☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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 ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date 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 such files). Yes☒ No ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of May ~~9, 2022,~~4, 2023, the registrant had ~~18,557,006~~19,083,075 shares of common stock, $0.001 par value per share, outstanding.



	March 31,			December 31,			March 31,			December 31,
	2022			2021			2023			2022
ASSETS
Cash and cash equivalents	$	5,107		$	8,192		$	8,717		$	7,736
Short-term investment securities		22,569			22,562			21,570			22,254
Accounts receivable, net of allowances of $49 and $64 at March 31, 2022 and
December 31, 2021, respectively		17,329			18,905
Accounts receivable, net of allowances of $135 and $132 at March 31, 2023 and
December 31, 2022, respectively								15,531			18,853
Inventories, net		12,852			13,691			17,626			18,918
Prepaid expenses and other assets		1,956			1,747			1,594			1,861
Total current assets		59,813			65,097			65,038			69,622

Property and equipment, net		11,490			11,949			9,819			10,004
Goodwill		6,220			6,334			5,946			5,935
Intangible assets, net		1,429			1,579			968			1,045
Other noncurrent assets		2,346			2,438			3,085			3,269
TOTAL ASSETS	$	81,298		$	87,397		$	84,856		$	89,875
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	4,013		$	5,360		$	3,520		$	4,648
Accrued liabilities		8,953			11,117			9,002			12,605
Total current liabilities		12,966			16,477			12,522			17,253
Long-term liabilities		3,820			3,999			3,431			3,624
Total liabilities		16,786			20,476			15,953			20,877
Stockholders’ equity:
Common stock, $0.001 par value, 50,000,000 shares authorized at
March 31, 2022 and December 31, 2021, respectively, and 18,453,698 and 18,238,030
shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		18			18
Common stock, $0.001 par value, 50,000,000 shares authorized at
March 31, 2023 and December 31, 2022, and 18,982,847 and 18,748,529
shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively								19			19
Additional paid-in capital		123,379			123,998			127,938			128,370
Accumulated deficit		(58,299	)		(56,735	)		(57,647	)		(57,941	)
Accumulated other comprehensive loss		(586	)		(360	)		(1,407	)		(1,450	)
Total stockholders’ equity		64,512			66,921			68,903			68,998
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	81,298		$	87,397		$	84,856		$	89,875

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



	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2022			2021			2023		2022

REVENUES	$	22,542		$	17,707		$	22,973	$	22,542
COST OF REVENUES		13,209			9,369			11,441		13,209
GROSS PROFIT		9,333			8,338			11,532		9,333
OPERATING EXPENSES:
Research and development		3,250			3,194			2,984		3,250
Sales and marketing		3,402			2,763			3,562		3,402
General and administrative		3,242			3,076			3,605		3,242
Amortization of intangible assets		71			0			63		71
Restructuring expenses		935			0			0		935
Total operating expenses		10,900			9,033			10,214		10,900
OPERATING LOSS		(1,567	)		(695	)
OPERATING INCOME (LOSS)								1,318		(1,567	)
Other income, net		11			39			220		11
LOSS BEFORE INCOME TAXES		(1,556	)		(656	)
INCOME (LOSS) BEFORE INCOME TAXES								1,538		(1,556	)
Expense for income taxes		8			6			214		8
NET LOSS	$	(1,564	)	$	(662	)
NET INCOME (LOSS)							$	1,324	$	(1,564	)

Net Loss per Share:
Net Income (Loss) per Share:
Basic	$	(0.09	)	$	(0.04	)	$	0.07	$	(0.09	)
Diluted	$	(0.09	)	$	(0.04	)	$	0.07	$	(0.09	)

Weighted Average Shares:
Basic		17,972			18,070			18,367		17,972
Diluted		17,972			18,070			18,428		17,972

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~LOSS~~INCOME (LOSS) (unaudited)

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


									Accumulated			Total											Accumulated			Total
			Additional						Other			Stockholders'					Additional						Other			Stockholders'
	Common		Paid-In			Accumulated			Comprehensive			Equity of			Common		Paid-In			Accumulated			Comprehensive			Equity of
	Stock		Capital			Deficit			Income (Loss)			PCTEL, Inc.			Stock		Capital			Deficit			Loss			PCTEL, Inc.


BALANCE at DECEMBER 31, 2022															$	19	$	128,370		$	(57,941	)	$	(1,450	)	$	68,998
Stock-based compensation expense																0		278			0			0			278
Cancellation of shares for payment of withholding tax																0		(710	)		0			0			(710	)
Dividends paid ($0.22 per share)																0		0			(1,030	)		0			(1,030	)
Net income																0		0			1,324			0			1,324
Change in cumulative translation adjustment, net																0		0			0			43			43
BALANCE at MARCH 31, 2023															$	19	$	127,938		$	(57,647	)	$	(1,407	)	$	68,903

BALANCE at DECEMBER 31, 2021	$	18	$	123,998		$	(56,735	)	$	(360	)	$	66,921		$	18	$	123,998		$	(56,735	)	$	(360	)	$	66,921
Stock-based compensation expense		0		774			0			0			774			0		774			0			0			774
Cancellation of shares for payment of withholding tax		0		(392	)		0			0			(392	)		0		(392	)		0			0			(392	)
Dividends paid ($0.055 per share)		0		(1,001	)		0			0			(1,001	)
Dividends paid ($0.22 per share)																0		(1,001	)		0			0			(1,001	)
Net loss		0		0			(1,564	)		0			(1,564	)		0		0			(1,564	)		0			(1,564	)
Change in cumulative translation adjustment, net		0		0			0			(226	)		(226	)		0		0			0			(226	)		(226	)
BALANCE at MARCH 31, 2022	$	18	$	123,379		$	(58,299	)	$	(586	)	$	64,512		$	18	$	123,379		$	(58,299	)	$	(586	)	$	64,512

BALANCE at DECEMBER 31, 2020	$	18	$	128,250		$	(56,888	)	$	18		$	71,398
Stock-based compensation expense		1		617			0			0			618
Issuance of shares for stock purchase plans and stock options		0		8			0			0			8
Cancellation of shares for payment of withholding tax		0		(659	)		0			0			(659	)
Repurchase of common stock		0		(31	)		0			0			(31	)
Dividends paid ($0.055 per share)		0		(1,011	)		0			0			(1,011	)
Net loss		0		0			(662	)		0			(662	)
Change in cumulative translation adjustment, net		0		0			0			(16	)		(16	)
BALANCE at MARCH 31, 2021	$	19	$	127,174		$	(57,550	)	$	2		$	69,645

