UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

For the fiscal year endedDecember 31 2019, 2022

OR

For the transition period from ________ to________

Commission file number 1-11916

WIRELESS TELECOM GROUP, INCINC..

(Exact name of registrant as specified in its charter)

(Registrant’s Telephone Number, Including Area Code) 973-386-9696973-386-9696

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

none

(Title of Class)

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

Yes [  ] ☐ No [X] ☒

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

Yes [X] ☒ No [  ]☐

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Yes [X] No [  ]

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).

Yes [X] ☒ No [  ]☐

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. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b) . ☐

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

Yes [  ] ☐ No [X] ☒

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: $28,924,861.2022: $23,925,676. As of March 6, 2020,2023, there were 21,647,57121,371,047 shares of the Company’s common stock ($.01 par value) outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement relating to the 20202022 Annual Meeting of Stockholders (the “2020“2023 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

PART I

Item 1.Business

Overview

Wireless Telecom Group, Inc., a New Jersey corporation, together with its subsidiaries (“we”, “us”, “our” or the “Company”), specializes inis pursuing strategic alternatives to accelerate the design and manufacturerealization of advanced radio frequency and microwave devices which enablevalue for our shareholders. On January 1, 2022, 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 fiscal year include the accounts of Wireless Telecom Group, Inc., doing business as, and operating under the trade name Noise Com,NoiseCom, Inc., and its wholly owned subsidiaries including Boonton Electronics Corporation, Microlab/FXR LLC, Wireless Telecommunications Group Ltd., CommAgility Limited and CommAgility Limited. The corporate website address is www.wirelesstelecomgroup.com. Noise Com,Holzworth Instrumentation, Inc. (NoiseCom, Inc., Boonton Electronics Corporation, Microlab/FXR andLLC, CommAgility Limited Ltd., and Holzworth Instrumentation, Inc. are hereinafter referred to as “Noisecom”, “Boonton”, “Microlab”, “CommAgility” and “CommAgility”“Holzworth”, respectively.respectively). 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.

As more fully described under Divestitures below, on March 1, 2022, the Company completed the sale of Microlab to RF Industries, Ltd and on December 30, 2022 completed the sale of CommAgility to E-Space Acquisitions, LLC. Subsequent to the divestitures of Microlab and CommAgility, the Company is comprised of the T&M business, which is made up of our Boonton, Noisecom and Holzworth brands. The T&M business provides radio frequency (“RF”) and microwave test equipment and low phase noise RF synthesizers to equipment manufacturers, aerospace and defense companies, military and government agencies, satellite communication companies, semiconductor companies and other global technology companies.

In accordance with applicable accounting guidance, the results of Microlab and CommAgility are presented as discontinued operations in the Consolidated Statements of Operations and Comprehensive Income/(Loss) and, as such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of Microlab and CommAgility as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of December 31, 2021. The Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations. Our consolidated financial statements from continuing operations include the accounts of Noisecom, Boonton and Holzworth.

Divestiture of Microlab and CommAgility

On December 16, 2021, the Company and its wholly owned subsidiary Microlab entered into a Membership Interest Purchase Agreement (the “Microlab Purchase Agreement”) with RF Industries, Ltd., a Nevada corporation (the “Buyer” or “RF Industries”) 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 Microlab 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 “Microlab Transaction”). On February 25, 2022, the shareholders of the Company approved the Microlab 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 $22.8 million in proceeds net of indemnification and purchase price adjustment holdbacks of $150,000 and $100,000, respectively, and direct expenses of approximately $1.1 million including fees to our advisors. In July 2022, the Company received $225,000 in final purchase price adjustment primarily related to the working capital adjustment and, on March 1, 2023, the Company received the indemnification holdback amount of $150,000. In total, the Company received net proceeds of approximately $23.1 million related to the Microlab Transaction. In 2022, the Company used $4.2 million of the Microlab Transaction proceeds to repay in full our outstanding term loan with Muzinich BDC and approximately $600,000 was used to repay in full our outstanding revolver balance related to the Bank of America credit agreement. The Company terminated both the Muzinich term loan and Bank of America credit facility as of the Microlab Transaction date. Additionally, concurrent with the closing, 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.

On December 4, 2022, the Company, and its wholly owned subsidiary, Wireless Telecommunications Group, Ltd, a company organized under the laws of England and Wales (“Holdings”), which owns 100% of the outstanding securities of CommAgility, entered into a Securities Purchase Agreement (the “CommAgility Purchase Agreement”) with E-Space Acquisitions LLC, a Delaware limited liability company (“Buyer” or “E-Space”), and eSpace Inc., a Delaware corporation, as guarantor. The CommAgility Purchase Agreement provided for the purchase by the Buyer of 100% of the issued and outstanding equity interests of Holdings (the “Securities”) from the Company. The board of directors or other governing body of each of the Company and the Buyer unanimously approved the CommAgility Purchase Agreement and the transactions contemplated thereby (collectively, the “CommAgility Transaction”). Under the terms of the CommAgility Purchase Agreement, the purchase price for the Securities was estimated to be approximately $14.5 million, inclusive of $13.8 million in cash consideration and a $750,000 note payable, under which the note was subject to agreed-upon reductions of $650,000.

The CommAgility Transaction closed on December 30, 2022 and the Company received net proceeds of $12.2 million which is comprised of the cash consideration of $13.8 million less direct expenses of approximately $1.6 million. The note payable of $750,000 has been offset by agreed-upon reductions of $650,000 for a net balance due of approximately $100,000 which is due one year from the date of the CommAgility Transaction closing or upon a change in control as defined in the CommAgility Purchase Agreement. The note receivable balance of $100,000 has been further offset by the 2023 UK transaction taxes of approximately $69,000 and the expected net proceeds of the note is approximately $31,000.

The CommAgility Transaction and Microlab Transaction resulted in net proceeds of approximately $35.3 million in 2022. As of December 31, 2022, subsequent to both the CommAgility Transaction and Microlab Transaction the Company had a cash balance of $20.7 million with no debt or earnout liabilities. The Company continues to explore strategic alternatives for the remaining T&M business. We do not expect to comment further or update the market with any additional information on the process unless and until its Board of Directors has approved a specific transaction or otherwise deems disclosure appropriate or necessary. There can be no assurance that the evaluation of strategic alternatives will result in any strategic alternative transaction, or any assurance as to its outcome or timing.

