended December 31
	Operating Expenses				% of Revenue						Change
	2019		2018		2019			2018			Amount			Pct.
Research and Development	$	5,917	$	4,909		12.1	%		9.3	%	$	1,008			20.5	%
Sales and Marketing		7,677		7,595		15.7	%		14.4	%		82			1.1	%
General and Administrative		10,174		10,306		20.8	%		19.5	%		(132	)		-1.3	%
Loss on Change in Fair Value of Contingent Consideration		-		578		0.0	%		1.1	%		(578	)		-100.0	%
Total Operating Expenses	$	23,768	$	23,388		48.6	%		44.3	%	$	380			1.6	%

	Total		2022		2023		2024		2025		Thereafter
Facility leases	$	1,591	$	714	$	326	$	209	$	214	$	128
Operating and equipment leases		126		29		29		29		29		10
Purchase obligations		5,785		5,785		-		-		-		-
Muzinich Term Loan		4,104		84		84		84		3,852
CIBLS loan		337		42		84		84		84		43
Holzworth deferred purchase price		250		250		-		-		-		-
Holzworth earn out		2,942		2,942		-		-		-		-
	$	15,135	$	9,846	$	523	$	406	$	4,179	$	181

	Page

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 127)	3132

Consolidated Financial Statements:

Balance Sheets as of December 31, ~~2019~~2021 and ~~2018~~2020	3234

Statements of Operations and Comprehensive Income/(Loss) for the Two Years Ended December 31, ~~2019~~2021	3335

Statement of Changes in Shareholders’ Equity for the Two Years Ended December 31, ~~2019~~2021	3436

Statements of Cash Flows for the Two Years Ended December 31, ~~2019~~2021	3537

Notes to Consolidated Financial Statements	3638

	December 31			December 31
	2019			2018

CURRENT ASSETS
Cash & Cash Equivalents	$	4,245		$	5,015
Accounts Receivable - net of reserves of $69 and $44, respectively		6,152			8,638
Inventories - net of reserves of $969 and $1,910, respectively		7,325			6,884
Prepaid Expenses and Other Current Assets		1,871			1,689

TOTAL CURRENT ASSETS		19,593			22,226

PROPERTY PLANT AND EQUIPMENT - NET		2,147			2,578

OTHER ASSETS
Goodwill		10,069			9,778
Acquired Intangible Assets, net		2,219			3,206
Deferred Income Taxes		6,013			5,592
Right of Use Assets		1,436			-
Other Assets		874			787

TOTAL OTHER ASSETS		20,611			19,363

TOTAL ASSETS	$	42,351		$	44,167

CURRENT LIABILITIES
Short Term Debt	$	2,696		$	2,016
Accounts Payable		2,227			3,252
Short Term Leases		440			-
Accrued Expenses and Other Current Liabilities		2,657			6,083
Deferred Revenue		42			103

TOTAL CURRENT LIABILITIES		8,062			11,454

LONG TERM LIABILITIES
Long Term Leases		1,018			-
Other Long Term Liabilities		77			115
Deferred Tax Liability		503			616
TOTAL LONG TERM LIABILITIES		1,598			731

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, 34,488,252 and 34,393,252 shares issued, 21,300,251 and 21,205,251 shares outstanding		345			344
Additional Paid in Capital		49,062			48,479
Retained Earnings		7,142			7,556
Treasury Stock at Cost, 13,188,000		(24,509	)		(24,509	)
Accumulated Other Comprehensive Income		651			112
TOTAL SHAREHOLDERS’ EQUITY		32,691			31,982

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	42,351		$	44,167

	Twelve Months Ended
	December 31
	2019			2018
NET REVENUES	$	48,921		$	52,788

COST OF REVENUES		26,632			28,621

GROSS PROFIT		22,289			24,167

Operating Expenses
Research and Development		5,917			4,909
Sales and Marketing		7,677			7,595
General and Administrative		10,174			10,306
(Gain)/Loss on Change in Fair Value of Contingent Consideration		-			578
Total Operating Expenses		23,768			23,388

Operating Income/(Loss)		(1,479	)		779

Other Income/(Expense)		(2	)		(121	)
Interest Expense		(305	)		(575	)

Income/(Loss) before taxes		(1,786	)		83

Tax Provision/(Benefit)		(1,372	)		48

Net Income/(Loss)	$	(414	)	$	35

Other Comprehensive Income/(Loss):
Foreign Currency Translation Adjustments		539			(892	)
Comprehensive Income/(Loss)	$	125		$	(857	)

Earnings/(Loss) Per Share:
Basic	$	(0.02	)	$	0.00
Diluted	$	(0.02	)	$	0.00

Weighted Average Shares Outstanding:
Basic		21,111			20,858
Diluted		21,111			21,566