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


	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023			2022

Operating Activities:
Net loss	$	(1,564	)	$	(662	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net income (loss)							$	1,324		$	(1,564	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		781			742			548			781
Intangible asset amortization		91			0			81			91
Stock-based compensation		774			618			278			774
Loss on disposal of property and equipment		0			3			26			0
Restructuring costs		(368	)		(15	)		0			(368	)
Bad debt provision		(3	)		(11	)		14			(3	)
Changes in operating assets and liabilities:
Accounts receivable		1,530			1,999			3,315			1,530
Inventories		772			259			1,297			772
Prepaid expenses and other assets		(145	)		215			361			(145	)
Deferred tax assets								80			0
Accounts payable		(1,299	)		(2,061	)		(1,117	)		(1,299	)
Income taxes payable		41			6			134			41
Other accrued liabilities		(2,027	)		554			(3,940	)		(2,027	)
Deferred revenue		87			7			18			87
Net cash (used in) provided by operating activities		(1,330	)		1,654
Net cash provided by (used in) operating activities								2,419			(1,330	)
Investing Activities:
Capital expenditures		(320	)		(354	)		(389	)		(320	)
Purchase of short-term investments		(8,194	)		(5,953	)		(6,660	)		(8,194	)
Redemptions/maturities of short-term investments		8,187			13,407			7,344			8,187
Net cash (used in) provided by investing activities		(327	)		7,100
Net cash provided by (used in) investing activities								295			(327	)
Financing Activities:
Proceeds from issuance of common stock		0			8
Payment of withholding tax on stock-based compensation		(392	)		(659	)		(710	)		(392	)
Principal payments on finance leases		(19	)		(16	)		(14	)		(19	)
Purchase of common stock from repurchase program		0			(31	)
Cash dividends		(1,001	)		(1,011	)		(1,030	)		(1,001	)
Net cash used in financing activities		(1,412	)		(1,709	)		(1,754	)		(1,412	)

Net (decrease) increase in cash and cash equivalents		(3,069	)		7,045
Net increase (decrease) in cash and cash equivalents								960			(3,069	)
Effect of exchange rate changes on cash		(16	)		(10	)		21			(16	)
Cash and cash equivalents, beginning of period		8,192			5,761			7,736			8,192
Cash and Cash Equivalents, End of Period	$	5,107		$	12,796		$	8,717		$	5,107

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

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 831): Disclosures by Business Entities about Government Assistance. This Update, which aims to increase transparency of government assistance, requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model. Under this ASU, an entity is required to disclose (1) the types of assistance, (2) an entity’s accounting for assistance, and (3) the effect of the assistance on an entity’s financial statements. This Update is effective for all entities within their scope for financial statements issued for annual periods beginning after December 15, 2021. Early adoption is permitted. The Company evaluated the effect of adoption of the update and concluded it does not have an impact on the consolidated financial statements or the related disclosures.

2. Fair Value of Financial Instruments

The Company follows accounting guidance for fair value measurements and disclosures, which establishes a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

Level 1: inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities.

Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Cash equivalents are measured at fair value and investments are recognized at amortized cost in the Company’s financial statements. Accounts receivable is a financial asset with a carrying value that approximates fair value due to the short-term nature of these assets. Accounts payable, accrued employee compensation and certain operating liabilities are financial liabilities with a carrying value that approximates fair value due to the short-term nature of these liabilities.

The following table is the computation of basic and diluted income per share:


	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023		2022
Basic Income Per Share computation:
Numerator:
Net loss	$	(1,564	)	$	(662	)
Net income (loss)							$	1,324	$	(1,564	)
Denominator:
Weighted shares outstanding - basic		17,971,851			18,069,836			18,366,614		17,971,851

Net loss per common share - basic	$	(0.09	)	$	(0.04	)
Net income (loss) per common share - basic							$	0.07	$	(0.09	)
Diluted Income Per Share computation:
Denominator:
Weighted shares outstanding - basic		17,971,851			18,069,836			18,366,614		17,971,851
Restricted shares subject to vesting		0			0			61,429		0
Common stock option grants								19		0
Weighted shares outstanding - diluted		17,971,851			18,069,836			18,428,062		17,971,851

Net loss per common share - diluted	$	(0.09	)	$	(0.04	)
Net income (loss) per common share - diluted							$	0.07	$	(0.09	)

On April 30, 2021, the Company acquired all the outstanding stock of Smarteq, a Swedish company based in Kista, Sweden, that designs antennas for specialized Industrial IoT and vehicular applications, pursuant to a Share Sale and Purchase Agreement (the “SPA”) between PCTEL and Allgon Aktiebolag, a Swedish company and holder of the outstanding stock of Smarteq. Smarteq owns all the outstanding stock of SAS Smarteq France (“Smarteq France”), which engages in sales of Smarteq products.

Pursuant to the SPA, the Company acquired Smarteq for a cash purchase price consisting of SEK 53.0 million plus working capital adjustments of SEK 1.6 million and an adjustment for the net cash at closing of SEK 2.1 million for total cash consideration of SEK 56.8 million ($6.8 million), all of which was provided from PCTEL’s existing cash. The Company believes the acquisition of Smarteq will provide a strong local presence, expertise, and channel partners to accelerate revenue growth in Europe, as well as a complementary portfolio of products. The results for Smarteq are combined with the Company’s antenna and Industrial IoT device product line. The Company applied the provisions of Accounting Standards Codification (“ASC”) 805, Business Combinations, in accounting for its acquisitions. It requires the Company to recognize separately from goodwill the assets acquired, and the liabilities assumed, at the acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the acquisition date fair values of the net assets acquired and the liabilities assumed. The Company used its best estimates and assumptions where applicable to accurately value assets acquired and liabilities assumed at the acquisition date. The operating results of the acquired business are included in the Company’s Consolidated Financial Statements from the date of the acquisition.

~~The following table summarizes the fair value of purchase consideration to acquire Smarteq:~~

~~The Company acquired all of the assets and liabilities of Smarteq, including cash of $0.5 million and debt of $0.1 million.~~

The following is an allocation of the purchase price as of the April 30, 2021 closing date based upon an estimate of the fair value of the assets acquired and liabilities assumed by the Company in the acquisition:

~~The following is a summary of identifiable intangible assets acquired and the related expected lives for the finite-lived intangible assets:~~

The Company prepared the purchase price allocation for the acquired Smarteq assets and in doing so utilized reports of a third-party valuation expert to calculate the fair value of the identifiable intangible assets. Estimates of fair value required management to make significant estimates and assumptions. The goodwill recognized is attributable primarily to the acquired workforce, expected synergies, and other benefits that the Company believes will result from integrating the Smarteq operations with the operations of the Company.

The fair value of the customer relationships was determined using the multi-period excess earnings method (“MPEEM”). MPEEM estimates the value of an intangible asset by quantifying the amount of residual (or excess) cash flows generated by the future customer cash flows, and discounting those cash flows to the present value. Future cash flows for customers were estimated based on forecasted revenue and costs, taking into account the growth rates, customer attrition, and contributory charges. The fair value of the customer backlog was calculated using the present value of the cash flows associated with the acquired backlog.

The fair values of the trade names, developed technology, and exclusive rights were determined using the relief-from-royalty method. The relief-from-royalty method is a specific application of the discounted-cash-flow method, which is a form of the income approach. It is based on the principle that ownership of the intangible asset relieves the owner of the need to pay a royalty to another party in exchange for rights to use the asset. Key assumptions to estimate the hypothetical royalty rate include observable royalty rates, which are royalty rates in negotiated licenses and market-based royalty rates which are royalty rates found in available market data for licenses involving similar assets.

The fair value of covenants not to compete was estimated using the with-or-without method. The with-and-without method estimates the value of an intangible asset by quantifying the loss of economic profits under a hypothetical condition where only the subject intangible does not exist and needs to be re-created. Projected revenues, operating expenses and cash flows are calculated in each "with" and "without" scenario and the difference in the cash flow is discounted to present value.