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 2022 exclude the results of Microlab and CommAgility for all periods presented. The results of Microlab and CommAgility have been recorded as discontinued operations in accordance with the applicable accounting guidance. Further, the assets and liabilities of Microlab and CommAgility have been reclassified as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of December 31, 2021.

Customers

Our customers include aerospace and defense companies, military and government agencies, satellite communication companies, semiconductor manufacturers, and other global technology companies. For the years ended December 31, 2022 and December 31, 2021, one customer accounted for 15% and 13% of total consolidated revenues, respectively.

Products

Our products include RF power meters, sensors and analyzers, RF synthesizers, noise generators and components and phased noise analyzers. Our services include calibration, repair and maintenance. Our customers use our products in the testing of satellite communication systems, radar systems, semiconductor manufacturing and for quantum computing.

Market

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 and electronic testing and measurement instruments,instruments. In February 2020, we acquired Holzworth which specializes in supplying RF synthesizers and radio frequency (“RF”) passive componentsphase noise analyzers to customers. Withglobal aerospace and defense companies, the CommAgility acquisition in February of 2017 the Company expanded to include the delivery of signal processing modulessemiconductor industry and the delivery, implementationfor quantum computing. Approximately 65% and configuration of LTE physical layer and stack software. Approximately 93% and 90%63% of the Company’s consolidated revenues in fiscal years 20192022 and 2018,2021, respectively, were derived from commercial customers. The remaining consolidated revenues (approximately 7%35% and 10%37% in 20192022 and 2018,2021, respectively) were comprised of revenues from the United States government (particularly the armed forces) and prime defense contractors.

Brands and Products

Our Network Solutions segment is comprised of ourMicrolabBoonton 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 theBoonton andNoisecom brands and, subsequent to the closing of our acquisition of Holzworth, theHolzworth brand.

Boonton

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 frequencyRF 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 frequencyRF 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

Noisecom is a leader in radio frequencyRF 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

Holzworth designs and manufactures specialty phasedphase noise analyzers and signal generatorsRF synthesizers used by aerospace and defense companies, government labs, the semiconductor industry, and network equipment providers and for quantum computing sold to global technology companies. Holzworth products are used in, among others, inother things, research and automated test environments.environments and for quantum computing. Holzworth signal generatorsRF synthesizers 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.

Our Embedded Solutions segment consists of our subsidiaryCommAgility.

CommAgility develops the software which enables private network deployments including the LTE physical layer and stack software, 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 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 products for integration into high performance test equipment, specialized radio and intelligence systems, satellite systems and R&D demonstrators.

CommAgility engineers work closely with customers to provide hardware and software solutions for the most demanding real-time signal processing, test and control challenges in wireless baseband, semiconductor processing, medical imaging, radar and sonar applications. Additionally, CommAgility licenses, implements and customizes 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 the LTE standard.

Marketing and Sales

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.

Customers

The Company currently sells the majority of its products to 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 and 2018 one customer, Viavi Solutions, accounted for 24.8% and 22.0% of total consolidated revenues, respectively.

Competition

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 and Anritsu Corporation, Kathrein, Commscope, Qualcomm 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.Corporation.

The Company believes its competitive strengths include:

Backlog

The Company’s consolidated backlog of firm orders to be shipped in the next twelve months was approximately $3.8$6.6 million at December 31, 2019,2022, compared to approximately $8.2$5.3 million at December 31, 2018. It2021. The increase in backlog is anticipateddue to higher order flow in the second half of fiscal 2022 as compared to the prior year. Management anticipates that the majority of the backlog orders at December 31, 20192022 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.

Inventory, Supplies and Manufacturing

CommAgility developsThe Company purchases electronic components, diodes, aluminum housings and printed wiring assemblies from domestic suppliers. The Company’s procurement policy requires maintaining adequate levels of raw materials inventory to minimize the software which enables private network deployments includingCompany’s production lead times with third-party suppliers and to improve the LTE physical layerCompany’s capacity to expedite fulfillment of customer orders. During 2022 and stack software,2021, the Company experienced component shortages and longer lead times from suppliers. Although there was no material impact to our consolidated financial statements in 2022 or 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. Two suppliers accounting for 4Gapproximately 33% and emerging 5G mobile network37% of consolidated inventory purchases for the year ended December 31, 2022 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 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 products for integration into high performance test equipment, specialized radio and intelligence systems, satellite systems and R&D demonstrators.2021, respectively.

The Company is not party to any long termlong-term contracts regarding the deliveries of its supplies and components. ItWe generally purchasespurchase 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% 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 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 MicrolabHolzworth 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,developed, assembled 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.in our facility in Boulder, Colorado.

Warranty and Service

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 ortypically 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. TheIf 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.

Product Liability Coverage

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.

Intellectual Property

We believe that our intellectual property, including its methodologies, is critical to our success and competitive position. We rely primarily 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.

Regulation

Environmental

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,wastes, and require cleanup of contaminated soil and groundwater.

At this time,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”) and Site Investigation (“SI”) in accordance with the provisions of ISRA. In accordance with ISRA, in February 2022, the Company posted a $100,000 letter of credit with the NJDEP. The PA identified several areas requiring further environmental investigation which were addressed as part of the SI report.

In December 2022, the Company received the SI report from the LSRP. The SI report identified several areas requiring additional investigation most notably elevated concentrations of hazardous substances in the groundwater that were above state and federal limits. The SI report also stated that the groundwater contamination predates our occupancy at our headquarters. We engaged our LSRP to perform additional testing in the first quarter of 2023 to further refine the Company’s understanding of the contamination. As a result of the testing performed in the first quarter of 2023, it is suspected that the groundwater contamination originated from an offsite source. Further testing is being conducted to validate the findings.