	Common Stock Issued		Common Stock Amount		Additional Paid In Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income/(Loss)			Total Shareholders’ Equity
Balances at December 31, 2017		33,868,252	$	339	$	47,494		$	7,176		$	(20,910	)	$	1,004		$	35,103
Adoption of Accounting Standard		-		-		-			345			-			-			345
Adjusted Opening Equity		33,868,252	$	339	$	47,494		$	7,521		$	(20,910	)	$	1,004		$	35,448

Net Income/(Loss)		-		-		-			35			-			-			35
Issuance of Shares in Connection with Stock Options Exercised		300,000		3		285			-			-			-			288
Issuance of Restricted Stock		225,000		2		(2	)		-			-			-			-
Forfeiture of Shares Issued in Connection with CommAgility acquisition		-		-		-			-			(3,599	)		-			(3,599	)
Share-based Compensation Expense		-		-		702			-			-			-			702
Cumulative Translation Adjustment		-		-		-			-			-			(892	)		(892	)
Balances at December 31, 2018		34,393,252	$	344	$	48,479		$	7,556		$	(24,509	)	$	112		$	31,982

Net Income/(Loss)		-		-		-			(414	)		-			-			(414	)
Issuance of Restricted Stock		95,000		1		(1	)		-			-			-			-
Share-based Compensation Expense		-		-		584			-			-			-			584
Cumulative Translation Adjustment		-		-		-			-			-			539			539
Balances at December 31, 2019		34,488,252	$	345	$	49,062		$	7,142		$	(24,509	)	$	651		$	32,691

	For the Twelve Months
	Ended December 31
	2019			2018
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net Income/(Loss)	$	(414	)	$	35
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Depreciation and Amortization		2,151			2,305
Amortization of Debt Issuance Fees		63			78
Share-based Compensation Expense		584			702
Non Cash Lease Expense		(24	)		11
Deferred Income Taxes		(551	)		233
Provision for Doubtful Accounts		25			-
Inventory Reserves		103			359
Changes in Assets and Liabilities:
Accounts Receivable		2,465			231
Inventories		(502	)		(751	)
Prepaid Expenses and Other Assets		42			(850	)
Accounts Payable		(1,055	)		(735	)
Payment of Contingent Consideration		(772	)		-
Accrued Expenses and Other Liabilities		(2,035	)		2,372
Net Cash Provided by Operating Activities		80			3,990

CASH FLOWS (USED) BY INVESTING ACTIVITIES
Capital Expenditures		(392	)		(853	)
Acquisition of Business, Net of Cash Acquired		(426	)		(805	)
Net Cash (Used) by Investing Activities		(818	)		(1,658	)

CASH FLOWS PROVIDED/(USED) BY FINANCING ACTIVITIES
Revolver Borrowings		36,544			37,695
Revolver Repayments		(35,712	)		(37,355	)
Term Loan Repayments		(152	)		(152	)
Debt Issuance Fees		(110	)		-
Payment of Contingent Consideration		(782	)		-
Proceeds from Exercise of Stock Options		-			288
Net Cash Provided/(Used) by Financing Activities		(212	)		476

Effect of Exchange Rate Changes on Cash and Cash Equivalents		180			(251	)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		(770	)		2,557

Cash and Cash Equivalents, at Beginning of Period		5,015			2,458

CASH AND CASH EQUIVALENTS, AT END OF PERIOD	$	4,245		$	5,015

SUPPLEMENTAL INFORMATION:
Cash Paid During the Period for Interest	$	185		$	176
Cash Paid During the Period for Income Taxes	$	108		$	41

					December 31,		December 31,
Inventories consist of (in thousands):	December 31, 2019		December 31, 2018		2021		2020
Raw materials	$	4,023	$	3,248	$	5,271	$	4,644
Work-in-process		406		557		821		618
Finished goods		2,896		3,079		2,982		3,534
	$	7,325	$	6,884
Inventory net					$	9,074	$	8,796

Machinery and computer ~~equipment~~equipment/software		~~3-8~~3-8 years
Furniture and fixtures		~~5-7~~5-7 years
~~Transportation equipment~~		~~4 years~~

	2021		2020
	For the Years Ended December 31,
	2021		2020

Weighted average common shares outstanding		22,049,636		21,656,906
Potentially dilutive equity awards		2,247,470		313,341
Weighted average common shares outstanding, assuming dilution		24,297,106		21,970,247

	●	~~Carry forward of historical lease classifications and accounting treatment;~~
	●	~~Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less; and~~
	●	~~The option to not separate lease and non-lease components for certain equipment lease categories such as office printers and copiers.~~

	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

	December 31, 2021
Revolver at LIBOR plus margin	$	-
Term loan at LIBOR plus margin		4,104
Less: Debt issuance costs, net of amortization		(627	)
Less: Fair value of warrants, net of amortization		(93	)
CIBLS Loan at Bank of England plus margin		337
Total Debt		3,721
Less: Debt maturing within one year		(126	)
Non-current portion of long term debt	$	3,595