Inventory was valued at net realizable value. Raw materials were valued at book value and finished goods were valued assuming hypothetical revenues from finished goods adjusted for disposal costs, profit attributable to the seller and holding costs. An inventory step-up to fair value of $0.5 million was included in the purchase price allocation above. The inventory step-up was calculated based on the net realizable value, on a part-by-part basis, of the inventory on the opening balance sheet. The amortization of the inventory step-up was recorded based on the consumption of those parts and was fully recognized ~~during the period from the acquisition date through December 31, 2021.~~

The Company assumed gross accounts receivable of $1.4 million. Based on Smarteq’s bad debt experience and a review of the receivables, the Company did not record material reserves for collection issues.

The Company assumed liabilities in the Smarteq acquisition that primarily consist of accounts payable, accrued employee compensation and certain operating liabilities. The fair value of the liabilities assumed was valued at their cash settlement value.

As part of the acquisition of Smarteq on April 30, 2021, the Company assumed an office lease. The office in Kista, Sweden has 4,080 square feet used for engineering, sales, and administration and the lease term is through July 31, 2023. On the acquisition date, the Company recorded $0.2 million for each of the right-of-use assets and the lease liabilities.

~~The Company assumed Smarteq France’s~~ ~~five-year~~ loan of approximately $0.1 million with an interest rate of 0.57%. The loan was part of a program from the French Ministry of Economy and Finance to support for French businesses during the COVID-19 pandemic. The loan is denominated in Euros. Payment of the interest and principal on the loan are deferred until June 2022 and the loan term ends in ~~May 2026~~.

The Company recorded net deferred tax assets of $2.4 million, primarily relating to deferred tax assets for net operating losses. The Company also booked a deferred tax asset for inventory reserves and deferred tax liabilities related to intangible asset amortization that is not deductible for income taxes. While the Company expected book and tax profits in 2021 and future periods, Smarteq had recorded a three-year cumulative tax loss. Based on this objective evidence and based on uncertainty associated with the COVID-19 pandemic the Company recorded a full valuation allowance on the opening balance sheet.

Goodwill recorded in connection with the acquisition was $3.2 million. The Company does not expect to deduct any of the acquired goodwill for tax purposes. The Company recorded $0.3 million of transaction costs during the second quarter of 2021 in general and administrative expenses in the consolidated statements of operations. The transaction costs will not be deductible for income tax purposes.

~~Supplemental pro forma financial information~~

~~The following unaudited pro forma financial information presents the combined results of operations for each of the periods presented as if the Smarteq acquisition had occurred as of January 1, 2021:~~

Three Months Ended March 31,

2022

2021

Net Revenue - pro forma combined

$
22,542

$
19,564

Net Loss - pro forma combined

(1,478
)

(856
)
Weighted Average Shares:

Basic

17,972

18,070

Diluted

17,972

18,070

Net Loss per Share:

Basic

$
(0.08
)

$
(0.05
)
Diluted

$
(0.08
)

$
(0.05
)

~~The following adjustments were included in the unaudited pro forma combined net revenues:~~

Three Months Ended March 31,

2021

Net Revenue

$
17,707

Add: Net Revenue - acquired business

1,857

Net Revenue - pro forma combined

$
19,564

~~The following adjustments were included in the unaudited pro forma combined net loss:~~

Three Months Ended March 31,

2022

2021

Net Loss

$
(1,564
)

$
(662
)
Add: Results of operations of acquired business

0

$
95

Less: pro forma adjustments

Amortization of intangibles

0

(32
)
Inventory fair value adjustments

0

(250
)
Acquisition related expenses

86

0

Interest income

0

(7
)
Net Loss - pro forma combined

$
(1,478
)

$
(856
)

The unaudited pro forma financial information has been adjusted to reflect the amortization expense for acquired intangibles, removal of historical intangible asset amortization and recognition of expense associated with the step-up of inventory.

The pro forma data is presented for illustrative purposes only, and the historical results of Smarteq are based on its books and records prior to the acquisition and are not necessarily indicative of the consolidated results of operations of the combined business had the acquisition actually occurred as of January 1, 2021. In addition, future results may vary significantly from the pro forma results reflected herein and should not be relied upon as an indication of the results of future operations of the combined business. The unaudited pro forma financial information does not reflect any operating efficiencies and cost savings that may be realized from the integration of the acquired entity.

5.4. Cash, Cash Equivalents and Investments

The Company’s cash, cash equivalents, and investments consisted of the following:


	March 31,		December 31,		March 31,		December 31,
	2022		2021		2023		2022
Cash	$	3,905	$	6,789	$	6,704	$	5,780
Cash equivalents		1,202		1,403		2,013		1,956
Short-term investments		22,569		22,562		21,570		22,254
Total	$	27,676	$	30,754	$	30,287	$	29,990

Cash and Cash Equivalents

At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, cash and cash equivalents included bank balances and investments with original maturities of less than 90 days. At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company’s cash equivalents were invested in highly liquid AAA rated money market funds that are required to comply with Rule 2a-7 of the Investment Company Act of 1940. Such funds utilize the amortized cost method of accounting, seek to maintain a constant ~~$1.00~~$1.00 per share price, and are redeemable upon demand. The Company restricts its investments in AAA money market funds to those invested ~~100%~~100% in either short-term U.S. government agency securities or bank repurchase agreements collateralized by these same securities. The fair values of these money market funds are established through quoted prices in active markets for identical assets (Level 1 inputs). The Company’s cash in U.S. banks is insured by the Federal Deposit Insurance Corporation up to the insurable limit of ~~$250.~~

$250.

The cash in foreign accounts was as follows:


	March 31,		December 31,		March 31,		December 31,
	2022		2021		2023		2022
China	$	2,282	$	2,801	$	2,739	$	2,672
Europe		904		1,108
Sweden						1,843		1,868
Total	$	3,186	$	3,909	$	4,582	$	4,540

As of March 31, ~~2022,~~2023, the Company has no intention of repatriating the cash in its foreign bank accounts. If the Company decides to repatriate the cash in the foreign bank accounts, it may have trouble doing so in a timely manner. The Company may also be exposed to foreign currency fluctuations and taxes if it repatriates these funds.

At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company’s investments consisted of corporate bonds with ratings at the purchase date of A or higher and certificates of deposit. All the investments at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 were classified as held-to-maturity. The bonds and certificates of deposit classified as short-term investments have original maturities greater than 90 days and mature within one year and the bonds and certificates of deposit classified as long-term investments have maturities greater than one year but less than two ~~years.~~years. The Company’s bond investments are recorded at the purchase price and carried at amortized cost.

Under ASU 2016-13, the Company classifies its held-to-maturity investment portfolio by the investment type and further classifies the corporate bonds by the bond ratings. ~~For estimating~~The Company determined that reserves for potential credit losses were not necessary at March 31, 2023 and December 31, 2022. For its review, the Company ~~considers the~~considered historical loss data, ~~the~~ bond ratings, ~~as well as~~and current and future economic conditions.