As the Company believes that it ishazardous substances in material compliancesoil and groundwater at our Parsippany headquarters predate our occupancy and/or were caused by unrelated third parties, we believe that others, and not the Company, should be responsible for the cost of remediation. However, we cannot guarantee that we will be successful in absolving the Company of the remediation liability. Based on our reasonable position that we did not cause the contamination we do not think our potential liability would be material.

In fiscal 2022 the Company incurred approximately $140,000 in expenses related to testing and assessments associated with all environmental laws,ISRA which are recorded as general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Income. As of December 31, 2022, the Company has not accrued a liability related to the estimated remediation expenses due to the fact that the Company does not anticipate any material expenditure 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.believe it should be ultimately responsible for the remediation.

Workplace Safety

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.

ITAR and Export Controls

The Company isCertain 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.

FAR and DFARS

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.

Cybersecurity Maturity Model Certification

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.

EmployeesHuman Capital

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. Subsequent to the Microlab and CommAgility divestitures, on March 1, 2023, the Company has 68 total full-time employees.

Investor Information

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.

Item 1A.Risk Factors

OurGlobal Economic and Supply-Chain Risks

Adverse global economic conditions and the related impact on our supply chain and the markets where we do 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.results of operations.

The uncertain state of the global economy (including the current conflict between Russia and Ukraine and related economic and other retaliatory measures taken by the United States, European Union and others) continues to impact businesses around the world. 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 performance isbusiness has been and may continue to be negatively impacted by such 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. Deteriorating economic conditions or financial uncertainty in any of the markets in which we sell our products could reduce business confidence and adversely impact spending patterns, and thereby could adversely affect our sales and results of operations. In challenging and uncertain economic environments such as the current one, we cannot predict whether or when such circumstances may improve or worsen, or what impact, if any, such circumstances could have on our business, financial condition and results of operations, or on the price of our common stock.

Our operations are dependent on customers’ or end users’ capital spending for constructing, rebuilding, maintaining or upgrading datathe ability of suppliers to deliver quality components, devices and communication networks, whichprinted wiring assemblies in time to meet critical manufacturing and distribution schedules. If we experience any constrained supply of component parts due to global economic uncertainties, such constraints, if persistent, could adversely affect operating results until alternate sourcing can be volatile or harddeveloped. There could be an increased risk of supplier constraints in periods where we are increasing production volume to forecast. Capital spendingmeet customer demands. Volatility in the communications industry is cyclical and can be curtailed or deferred on short notice. A varietyprices 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 seenin a timely manner in the pastquantities and configurations demanded or, expect inconversely, a temporary oversupply of these parts, could adversely affect our future operating results.

Rising inflation may negatively impact our profit margins

Recent inflationary pressures have increased the future. Accordingly,cost of energy and raw materials and may adversely affect our results of operations. If inflation continues to rise and further impact the cost of energy and raw materials, we may not be able to maintainoffset cost increases to our products through price adjustments without negatively impacting consumer demand, which could adversely affect our sales and results of operations.

Strategic Risks

Our operating results and financial condition could be harmed if the markets into which we sell our products decline or increasedo not grow as anticipated.

Visibility into our revenuemarkets is limited. Our quarterly sales and operating results are highly dependent on the volume and timing of technology-related spending and orders received during the fiscal quarter, which are difficult to forecast and may be cancelled by our customers. In addition, our revenues and earnings forecasts for future fiscal quarters are often based on the expected seasonality or cyclicality of our markets. However, due to the uncertainties and volatile economic environment created by increased geopolitical tensions, including the war between Russia and Ukraine, the impact of inflation, the potential for future recession, and continued supply chain challenges, the markets we serve may experience increased volatility and may not experience the seasonality or cyclicality that we expect. Any decline in the future,our customers’ markets would likely result in a reduction in demand for our products and services. If our business,customers’ markets decline, we may not be able to collect on outstanding amounts due to us. Such declines could harm our financial condition,position, results of operations, and cash flows and stock price, and could be materially adversely affected.

We depend on the deployment of 4G LTE and 5G NR private networks and related services to growlimit 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 resultsprofitability. In such an environment, pricing pressures could be adversely affected.

We depend on a limited number of customers forintensify. Since a significant portion of our revenues. The loss of, or a significant decreaseoperating expenses is relatively fixed in business from any ofnature due to sales, R&D and manufacturing costs, if we were unable to respond quickly enough, these customerspricing pressures could seriously harmfurther reduce our financial condition and results of operations.operating margins.

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 degree of leverage could have consequences, including:

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.

The cyclicality of our end-user markets could harm our financial results.

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 and evolving technology standards and short product life cycles.standards. 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,Boulder, 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 wouldhas 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.

Operational Risks

Failure to renegotiate the terms of our current lease for our corporate headquarters or find another location suitable for our operations could adversely impact our results of operations.

Our lease for our corporate headquarters and N.J operations in Parsippany expires on March 31, 2023. We are in negotiations with the landlord for an extension and are also exploring other locations to lease. Should we not come to terms with the landlord on an extension by the lease termination date we could incur charges above fair value for rent for industrial and office property which could have an adverse impact our results of operations.

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 success dependsgrowth and competitiveness. However, other than the employment agreements we entered into with our named executive officers, Timothy Whelan, Mike Kandell, 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.

We believe our pay levels are competitive within the regions in which we operate. However, global labor shortages, inflationary pressure on wages, and increased global attrition have intensified competition for talent in most fields in which we operate, and it may become more difficult to retain key employees. If we fail to retain key personnel and are unable to hire highly qualified replacements, we may not be able to meet key objectives, such as launching effective product innovations and meeting financial goals, and maintain or expand our business.

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 anticipatehire personnel with knowledge and to adapt to technological changes and to develop, implement and market product innovations.

Many ofskills 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:

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.have. If we do not succeed, we may be left with inventories of obsolete productsare 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.

Our future research and development projects might not be successful.

The successful development of telecommunicationsnew 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.reasons. There is no assurance that any of our future research and development projects will be successful or completed within the anticipated time frametimeframe 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 impactvalue of tariffs, may negativelyour 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 costsa 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 partsthese systems could adversely affect our operatingbusiness.

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 sourcesof 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.

Financial Risks

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 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 test and measurement industry.

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 17, 2023, 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 NYSE American, the trading volume in our common stock is less than that of other, larger companies in the test and measurement industry. Traditionally, the trading volume of our common stock has been limited. For example, for the 90 trading days ending on February 17, 2023, the average daily trading volume was approximately 22,000 shares per day and ranged from between 900 shares per day and approximately 109,000 shares per day. Furthermore, we only have 21,438,571 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.

Our

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.

Legal and Regulatory Risks

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 dependent onsubject to various federal, state, local, and foreign environmental laws, ordinances and regulations that limit discharges into the abilityenvironment, establish standards for the handling, generation, use, emission, release, discharge, treatment, storage and disposal of, suppliersor exposure to, deliver quality components, deviceshazardous materials, substances and subassemblieswaste, and require cleanup of contaminated soil and groundwater.

In connection with the Microlab divestiture the Company engaged an LSRP to perform a preliminary environmental assessment and site investigation 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. Volatilityaccordance with ISRA. The site investigation detected hazardous substances in the pricesgroundwater at our headquarter in Parsippany NJ. The Company believes the contamination predates our occupancy and, accordingly, remediation should not be the responsibility of these component parts, an inability to secure enough components atthe Company. However, we cannot guarantee that we will be successful in absolving the Company of the remediation liability. Based on our reasonable prices to build new products in a timely manner inposition that we did not cause the quantities and configurations demanded or, conversely, a temporary oversupply of these parts, could adversely affectcontamination we do not think our future operating results.potential liability would be material.

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.

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 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 primarily 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.

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 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.

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 of operations and financial condition.

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, thatthe 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 resultInternational Risks

The success of operating as a public company,our ability to grow revenues and our management devotes substantial time to compliance initiatives.

We have incurreddevelop relationships in Europe 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.

WeAsia may be adversely affectedlimited by changesrisks related to conducting business in LIBOR reporting practices, the methodEuropean and Asian markets.

Part of our strategy is to increase revenues and build our relationships in which LIBOR is determined or the use of alternative reference rates.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 term loan facility with Muzinich BDCAsian intellectual property laws are indexeddifferent than and might not protect our proprietary rights to the London Interbank Offered Rate (“LIBOR”).The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announcedsame extent as do U.S. intellectual property laws, and we will have to ensure that it intends to stop encouraging or requiring banks to submit rates for the calculation of LIBOR rates after 2021,our intellectual property is adequately protected in foreign jurisdictions 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 the cost of borrowing cash in 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, and could have an adverse effect on LIBOR-based interest rates on our current or future debt obligations.

United States. If securities or industry analystswe do not publish research or reports aboutadequately protect our business or if they issue an adverse or misleading opinion regardingintellectual property rights, competitors could use our stock, our stock priceproprietary technologies in non-protected jurisdictions and trading volume could decline.put us at a competitive disadvantage.

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.

Forward-Looking Statements

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.

Item 1B.Unresolved Staff Comments

None.

Item 2.Properties

The Company leases a 45,700 square foot facilityWe currently lease our corporate headquarters located in Hanover Township, Parsippany, New Jersey which is currently being usedalso serves as its principal corporate headquartersa manufacturing plant for our Noisecom and Boonton brands. We also lease office and manufacturing plant with respect to the Network Solutions and Test and Measurement Segments. In May 2015, the Company and its landlord entered into a 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 consistingBoulder, Colorado for our Holzworth brand. The table below shows a summary of 4,900the square feet and Duisburg, Germany consistingfootage of 7,446 square feet for the Embedded Solutions segment operations. The Leicestershire lease expires in November 2020 and the Duisburg lease is renewable every 3 months.these locations as of December 31, 2022:

The Company believes its properties are suitable and adequate for its current purposes. The Parsippany NJ lease expires on March 31, 2023. We are currently in negotiations with our landlord for a possible extension and are exploring other possible lease locations.

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. The sublease expires on March 30, 2023. The Company and RF Industries are discussing a possible extension of the sublease.

Item 3.Legal Proceedings

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.None

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 4.Mine Safety Disclosures

Not applicable.

Not applicable.

PART II

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, 2020,2023, the Company had 364352 stockholders of record. These stockholders of record do not include beneficial owners whose shares are held in “nominee” or “street name”.

Recent Sales of Unregistered Securities

None in the fourth quarter of fiscal 2019.year 2022.

Issuer Purchases of Equity Securities

TheIn the fourth quarter of fiscal year 2022 the Company did not repurchase any securities during the year ended December 31, 2019.repurchased 38,868 shares of common stock from employees to cover income tax withholding obligations for vested restricted common shares.

Equity Compensation Plan Information

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

Item 6. [Reserved]

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

Overview

TheIn 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.

On March 1, 2022, we sold Microlab to RF Industries, Ltd and on December 30, 2022 we sold CommAgility to E-Space Acquisitions, LLC. Subsequent to the divestitures of Microlab and CommAgility the Company is acomprised of the T&M business which is made up of our Boonton, Noisecom and Holzworth brands. The T&M business provides RF and microwave test equipment and low phase noise RF synthesizers to equipment manufacturers, aerospace and defense companies, military and government agencies, satellite communication companies, semiconductor companies and other global designertechnology companies.

The Consolidated Financial Statements and manufacturerManagement’s Discussion and Analysis of advanced RF, microwaveFinancial Condition and millimeter wave components, modules, systemsResults of Operations presented in this Annual Report on Form 10-K for the fiscal year ended 2022 exclude the results of Microlab and instruments. ServingCommAgility for all periods presented. The results of Microlab and CommAgility have been recorded as discontinued operations in accordance with the wireless, telecommunication, satellite, military, aerospace, semiconductorapplicable accounting guidance. Further, the assets and medical industries, Wireless Telecom Group products enable innovation across a wide rangeliabilities of traditionalMicrolab and emerging wireless technologies. With a unique setCommAgility have been reclassified as assets and liabilities of high-performance products including peak power meters, signal analyzers, signal processing modules, LTE physical layer and stack software, power splitters and combiners, GPS repeaters, public safety monitors, noise sources, and programmable noise generators, Wireless Telecom Group supportsdiscontinued operations in the development, testing and deploymentConsolidated Balance Sheet as of wireless technologies around the globe.December 31, 2021.