Cash equivalents and investments were as follows at March 31, ~~2022~~ 2023 and December 31, ~~2021:~~2022:


	March 31, 2022								December 31, 2021								March 31, 2023								December 31, 2022
	Level 1		Level 2			Total			Level 1		Level 2			Total			Level 1		Level 2			Total			Level 1		Level 2			Total
Cash equivalents:
Money market funds	$	1,202	$	0		$	1,202		$	1,403	$	0		$	1,403		$	2,013	$	0		$	2,013		$	1,956	$	0		$	1,956
Total Cash Equivalents	$	1,202	$	0		$	1,202		$	1,403	$	0		$	1,403		$	2,013	$	0		$	2,013		$	1,956	$	0		$	1,956
Short-Term Investments:
Corporate bonds	$	0	$	19,916		$	19,916		$	0	$	19,659		$	19,659		$	0	$	19,485		$	19,485		$	0	$	21,145		$	21,145
Certificates of deposit		2,653		0			2,653			2,903		0			2,903			2,085		0			2,085			1,109		0			1,109
Total Short-Term Investments	$	2,653	$	19,916		$	22,569		$	2,903	$	19,659		$	22,562		$	2,085	$	19,485		$	21,570		$	1,109	$	21,145		$	22,254
Cash equivalents and Investments - book value	$	3,855	$	19,916		$	23,771		$	4,306	$	19,659		$	23,965		$	4,098	$	19,485		$	23,583		$	3,065	$	21,145		$	24,210
Unrealized gains (losses)	$	0	$	(1	)	$	(1	)	$	1	$	(2	)	$	(1	)
Unrealized losses																	$	0	$	(127	)	$	(127	)	$	0	$	(59	)	$	(59	)
Cash equivalents and Investments - fair value	$	3,855	$	19,915		$	23,770		$	4,307	$	19,657		$	23,964		$	4,098	$	19,358		$	23,456		$	3,065	$	21,086		$	24,151

The Company categorizes its financial instruments within a fair value hierarchy according to accounting guidance for fair value. The fair value hierarchy is described under the Fair Value of Financial Instruments in Note 2. For the Level 2 investments, the Company uses quoted prices of similar assets in active markets. The fair values in the table above reflect net realizable losses of $1127 and $59 at March 31, ~~2022~~2023 and December 31, ~~2021.��~~ 2022, respectively.

6.5. Goodwill and Intangible Assets

Goodwill

The change in the carrying amount of goodwill during the three months ended March 31, ~~2022~~2023 is as follows:

Amount

Balance at December 31, 2021

$
6,334

Foreign currency translation

(114
)
Balance at March 31, 2022

$
6,220


	Amount
Balance at December 31, 2022	$	5,935
Foreign currency translation		11
Balance at March 31, 2023	$	5,946

The Company performs an annual impairment test of goodwill as of the end of the first month of the fourth fiscal quarter (October 31), or at an interim date if an event occurs or if circumstances change that ~~would~~ indicate that an impairment loss may have been incurred. In performing the annual impairment test, the Company may consider qualitative factors that would indicate possible impairment. A

quantitative fair value assessment is also performed at the reporting unit level. If the fair value exceeds the carrying value, then goodwill is not impaired, and no further testing is performed. If the carrying value exceeds the fair value, the implied fair value of goodwill is then compared against the carrying value of goodwill to determine the amount of impairment. In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred ~~which~~that would require interim impairment testing. The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and its impact on each of the reporting units. Further, the Company assessed the current market capitalization and financial forecasts. There were no triggering events during the three months ended March 31, ~~2022~~2023 and March 31, ~~2021.~~2022. The Company will continue to monitor goodwill for impairment going forward.

Intangible Assets

The Company amortized intangible assets with finite lives on a straight-line basis over the estimated useful lives, which ranged from one to five ~~years.~~ years.

The summary of amortization expense in the condensed consolidated statements of operations is as follows:


	Three Months Ended March 31,
	2023		2022
Cost of revenues	$	18	$	20
Operating expenses		63		71
Total	$	81	$	91

Three Months Ended March 31,

2022

2021

Cost of revenues

$
20

$
0

Operating expenses

71

0

Total

$
91

$
0

The summary of other intangible assets, net are as follows:


	March 31, 2022						December 31, 2021						March 31, 2023						December 31, 2022
			Accumulated		Net Book				Accumulated		Net Book				Accumulated		Net Book				Accumulated		Net Book
	Cost		Amortization		Value		Cost		Amortization		Value		Cost		Amortization		Value		Cost		Amortization		Value
Customer contracts and relationships	$	17,581	$	17,009	$	572	$	17,609	$	16,978	$	631	$	17,515	$	17,124	$	391	$	17,512	$	17,091	$	421
Patents and technology		10,034		9,715		319		10,049		9,698		351		9,997		9,779		218		9,995		9,761		234
Trademarks and trade names		1,540		1,076		464		1,563		1,051		512		1,486		1,169		317		1,484		1,143		341
Other intangible assets		106		32		74		110		25		85		96		54		42		96		47		49
Total	$	29,261	$	27,832	$	1,429	$	29,331	$	27,752	$	1,579	$	29,094	$	28,126	$	968	$	29,087	$	28,042	$	1,045

~~In April 2021,~~

During the three months ended March 31, 2023 and March 31, 2022, the Company recorded ~~$2.0 million~~amortization expense of ~~finite-lived intangible assets for the acquisition of Smarteq, and during~~$0.1 million. For the three months ended March 31, 2022, the Company recorded ~~amortization expense of $0.1 million and~~ a foreign currency translation adjustment of ~~$0.1~~$0.1 million.

The assigned lives and weighted average amortization periods by intangible asset category are summarized below:


Intangible Assets	Assigned Life	Weighted Average Amortization Period
Customer contracts and relationships	~~5 years~~		~~5.0~~	5 years	5.0
Patents and technology	~~5 years~~		~~5.0~~	5 years	5.0
Trademarks and trade names	~~5 years~~		~~5.0~~	5 years	5.0
Other intangible assets	~~.5 to 5 years~~		~~3.6~~	.5 to 5 years	3.6

The future amortization expenses are as follows:


Fiscal Year	Amount
2023 (remaining nine months)	$	244
2024		314
2025		308
2026		102
Thereafter		0
Total	$	968

Fiscal Year

Amount

2022 (remaining nine months)

$
270

2023

360

2024

346

2025

340

2026

113

Thereafter

0

Total

$
1,429

7.6. Balance Sheet Information

Accounts Receivable

Accounts receivable are recorded at invoiced amounts with standard net terms that range between 30 and 90 days. The Company extends credit to its customers based on an evaluation of a customer’s financial condition and collateral is generally not required. The Company records reserves for credit losses and credit allowances that reduce the value of accounts receivable to fair value.

The allowances for accounts receivable consisted of the following:


	March 31, 2022		December 31, 2021		March 31, 2023		December 31, 2022
Credit loss provision	$	16	$	26	$	106	$	92
Credit allowances		33		38		29		40
Total allowances	$	49	$	64	$	135	$	132

The Company is exposed to credit losses primarily through the sale of products. The Company’s expected loss methodology for accounts receivable is developed using historical collection experience, current and future economic market conditions, and a review of the current status of customers’ trade accounts receivable. Due to the short-term nature of accounts receivable, the estimate of amount of accounts receivable that may not be collected is based on aging of the account receivable balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. The Company’s allowance for credit losses was ~~$16~~$106 at March 31, ~~2022~~2023 and ~~$26~~$92 at December 31, ~~2021.~~ 2022.