Key 20192022 Developments and Financial Results

Fiscal 2019 was aIn 2022, the Company disclosed that we were pursuing strategic alternatives in order to maximize value for our shareholders. During the year we completed two divestitures for total proceeds of approximately $35.3 million and repaid all outstanding debt and earnout obligations. As of December 31, 2022, we have approximately $20.7 million in cash. The remaining T&M business generated 57.4% gross margins in fiscal 2022 and ended the year with some disappointments as well as growth oriented investment. Consolidated and segmenta backlog of $6.6 million, which was an increase of $1.1 million from the prior year. T&M revenue declined 1.4% from the prior year due primarily to general economic and global uncertainties which negatively impacted profitability. These declines were drivendelayed capital expenditure decisions by lower high margin software sales and delaysour customers for our products. T&M second half bookings in 2022 increased from the first half of certain large projects expected to be awardedthe year signaling a recovery in spend by our customers resulting in the year. Lower software revenue was caused byhigher backlog.

The Company continues to explore strategic alternatives for the slowdownremaining T&M business. We do not expect to comment further or update the market with any additional information on the process unless and until its Board of 4G software sales which was not offset by the adoption of emerging 5G software and standards. Despite these challenges, the Company invested in future growth and profitability through acquisitions and R&D investments and believes the revenue declines in 2019Directors has approved a specific transaction or otherwise deems disclosure appropriate or necessary. There can be overcome.no assurance that the evaluation of strategic alternatives will result in any strategic alternative transaction, or any assurance as to its outcome or timing.

The decline in Embedded Solutions software and services revenue from prior years represented declines in the Company’s highest margin revenue streams. Further, the Test and Measurement segment experienced a 4.5% revenue decline as large government projects were delayed, but increased segment gross profit margin from 49.4% to 54.0%. The industry in which the Network Solutions segment operates was impacted by highly competitive pricing from offshore vendors as well as a slowdown in large venue projects. The Test 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 pipeline as part of its strategic plan to add complimentary, accretive and profitable businesses and drive growth opportunity through acquisitions. In connection with this, the Company signed a definitive agreement to purchase Holzworth Instrumentation, Inc. in the fourth quarter which closed on February 7, 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, 20192022 and 2018;2021; (ii) Consolidated Statements of Operations and Comprehensive LossIncome/(Loss) for the years ended December 31, 20192022 and 2018;2021; (iii) Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 20192022 and 2018;2021; and (iv) Consolidated Statements of Cash Flows for the years ended December 31, 20192021 and 2018.2020.

Critical Accounting Policies

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.

Discontinued Operations

In accordance with Accounting Standards Codification (“ASC”) 205-20 Discontinued Operations, the results of Microlab and CommAgility are presented as discontinued operations in the Consolidated Statements of Operations and Comprehensive Income/(Loss) and, as such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of Microlab and CommAgility as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of December 31, 2021. The Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations.

The Company evaluated the Microlab and CommAgility divestitures in accordance with ASC 205-20 and determined that both transactions represented a strategic shift, as defined, in the operations of the Company. Microlab and CommAgility were major discrete lines of business focused on RF passive conditioning and LTE software development, respectively. The remaining T&M business is focused on RF test equipment and phase noise analysis.

In accordance with ASC 205-20 no expenses that are expected to continue in the ongoing entity after divestiture are reported within continuing operations.

Revenue Recognition

Effective January 1, 2018 the Company adopted Accounting Standards Update (“ASU”) 2014-09, “RevenueRevenue 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 and noise generators and components in the Test and Measurement segmentour T&M products 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 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 segmentproducts are generally considered a single performance obligation and revenue is recognized as the services are rendered.

Certain software arrangements in the Embedded Solutions segment 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.Leases

Leases

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

Business combinations are accounted underThe 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 onmarket value as of the acquisition date. Goodwill represents the excess of the purchase priceconsideration 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’sthe Company’s valuation and involves making significant estimates and assumptions based on facts and circumstances that existed as of the acquisition date. We useThe 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.

Valuation of Goodwill

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 goodwill balance of $10.1 million is comprised of $1.4 million related to the MicrolabThe Company has one reporting unit and $8.7 million related to the CommAgility reporting unit.with goodwill which is Holzworth. The Company performed aCompany’s qualitative assessment of Holzworth goodwill in the fourth quarter of 2019 of each reporting unit. The qualitative assessment of 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 hardware sales decline, the Company performed a quantitative impairment test of the goodwill of the CommAgility reporting unit.2022 indicated no impairment.

For goodwill impairment testing using the quantitative approach, the Company estimates the fair value of the selected reporting unit 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, and compares the estimated fair value 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 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 our projections used in the discounted cash flow model could affect 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 and compared those values to the carrying value. Based on this sensitivity analysis, the Company did not identify any goodwill impairment. 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 the Company’s consolidated goodwill balance of $9.8 million was comprised of $1.4 million related to the Microlab reporting unit and $8.4 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 and Long-lived Assets

Intangible assets include patents, non-competition agreements,acquired technology, 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 threeten to fivefourteen 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.

Income taxes

The Company records deferred taxes in accordance with ASC 740, “AccountingAccounting for Income Taxes.”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.

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 amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed.

Uncertain tax positions

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, 20192022 and 2018,2021, the Company has identified its federal tax return, and itsthe state tax returnreturns in New Jersey, California and Colorado 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 significant reserves for uncertain income tax positions have been recorded pursuant to ASC 740 during the years ended December 31, 20192022 and 2018,2021, 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.

Stock-based compensation

The Company follows the provisions of ASC 718, “CompensationCompensation - Stock Compensation”Compensation which requires that compensation expense be recognized based on the fair value of the stock awards. The fair value of the stockequity 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 and Inventory Valuation

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.

Allowances for doubtful accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. 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 itsour accounts receivable balance.

Impairment of long-lived assets

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.

Warranties

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 servicelabor costs over the warranty period.

Comparison of the results of operations for the year ended December 31, 20192022 with the year ended December 31, 20182021

Net Revenues (in thousands)

Consolidated net revenues were impactedrevenue decreased from $22.7 million in fiscal year 2021 to $22.4 million in fiscal year 2022 or 1.4% due primarily to general negative economic and global uncertainties which caused delays in capital expenditure decisions by declinesour customers resulting in all three segments. Embedded Solutions revenuelower sales of our products.

Consolidated gross profit decreased 1% 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 yearperiod 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.

Gross Profit (in thousands)

lower revenues. Consolidated gross profit margin in 2019of 57% was flat compared to 2018. Gross profit margin in the Test and Measurement segment increased fromconsistent with 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 absorption of fixed labor and overhead charges. Embedded Solutions gross profit margin declined on product 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.year.

Operating Expenses (in thousands)

Research and development expenses overall increased $1.0 million primarily due to increased expenses in the Embedded Solutions segment. Embedded Solutions segmentConsolidated research and development expenses increased $1.4 millionnominally from the prior year period due primarily for headcount deployment on product roadmap initiatives, specifically the 5G NR product roadmap. Theto an increase in the Embedded Solutions segmentheadcount expenses of approximately $100,000 and an increase in depreciation expense of approximately $20,000 only partially offset by a decrease in third-party research and development expenses of approximately $50,000.

Sales and marketing expenses were flat with the prior year period. External commissions expense increased approximately $190,000 from the prior year due a larger mix of commissionable sales. Higher external commissions expense was offset by a $0.4 million decrease in research and developmentheadcount related expenses in the Network Solutions and Test and Measurement segments due to headcount reductions and lower third party spend.

Sales and marketing expenses increased $0.1 million primarily due to increased headcount in the Test and Measurement and Network Solutions segments offset by lower commission expense in the Embedded Solutions segment due to lower volumes.sales headcount of approximately $113,000 and a decrease in third-party marketing spend of approximately $40,000.

General and administrative expenses decreased $0.1 millionincreased $562,000 from the prior year due primarily to an increase in non-cash stock compensation expense of $700,000 due to lower bonus,restricted share awards to employees in fiscal year 2022 and an increase in non-recurring expenses of $200,000 associated with our strategic alternatives process. These increases were offset by various administrative expense reductions of approximately $300,000 in the following areas: third party legal and stock compensationaccounting expenses, offset by higher mergersinvestor relations, market research and acquisitions expenses.consulting expenses and banking fees.

The loss on change in contingent consideration in 2021 relates to an adjustment to the Holzworth earnout liability. The Holzworth earnout liability was fully paid as of December 31, 2022.

(Loss)/Gain on Extinguishment of Debt

In 20182022, the Company recorded a loss on change in fair value of contingent consideration of $0.6 million as our estimateextinguishment of the earn-out paymentMuzinich term loan of $792,000 primarily related to the CommAgility acquisition was increased from our original estimatewrite off of deferred financing fees. In 2021, the Company recorded at the time of acquisition due to the then improved financial resultsa $2.0 million gain on extinguishment of the business. The contingent consideration paymentPayroll Protection Program loan after we received notice that our loan was made in Q1 2019.fully forgiven.

In early fiscal 2020, the Company undertook restructuring actions and cost and expense reductions across all 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.

Other income/expense

Other income increased $304,000 from the prior year due primarily to sublease income related to the sublease of approximately 50% of our Parsippany, NJ location to RF Industries.

Other expenses

Interest Expense

Interest expense decreased $0.1$1.1 million due primarily to the termination of the Muzinich term loan on March 1, 2022 concurrent with the Microlab divestiture.

Tax

Tax benefit increased $177,000 from the prior year due to a higher taxable loss from the prior year.

Net (Loss) from Continuing Operations

Net loss from continuing operations increased $1.8 million due to lower foreign exchange unrealized and realized losses on transactions denominated in currencies other than our functional currencies.

Interest Expense

Interest expense decreased $0.3 million primarily due togross profit caused by lower interest expense related to the CommAgility contingent consideration liability as final payment was made in March 2019.

Tax

The Company recorded a tax benefit in fiscal 2019 of $1.4 millionrevenues, higher operating expenses due primarily to a net taxable loss in the U.K. driven by deductible researchstock based compensation expense and development expenses as compared to a tax expense in fiscal 2018 of $48,000 due to deferred federal taxes in the U.S. offset by current and deferred tax benefits related to our strategic alternatives process and the U.K.

Net Loss

The Company recorded a net loss in the amounton extinguishment of $0.4 million in fiscal 2019 as compared to net income of $35,000 in fiscal 2018 due to lower consolidated gross profit and higher operating expensesour debt. This was only partially offset by lower consolidated interest expense and the recognition of a tax benefit.

Liquidity and Capital Resources

As disclosed in Note 4 to the Consolidated Financial Statements, on February 16, 2017 the Company entered into a Credit Facility which provided for a term loan in the aggregate principal amount of $0.8 million (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 million. 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, in connection with the Holzworth acquisition, the Company entered into Amendment No. 5 to the Credit Facility which, inter alia, extended the Revolver maturity date to March 31, 2023. Additionally, the Company prepaid the remaining principal balance of Term Loan in the amount of $0.3 million.

As of December 31, 2019 the Company had consolidated net cash (consolidated cash and cash equivalents less consolidated debt outstanding) of $1.5 million as compared to net cash of $3.0 million 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 and the payment of deferred purchase price and contingent consideration in the first quarter of 2019 related to the CommAgility acquisition offset by lower working capital and lower capital expenditures as compared to the prior year. Asyear and a higher tax benefit.

Net Income from Discontinued Operations, net of tax

Net income from discontinued operations, net of tax in fiscal 2021 represents the net income of Microlab of $3.4 million and net loss of CommAgility of $(1.2) million.