The following table summarizes the allowance for credit losses activity during the three months ended March 31, ~~2022:~~2023:

Balance at December 31, 2021
$
26

Current period benefit for credit losses

(10
)
Balance at March 31, 2022
$
16



Balance at December 31, 2022	$	92
Current period allowance for credit losses		14
Balance at March 31, 2023	$	106

Inventories

Inventories are stated at the lower of cost or net realizable value and include material, labor and overhead costs using the first-in, first-out method of costing. Inventories as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 were composed of raw materials, work-in-process and finished goods. The Company had consigned inventory with customers of ~~$0.5 million and $0.4~~$0.2 million at March 31, ~~2022~~2023 and December 31, ~~2021, respectively.~~2022. The Company records allowances to reduce the value of inventory to the lower of cost or net realizable value, including allowances for excess and obsolete inventory. Reserves for excess inventory are calculated based on an estimate of inventory in excess of normal and planned usage. Obsolete reserves are based on the identification of inventory where the carrying value is above net realizable value. The allowance for inventory losses was ~~$3.4~~$3.0 million at March 31, ~~2022~~2023 and ~~$4.1~~$3.1 million at December 31, ~~2021.~~2022.

Inventories, net consisted of the following:


	March 31, 2022		December 31, 2021		March 31, 2023		December 31, 2022
Raw materials	$	5,879	$	6,171	$	8,308	$	9,064
Work-in-process		808		690		953		1,076
Finished goods		6,165		6,830		8,365		8,778
Inventories, net	$	12,852	$	13,691	$	17,626	$	18,918

Prepaid Expenses and Other Assets

Prepaid assets are stated at cost and are amortized over the useful lives (up to one ~~year)~~year) of the assets.

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets. The Company depreciates computer equipment and software licenses over three to five years, office equipment, manufacturing

and test equipment, and motor vehicles over five years, furniture and fixtures over seven years, and buildings over 30 years. Leasehold improvements are amortized over the shorter of the corresponding lease term or useful life. Depreciation expense and gains and losses on the disposal of property and equipment are included in cost of revenues and operating expenses in the condensed consolidated statements of operations. Maintenance and repairs are expensed as incurred.

Property and equipment consisted of the following:


	March 31, 2022			December 31, 2021			March 31, 2023			December 31, 2022
Building	$	6,922		$	6,892		$	6,922		$	6,922
Computers and office equipment		10,474			10,604			10,439			10,217
Manufacturing and test equipment		16,536			16,305			13,850			14,661
Furniture and fixtures		1,460			1,455			1,491			1,475
Leasehold improvements		3,012			3,021			1,965			1,965
Motor vehicles		20			20			20			20
Total property and equipment		38,424			38,297			34,687			35,260
Less: Accumulated depreciation and amortization		(28,704	)		(28,118	)		(26,638	)		(27,026	)
Land		1,770			1,770			1,770			1,770
Property and equipment, net	$	11,490		$	11,949		$	9,819		$	10,004

Depreciation and amortization expense was approximately ~~$0.8~~$0.5 million and ~~$0.7~~$0.8 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Amortization for finance leases is included in depreciation and amortization expense. See Note 1110 for information related to finance leases.

Liabilities

Accrued liabilities consisted of the following:


	March 31, 2023		December 31, 2022
Inventory receipts	$	2,368	$	3,720
Payroll and other employee benefits		1,530		4,318
Paid time off		1,213		1,001
Income and sales taxes		852		836
Operating leases		535		527
Deferred revenues		513		495
Professional fees and contractors		493		346
Employee stock purchase plan		467		232
Warranties		315		317
Real estate taxes		199		158
Customer refunds for estimated returns		190		235
Finance leases		49		51
Other		278		369
Total	$	9,002	$	12,605

March 31, 2022

December 31, 2021

Inventory receipts

$
2,704

$
4,302

Paid time off

1,452

1,284

Payroll and other employee benefits

1,284

2,266

Deferred revenues

625

538

Employee stock purchase plan

503

253

Operating leases

495

475

Income and sales taxes

433

415

Professional fees and contractors

360

233

Warranties

253

257

Customer refunds for estimated returns

232

248

Real estate taxes

195

156

Finance leases

53

62

Restructuring

0

368

Other

364

260

Total

$
8,953

$
11,117

Long-term liabilities consisted of the following:


	March 31, 2023		December 31, 2022
Operating leases	$	3,172	$	3,327
Deferred revenue		182		181
Finance leases		62		73
Other		15		43
Total	$	3,431	$	3,624

March 31, 2022

December 31, 2021

Operating leases

$
3,463

$
3,600

Finance leases

81

92

Deferred revenue

183

181

Other

93

126

Total

$
3,820

$
3,999

The condensed consolidated statements of operations include ~~$0.8~~$0.3 million and ~~$0.6~~$0.8 million of stock compensation expense for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively. T~~he Company accounts~~Stock compensation expense was lower during the three months ended March 31, 2023 compared to the same period in 2022 primarily because of revisions to forecasts for ~~forfeitures as they occur.~~performance-based share awards under long-term incentive plans.

The stock-based compensation expense by type is as follows:


	Three Months Ended March 31,
	2023			2022
Service-based awards	$	361		$	320
Performance-based awards (short-term incentive plan)		115			81
Performance-based awards (long-term incentive plan)		(259	)		306
Employee stock purchase plan		61			67
Total	$	278		$	774

Three Months Ended March 31,

2022

2021

Service-based awards

$
320

$
455

Performance-based awards (short-term incentive plan)

81

58

Performance-based awards (long-term incentive plan)

306

39

Employee stock purchase plan

67

66

Total

$
774

$
618

Total stock-based compensation is reflected in the condensed consolidated statements of operations as follows:

The following table presents a summary of the remaining unrecognized share-based compensation expense related to outstanding share-based awards as of March 31, ~~2022 :~~2023:

The Company grants both service-based and performance-based stock awards to employees pursuant to the PCTEL, Inc. 2019 Stock Incentive Plan. When service-based restricted stock is granted, the Company records deferred stock compensation within additional paid-in capital, representing the fair value of the common stock on the date the restricted shares are granted. The Company records stock compensation expense on a straight-line basis over the vesting period of the applicable service-based restricted shares. During the first quarter ~~of 2022,~~2023, the Company awarded executives ~~and key-managers~~ long-term incentives comprised one-third of service-based restricted stock and two-thirds of performance-based restricted stock. ~~The Company awarded service-based restricted stock to all other participating employees.~~

The following table summarizes service-based restricted stock activity for the three months ended March 31, ~~2022:~~ 2023:

	Shares			Weighted Average Fair Value
Unvested Restricted Stock Awards - December 31, 2021		326,336		$	7.76
						Shares			Weighted Average Fair Value
Unvested Restricted Stock Awards - December 31, 2022							354,037		$	6.12
Shares awarded		230,744			4.73		80,393			4.55
Shares vested		(163,550	)		7.28		(163,975	)		6.80
Unvested Restricted Stock Awards - March 31, 2022		393,530		$	6.18
Shares cancelled							(267	)		8.70
Unvested Restricted Stock Awards - March 31, 2023							270,188		$	5.24

The intrinsic value of service-based restricted shares that vested was $0.8 million during the three months ended March 31, ~~2022~~2023 and ~~2021 was $0.8 million and $1.9 million, respectively.~~ 2022.

Restricted Stock Units

The Company grants service-based restricted stock units as employee incentives. Restricted stock units are primarily granted to foreign employees for long-term incentive purposes. Employee restricted stock units are service-based awards and are amortized over the vesting period. At the vesting date, these units are converted to shares of common stock. The Company records expense on a straight-line basis for restricted stock units.

The following table summarizes the restricted stock unit activity during the three months ended March 31, ~~2022:~~2023:

Shares

Weighted
Average
Fair Value

Unvested Restricted Stock Units - December 31, 2021

21,437

$
7.23

Units awarded

24,667

4.52

Units vested/Shares awarded

(3,201
)

7.47

Unvested Restricted Stock Units - March 31, 2022

42,903

$
5.59


	Shares			Weighted Average Fair Value
Unvested Restricted Stock Units - December 31, 2022		35,253		$	5.42
Units vested/Shares awarded		(9,152	)		5.40
Unvested Restricted Stock Units - March 31, 2023		26,101		$	5.45

The intrinsic value of service-based restricted stock units that vested and were issued as shares during the three months ended March 31, 2023 and 2022 was $40and ~~2021 was $16 and $25,~~$16, respectively.

Stock Options

The Company may grant employees options to purchase the Company’s common stock. The Company issues stock options with exercise prices no less than the fair value of the Company’s stock on the grant date. Employee stock options are subject to installment vesting typically over a period of not less than three ~~years.~~years. Stock options may be exercised at any time prior to their expiration date or within 180 days of termination of employment, or such shorter time as may be provided in the related stock option agreement. The stock options outstanding at March 31, ~~2022~~2023 have a seven-year life. There was no activity related to stock options during the first quarter ~~2022.~~ 2023.

The following table summarizes information about stock options outstanding under all stock option plans at March 31, ~~2022:~~2023:


	Options Outstanding								Options Exercisable								Options Outstanding and Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Contractual Life (Years)		Intrinsic Value		Weighted- Average Exercise Price		Number Exercisable		Weighted Average Contractual Life (Years)		Intrinsic Value		Weighted Average Exercise Price		Number of Shares		Weighted Average Contractual Life (Years)		Intrinsic Value		Weighted- Average Exercise Price
$ 5.06 - $ 6.98		4,000		2.17	$	0	$	6.02		4,000		2.17	$	0	$	6.02		4,000		1.17	$	0	$	6.02

Weighted
Average
Contractual
Life (years)

Intrinsic
Value

Options Outstanding

2.67

$
2

Options Exercisable

2.63

$
2

The intrinsic value is based on the share price of ~~$4.64~~$4.23 at March 31, ~~2022.~~2023.

For outstanding stock options, the Company calculated the fair value of each option on the date of grant using the Black-Scholes option-pricing model. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the existing models may not necessarily provide a reliable single measure of the fair value of the employee stock options. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility and expected option life.

The dividend yield rate is calculated by dividing the Company’s annual dividend by the closing price on the grant date. The risk-free interest rate is based on the U.S. Treasury yields with a remaining term that approximates the expected life of the options granted. The expected volatility is based on a five-year historical period of the Company’s stock price. The expected life for options granted is based on historical data of employee exercise performance. The Company records expense based on the graded vesting method.

Performance-Based Equity Awards

Short-Term Incentive Plan

The Company granted short-term ~~inventive~~incentive awards to executives, key managers, and non-sales employees under the Company’s 2022 Short-Term Incentive Plan (“STIP”) based on upon achievement of specifically identified corporate annual 2022 adjusted EBITDA and revenue goals. ~~The 2022 STIP awards, like the 2021 STIP awards, will be paid 50% in cash and 50% in the Company’s stock.~~

In the first quarter 2022 the Board of Directors exercised its discretion to approve awards equal to those payable for achievement of the adjusted EBITDA goal at the threshold level. Individuals received awards in an amount equal to the amount that would have been received had the Company and the threshold Adjusted EBITDA. No awards were received by 2021 STIP participants with respect to the revenue goal. Bonuses2023 bonuses were paid ~~during the first quarter 2022 50% in the Company’s~~50% Company common stock for a total of ~~$0.3~~$1.2 million and ~~50%~~50% in cash for executives and key managers, and ~~100%~~100% in cash for all other participants.

Long-Term Incentive Plan

The Company grants performance-based awards to executives and key managers to encourage sustainable growth, consistent earnings, and management retention. Based on the fair value of the shares on the grant date, the Company records stock compensation expense over the performance period based on the estimated achievement of the award.

The following table summarizes the performance award activity:

	Awards at Target			Weighted Average Fair Value
Unvested Performance Awards - December 31, 2021		333,153		$	8.39
						Awards at Target			Weighted Average Fair Value
Unvested Performance Awards - December 31, 2022							521,204		$	6.85
Awards granted		269,618			4.84		163,222			4.55
Awards vested							(53,345	)		8.70
Awards cancelled		(3,600	)		8.30		(82,544	)		8.70
Unvested Performance Awards - March 31, 2022		599,171		$	6.82
Unvested Performance Awards - March 31, 2023							548,537		$	5.70

The Company granted performance awards under its long-term incentive plan to executives ~~and key managers~~ in February ~~2022 (“2022~~2023 (the “2023 LTIP”). The performance period for the ~~2022~~2023 LTIP is from January 1, ~~2022~~2023 through December 31, ~~2024.~~2025. At target, the total fair market value of the award was ~~$1.3~~$0.7 million based on the average share price of ~~$4.84~~$4.55 on the grant date. On the award date, the aggregate number of shares that could be earned at target was ~~269,618~~163,222 and the maximum number of aggregate shares that could be earned was ~~471,832.~~ 285,639.

Under the ~~2022~~2023 LTIP, and under similar plans from ~~2021~~2022 and ~~2020,~~2021, shares of the Company’s stock can be earned based on achievement of a three-year revenue growth target with a penalty if a certain adjusted EBITDA level is not maintained. If the Company achieves less than the target growth over the performance period, the participant will receive fewer shares than the target award, determined on a straight-line basis. If the Company achieves greater than the target growth, the participant will receive more shares than the target award on an accelerated basis. Participants are required to be in service at the determination date of the award following the end of the performance period in order to receive the award. Shares earned will be fully vested shares. The Company records stock compensation expense over the performance period based on the Company’s estimate of the aggregate number of shares that will be earned under the incentive plan.

During the first quarter 2023, the Company issued 53,345 shares with an intrinsic value of $0.2 million related to achievement under the 2020 LTIP.