Net income from discontinued operations, net of tax in fiscal 2022, represents the results of Microlab and CommAgility during the period of ownership in 2022 as well as the gain recognized on sale of each business. Microlab’s net income during 2022 was $158,000 and CommAgility’s net loss was $3.2 million. The Company recognized a gain on sale of Microlab of $16.5 million and a gain on sale of CommAgility of $6.3 million. The combined net income from discontinued operations was offset by a tax provision related to discontinued operations of $2.7 million.

Liquidity and Capital Resources

On December 31, 2019, substantially all of our cash and cash equivalents are held outside the United States. As 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, and the date hereof,16, 2021, the Company is in complianceand its wholly owned subsidiary Microlab entered into the Microlab Purchase Agreement with the covenantsRF Industries, whereby RF Industries agreed to purchase 100% 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 such 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.

Operating Activities

Cash provided by operating activities was $80,000membership interests in Microlab 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 of deferred purchase price of $24,250,000, subject to certain adjustments as set forth in the Microlab Purchase Agreement. The board of directors of each of the Company and 2018 bonuses, which are reflected asRF Industries unanimously approved the Microlab Transaction. On February 25, 2022, the shareholders of the Company approved the Microlab Transaction at a decreaseSpecial Meeting of Shareholders held virtually via live webcast and on March 1, 2022, the Microlab Transaction closed.

At closing the Company received approximately $22.8 million in accrued expensesproceeds net of indemnification and other current liabilities offset by cash generated from working capital.

Investing Activities

Cash used by investing activities was $0.8 million for the year ended December 31, 2019 and was primarily comprised of cash used for capital expenditures of $0.4 million and payment of deferred purchase price adjustment holdbacks of $150,000 and $100,000, respectively, and direct expenses of approximately $1.1 million including fees to our advisors. In July 2022, the Company received $225,000 in final purchase price adjustments primarily related to the CommAgility acquisitionworking capital adjustment and on March 1, 2023 the Company received the indemnification holdback amount of $0.4 million. For$150,000. In total the year ended December 31, 2018 cash used by investing activities was $1.7Company received net proceeds of approximately $23.1 million and was primarily related to cashthe Microlab Transaction. In March 2022 the Company used $4.2 million of the Microlab Transaction proceeds to repay in full our outstanding term loan with Muzinich BDC and approximately $600,000 was used to repay in full our outstanding revolver balance related to the Bank of America credit agreement. The Company terminated both the Muzinich term loan and Bank of America credit facility as of the Microlab Transaction date.

On May 30, 2022, the Company repaid the previously outstanding Coronavirus Business Interruption Loan Agreement (“CIBLS Loan”) with Lloyds Bank PLC (“Lloyds”) in the amount of £250,000.

On December 4, 2022, the Company, and Holdings entered into the CommAgility Purchase Agreement with E-Space, and eSpace Inc., a Delaware corporation, as guarantor. The CommAgility Purchase Agreement provided for the paymentpurchase by the Buyer of 100% of the Securities from the Company. The board of directors or other governing body of each of the Company and the Buyer has unanimously approved the CommAgility Transaction. Under the terms of the CommAgility deferred purchase price of $0.8 million and capital expenditures of $0.9 million.

Financing Activities

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 by Term Loan principal payments of $0.2 million.

New Term Loan Facility and Amended Credit Facility

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 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 ofPurchase Agreement, the purchase price for the Holzworth acquisition. Principal paymentsSecurities was estimated to be approximately $14.5 million, inclusive of $13.8 million in cash consideration and a $750,000 note payable, subject to agreed-upon reductions of $650,000.

The CommAgility Transaction closed on December 30, 2022 and 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 floorCompany received net proceeds of 1.0%) plus a margin of 7.25%. The Term Loan Facility includes an upfront fee of 2.50%$12.2 million which is comprised of the aggregate principal amountcash consideration of $13.8 million less direct expenses of approximately $1.6 million. The note payable of $750,000 has been offset by agreed-upon reductions of $650,000 for a net balance of approximately $100,000 which is due one year from the transaction close or upon a change in control as defined in the CommAgility Purchase Agreement. The note receivable balance of $100,000 has been further offset by the 2023 UK transaction taxes of approximately $69,000 and the expected net proceeds of the Initial Term Loan.note is approximately $31,000.

The Company may prepay the Initial Term Loan at any time. Prepayments made prior to (a) February 7, 2022 are subject to a prepayment premiumCommAgility Transaction and Microlab Transaction resulted 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 thenet proceeds of certain asset dispositions, insurance recoveries and extraordinary receipts, subject to specified reinvestment rights. The Company is also required to make prepaymentsapproximately $35.3 million in 2022. As 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 whichDecember 31, 2022, the Company has entered into a confidential, non-binding letter-of-intent (the “Additional Acquisition”). There can becash balance of $20.7 million with 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 acceptable replacements 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.

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 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 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 a closing fee in the amount of $25,000. The Borrowers satisfied all such conditions on February 7, 2020.

Any exercise of remedies by Bank of America, N.A. under the Credit Facility is subject to compliance with the intercreditor agreement entered into at the closing of Amendment No. 5 among the Company, Muzinich, as lender under the Term Loan Facility, and Bank of America, N.A.

The Company expects to realize tax benefits in future periods due to the available net 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 the utilization of operating loss carryforwards and as a result will increase the Company’s liquidity as cash needed to pay federal and state income taxes will be substantially reduced. Additionally, CommAgility benefits from a research and development deduction which significantly reduces the cash needed to pay taxes in the UK.

The Company may pursue strategic opportunities, including potential acquisitions, mergers, divestitures or other activities, which may require significant use of the Company’s capital resources. The Company may incur costs as a result of such activities and such activities may affect the Company’s liquidity in future periods. In order to fund such activities, the Company may need to incur additional debt or issue additional securities if market conditions are favorable. However, there can be no certainty that such funding will be available in needed quantities on terms favorable to the Company or at all.

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 the Company to issue and sell, from time to time, up to $40 million in aggregate value of 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 the intended use of the net proceeds resulting therefrom, will be established at the times of the offerings and will be described in prospectus supplements filed with the SEC at the times of the offerings. The shelf registration statement is intended to provide financial flexibility to access capital in a competitive and expeditious manner when market conditions are appropriate.