The following table summarizes the active performance-based long-term incentive plans at March 31, ~~2022:~~2023:


			Number of Shares							Number of Shares
	Share Price		That Could Be Earned:					Share Price		That Could Be Earned:
LTIP award	on Grant Date		Target		Maximum		Performance Period	on Grant Date		Target		Maximum		Performance Period
2020 LTIP	$	8.70		143,289		250,756	January 1, 2020 through December 31, 2022
2021 LTIP	$	8.25		186,264		325,962	January 1, 2021 through December 31, 2023	$	8.23		153,697		268,970	January 1, 2021 through December 31, 2023
2022 LTIP	$	4.84		269,618		471,832	January 1, 2022 through December 31, 2024	$	4.83		231,618		405,332	January 1, 2022 through December 31, 2024
2023 LTIP								$	4.55		163,222		285,639	January 1, 2023 through December 31, 2025
				599,171		1,048,550					548,537		959,941

Employee Stock Purchase Plan (“ESPP”)

The ESPP enables eligible employees to purchase common stock at the lower of ~~85%~~85% of the fair market value of the common stock on the first or last day of each offering period. Each offering period is approximately six ~~months.~~ months. Shares are issued in April and October each year under the ESPP.

Based on the ~~15%~~15% discount and the fair value of the option feature of the ESPP, it is considered compensatory. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes option-pricing model.

The Company calculated the fair value of each employee stock purchase grant on the date of grant using the Black-Scholes option-pricing model using the following assumptions:


	Employee Stock Purchase Plan						Employee Stock Purchase Plan
	2022			2021			2023			2022
Dividend yield		4.7	%		3.1	%		5.2	%		4.7	%
Risk-free interest rate		1.7	%		0.1	%		4.6	%		1.7	%
Expected volatility		48	%		48	%		48	%		48	%
Expected life (in years)		0.5			0.5			0.5			0.5

The dividend yield rate was calculated by dividing the Company’s annual dividend by the closing price on the grant date. The risk-free interest rate was based on the U.S. Treasury yields with a remaining term that approximates the expected life of the options granted. The volatility was based on a five-year historical period of the Company’s stock price. The expected life was based on the offering period.

Board of Director Equity Awards

~~In May, the~~The Company grants equity awards to members of its Board of Directors as an annual retainer and for committee service. These awards are shares of the Company’s common stock that vest one year after issuance. In addition, new directors receive a one-time grant that vests over three ~~years.~~years. There was 0no activity related to director awards during the first quarter ~~2022.~~ 2023. The outstanding shares vest in May 2023.

The number of unvested director awards was as follows at March 31, ~~2022:~~2023:

Shares

Weighted
Average
Fair Value

Outstanding - March 31, 2022

11,534

$
6.57


	Shares		Weighted Average Fair Value
Outstanding - December 31, 2022		120,696	$	4.02
Shares awarded		0		0
Shares vested		0		0
Outstanding - March 31, 2023		120,696	$	4.02

Employee Withholding Taxes on Stock Awards

For ease in administering the issuance of stock awards, the Company holds back shares of vested restricted stock awards, stock option exercises and short-term and long-term incentive plan stock awards for the value of the statutory withholding taxes. For everyone receiving a share award, the Company redeems the shares it computes as the value for the withholding tax and remits this amount to the appropriate tax authority. For withholding taxes related to stock awards, the Company paid ~~$0.4~~$0.7 million and ~~$0.7~~$0.4 million during the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively.

~~Stock Repurchases~~18

On November 4, 2020, the Board of Directors approved a $5.0 million share repurchase program. The Company spent $3.2 million during 2021 to repurchase 495,144 shares at an average price of $6.45 under this plan. The Company retired all repurchased shares. This repurchase plan ended in September 2021 with the completion of $5.0 million of share repurchases.

9.8. Benefit Plans

Employee Benefit Plans

The Company’s 401(k) plan covers all U.S. employees beginning the first day of the month following the first month of their employment. Under this plan, employees may elect to contribute up to ~~15%~~15% of their current compensation to the 401(k) plan up to the statutorily prescribed annual limit. The Company matches employee contributions up to 4%4% and may also make discretionary contributions to the 401(k) plan. The Company also contributes to various retirement plans for foreign employees.

The Company’s contributions to retirement plans during the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, were as follows:


	Three Months Ended March 31,
	2023		2022
PCTEL, Inc. 401(k) profit sharing plan - US employees	$	256	$	219
Defined contribution plans - Foreign employees		54		73
Total	$	310	$	292

Three Months Ended March 31,

2022

2021

PCTEL, Inc. 401(k) profit sharing plan - US employees

$
219

$
172

Defined contribution plans - Foreign employees

73

87

Total

$
292

$
259

~~10.~~9. Commitments and Contingencies

~~Tianjin Manufacturing Restructuring~~

Due to uncertainties with its Tianjin facility lease and also to optimize the cost structure of the antenna product line and create flexibility in antenna manufacturing, the Company initiated a restructuring plan in 2019 to transition manufacturing from its Tianjin, China facility primarily to contract manufacturers in China. The Company completed the transition in the first quarter 2022. For the quarter ended March 31, 2022, the Company incurred restructuring expenses of $0.9 million, including $0.8 million for employee severance and benefits related to the separation of 69 employees and $0.1 million related to fixed assets and facilities. Severance costs were paid from the Company’s cash in its China bank accounts. With the transition complete, the Company vacated the Tianjin manufacturing facility in April 2022 and relocated a small team of employees associated with sourcing, quality, and local customer support at a new leased facility in Tianjin, China. See Note 11 for additional information on the Tianjin lease.

~~Beijing Restructuring~~

As a cost saving initiative, the Company separated 14 employees from its Beijing office in November 2021. The terminated positions were primarily related to antenna engineering in addition to sales support. The Company incurred restructuring expenses of $0.8 million consisting of employee severance and related employee benefits and for professional fees associated with employee separations. The Company engaged 4 former Beijing employees through a third-party employment agency to provide sales and engineering support. During the first quarter of 2022, the Company paid $0.4 million related to severance benefits accrued at December 31, 2021.

~~The following table summarizes the restructuring activity during the three months ended~~ ~~March 31, 2022~~ ~~and the status of the reserves at~~ ~~March 31, 2022~~:

Tianjin

Manufacturing

Beijing

Total

Balance at December 31, 2021

$
0

$
368

$
368

Restructuring expense

935

0

935

Payments made

(935
)

(368
)

(1,303
)

Balance at March 31, 2022

$
0

$
0

$
0

~~The restructuring liability was recorded in accrued liabilities on the condensed consolidated balance sheet at December 31, 2021.~~

Warranty Reserve and Sales Returns

The Company allows its major distributors and certain other customers to return unused product under specified terms and conditions. The Company accrues for product returns based on historical sales and return trends. The refund liability related to estimated sales returns was ~~$0.2~~$0.2 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, and is included within accrued liabilities on the accompanying condensed consolidated balance sheets.

The Company offers repair and replacement warranties ~~of up~~ranging from one to ~~five~~ten years for certain antenna products and test & measurement products. The Company’s warranty reserve is based on historical sales and costs of repair and replacement trends. The warranty reserve was ~~$0.3~~$0.3 million at March 31, ~~2022~~2023 and ~~2021, respectively,~~2022 and is included in accrued liabilities in the accompanying condensed consolidated balance sheets.