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.

earnout liabilities. 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.

The Microlab 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 and will result in a net taxable gain. The CommAgility Transaction will be treated as a sale of stock for U.S. federal and applicable state income tax purposes and will result in a net taxable loss. We will utilize approximately $9.8 million of our federal net operating loss carryforwards and approximately $8.0 million of our New Jersey state net operating loss carryforwards to offset the net taxable gain generated from the 2022 divestitures. As of December 31, 2022, after utilization of the net operating loss carryforwards, the Company has $5.2 million in U.S. federal net operating loss carryforwards and $33.3 million in New Jersey state net operating loss carryforwards.

The Company currently is pursuing possible strategic opportunities, including potential divestitures, acquisitions, mergers, or other activities, which may require significant use of the Company’s capital resources. The Company may incur costs as a result of such activities and such activities may affect the Company’s liquidity in future periods.

Sources and Uses of Cash

As of December 31, 2022, the Company’s consolidated cash balance was $20.7 million as compared to $4.5 million as of the prior year.

Our primary sources of cash were net proceeds of the Microlab Transaction and CommAgility Transaction which generated an aggregate amount of $35.3 million. Our primary uses of cash were the repayment of the Muzinich term loan of $4.4 million, acquisition of treasury stock of $2.5 million and final payment of contingent consideration and deferred purchase price related to the Holzworth acquisition $3.2 million, of which $1.4 million is classified within financing activities on the consolidated cash flow statement, $250,000 is classified within investing activities and $1.6 million is classified within operating activities. Additionally, working capital increased approximately $5.6 million due to higher accounts receivable related to timing of shipments at the end of the year, higher inventory balances to mitigate long lead times caused by supply chain disruption and estimated U.S. federal and state tax payments made during the year.

Operating Activities

Cash used by operating activities was $9.7 million in fiscal year 2022 as compared to cash provided by operating activities of $4.6 million in fiscal year 2021. The cash usage in fiscal year 2022 was due primarily to an increase in working capital due to higher accounts receivable caused by timing of shipments at the end of the year, higher inventory balances caused by higher levels of safety stock to mitigate long lead times, estimated U.S. federal and state tax payments made in fiscal year 2022 of approximately $900,000 and the Holzworth earnout payment of $1.6 million which is classified in operating activities.

Investing Activities

Cash provided by investing activities was $34.3 million in fiscal year 2022 due primarily to net cash proceeds of $35.3 million from the Microlab Transaction and CommAgility Transaction.

Financing Activities

Cash used by financing activities increased from $4.2 million in the prior year to $8.2 million in fiscal year 2022 due primarily to repurchases of our common stock of $2.5 million and final payment of the Holzworth earnout liability of $1.4 million.

Holzworth Deferred Purchase Price and Earnout

As of December 31, 2022 the Company had paid the final earnout and deferred purchase price liabilities related to the Holzworth acquisition. There are no remaining purchase price liabilities.

On August 27, 2018, the Company filed a shelf registration statement on Form S-3 which was declared effective on September 17, 2018. On July 21, 2021, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”) to issue and sell through the Agent, shares of the Company’s common stock, par value $0.01 per share, having an aggregate offering price of up to $12,000.000 (the “Shares”), as described in Note 5 – Equity. From July 21, 2021 through August 6, 2021, the Agent sold 254,701 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 $560,000 after deducting direct legal and accounting fees associated with the offering. The shelf registration statement expired on September 17, 2021 and was not renewed by the Company.

Purchase obligations consist of inventory that arises in the normal course of business operations. Future obligations and commitments as of December 31, 20192022 consisted of the following:

Table of Contractual Obligations

Payments by year(in (in thousands)

Off-Balance Sheet Arrangements

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

Effects of Inflation and Changing Prices

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

Recent Accounting Pronouncements Affecting the Company

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

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8.Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Wireless Telecom Group, Inc.

To the Board of Directors and Shareholders

Wireless Telecom Group, Inc.

Parsippany, NJ

Opinion on 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, 20192022 and 2018, and2021, 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, 2019,2022, 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, 20192022 and 2018,2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019,2022, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

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

Basis for Opinion

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.

Critical Audit Matter

The critical audit matter communicated below is a matter 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 a critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Discontinued operations – Refer to Note 2 to the financial statements

During the first quarter of 2022, the Company completed the divestiture of the Radio Frequency Components (“RFC”) Business and recorded a gain from divesture, net of expenses of $16.5 million. During the fourth quarter of 2022, the Company completed the divestiture of the Radio, Baseband and Software (“RBS”) Business and recorded a gain of divestiture, net of expenses of $6.3 million. At the time, management determined that each of the proposed sales met the criteria for the RFC and RBS Businesses to have balances on the December 31, 2021 balance sheet classified as held for sale and the results of operations as discontinued operations for all periods presented in accordance with Accounting Standards Codification 205-20 Discontinued Operations (“ASC 205-20”). The gains recorded on the sales of these businesses resulted in significant tax consequences across multiple jurisdictions.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Wireless Telecom Group, Inc.

We identified discontinued operations as a critical audit matter because of (1) the level of operational and financial integration between the RFC Business and the continuing operations of the Company; (2) the segregations of certain assets and liabilities of the RFC Business before the divestiture and the identification of the results of operations thereon; (3) the complexity of the calculation of the gains and resulting income tax expense for the RFC and RBS Businesses. These matters required significant audit effort to assess, and a high degree of auditor judgement, including the need to involve our income tax specialists, when performing audit procedures to evaluate the income tax expense from discontinued operations.

Our audit procedures related to management’s determination of the gain on sale and resulting income tax expense included the following, among others:

/s/ PKF O’Connor Davies, LLP

New York, New York

March 23, 2023

We have served as the Company’s auditor since 2006.

* * * * *

New York, New York

March 19, 2020

CONSOLIDATED BALANCE SHEETS

Wireless Telecom Group, Inc.

(In thousands, except number of shares and par value)

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

Wireless Telecom Group, Inc.

(In thousands, except per share amounts)