The following table summarizes the warranty activity during the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


	March 31,
	2023			2022
Beginning balance	$	317		$	257
Provisions for warranties		52			16
Consumption of reserves		(54	)		(20	)
Ending balance	$	315		$	253

March 31,

2022

2021

Beginning balance

$
257

$
285

Provisions for warranties

16

15

Consumption of reserves

(20
)

(5
)
Ending balance

$
253

$
295

10. Leases

~~11. Leases~~

The Company has operating leases for facilities and finance leases for office equipment. Leases with an initial term of 12 months or less are not recorded in the balance sheet. The Company determines if an arrangement is a lease at inception of a contract.

Right of Use (“ROU”) assets represent the Company's right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the net present value of fixed lease payments over the lease term. The Company's lease term is deemed to include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. ROU assets also include any advance lease payments made and exclude lease incentives. As most of the Company's operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments on a collateralized basis. Finance lease agreements generally include an interest rate that is used to determine the present value of future lease payments. Operating lease expense and finance lease depreciation expense are recognized on a straight-line basis over the lease term.

The Company's lease cost for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, included the following components:


	Three Months Ended March 31,
	2023		2022
Operating lease costs	$	135	$	128
Short-term lease costs		9		27
Variable lease costs		1		4
Amortization of finance lease assets		14		19
Interest on finance lease liabilities		1		2
Total lease cost	$	160	$	180

Three Months Ended March 31,

2022

2021

Operating lease costs

$
128

$
97

Short-term lease costs

27

41

Variable lease costs

4

2

Amortization of finance lease assets

19

14

Interest on finance lease liabilities

2

2

Total lease cost

$
180

$
156

The table below summarizes the Company's scheduled future minimum lease payments under operating and finance leases recorded on the balance sheet as of March 31, ~~2022:~~2023:


Year	Operating Leases			Finance Leases
2023 (remaining nine months)	$	475		$	40
2024		676			45
2025		586			26
2026		522			6
2027		505			0
Thereafter		1,675			0
Total minimum payments required		4,439			117
Less: amount representing interest		732			6
Present value of net minimum lease payments		3,707			111
Less: current maturities of lease obligations		(535	)		(49	)
Long-term lease obligations	$	3,172		$	62

Year

Operating Leases

Finance Leases

2022 (remaining nine months)

$
463

$
45

2023

636

44

2024

581

33

2025

501

15

2026

494

5

Thereafter

2,180

0

Total minimum payments required

4,855

142

Less: amount representing interest

897

8

Present value of net minimum lease payments

3,958

134

Less: current maturities of lease obligations

(495
)

(53
)
Long-term lease obligations

$
3,463

$
81

The weighted average remaining lease terms and discount rates for all of the Company’s operating and finance leases were as follows as of March 31, ~~2022:~~2023:

The table below presents supplemental cash flow information related to leases during the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively:


	Three Months Ended March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	200	$	100	$	253	$	200
Operating cash flows for finance leases	$	2	$	2	$	1	$	2
Financing cash flows for finance leases	$	19	$	16	$	14	$	19

The Company completed the transition of antenna manufacturing from its Tianjin, China facility to contract manufacturers during the first quarter of 2022. In April 2022, the Company vacated the manufacturing facility and moved a small team of employees associated with sourcing, quality, and local customer support to a new leased facility in Tianjin, China. For the new office, the Company entered into a ~~two-year~~ ~~lease ending December 31, 2023 for 1,694 square feet of office space in Tianjin, China. The Company recognized a present value of the right of use asset of $0.1 million for this new office lease.~~

As a cost saving initiative, the Company separated all 14 employees from its Beijing office in November 2021 and the Company closed this office in the first quarter of 2022. In April 2022, the Company entered into a ~~two-year~~ office lease ending April 30, 2024 for 350 square feet of office space. NaN former employees in Beijing were engaged through a third-party employment agency and will provide sales and engineering support from the new smaller office.

As part of the acquisition of Smarteq on April 30, 2021, the Company assumed an office lease and two automotive leases. The office in Kista, Sweden has 4,080 square feet used for engineering, sales, and administration with a lease term ending July 31, 2023. On the acquisition date, the Company recorded $0.2 million for each of the ROU assets and the lease liabilities.

~~As part of the Smarteq acquisition, the Company assumed a~~ ~~five-year~~ loan of approximately $0.1 million with an interest rate of 0.57%. The loan was part of a program from the French Ministry of Economy and Finance as financial support for French businesses during the COVID-19 pandemic. The loan is denominated in Euros. Payment of the principal and interest on the loan is deferred until June 2022 and the loan term ends in ~~May 2026. The amount due within one year is $2, and the remainder is due in equal monthly payments thereafter.~~

The Company recorded income tax expense of $8$0.2 million and $6$8 for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The expense recorded for the three months ended March 31, ~~2022~~2023 and ~~2021~~March 31, 2022 was lower than the statutory rate of ~~21%~~21% because the Company has a full valuation allowance on its U.S. deferred tax assets. ~~The Company’s valuation allowance is due to the uncertainty regarding the utilization of the deferred tax assets.~~

The Company had deferred tax assets net of deferred tax liabilities of ~~$15.2~~$15.1 million and ~~$15.3~~$15.3 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. By jurisdiction, ~~$11.9~~$12.0 million was associated with the U.S., ~~$1.2~~$1.4 million was associated with China, and ~~$2.1~~$1.7 million was associated with Sweden. The Company’s gross deferred tax assets consist of federal and state net operating losses (“NOLs”), credits, and timing differences. ~~As part~~

The Company's valuation allowances are due to uncertainty regarding the utilization of the acquisition of Smarteq, the Company recorded deferred tax assets of $2.3 million associated with NOLs, inventory reserves and recorded tax liabilities associated with acquired intangible assets. Because of the objective evidence of cumulative three-year losses and uncertainty associated with the COVID-19 pandemic, the Company recorded a full valuation allowance on the deferred tax assets.

On a regular basis, the Company evaluates the recoverability of deferred tax assets and the need for a valuation allowance. Such evaluations involve the application of significant judgment. The Company considers multiple factors in its evaluation of the need for a valuation allowance. At March 31, 2023, the Company had a full valuation allowance on its U.S. and China deferred tax asset and a partial valuation allowance related to its net deferred tax assets for Sweden.

The Company’s federal NOLs generated in 2018 and ~~future~~later periods will not expire, ~~and~~but the Company’s NOLs ~~and credits~~ generated ~~as of~~ through
December 31, 2017 have a finite life primarily based on the ~~20-year~~20-year carry forward of federal net operating losses. The timing differences have a ratable reversal pattern over 12 years.

The Company had a full valuation allowance on its net deferred tax assets in each of its jurisdictions at March 31, 2022 and December 31, 2021. For U.S. tax purposes, the Company recorded a book loss during the first quarter 2022. Further, the Company recorded book income during 2021 but generated a tax loss and its earnings were below its projections. While the Company has recorded ~~pretax~~pre-tax book income for the prior three years and believes its financial outlook remains positive, it did not meet revenue or earnings expectations for the U.S. jurisdiction. Additionally, the Company recognized revenue for one-time projects in ~~2021 for revenues~~fiscal year 2022 that may not be repeated in 2023 or ~~earnings.~~future years. Because of difficulties with forecasting financial results historically, and due to the uncertainties associated with inflationary and recessionary issues, the Company maintained a full valuation allowance on its U.S. deferred tax assets at March 31, 2023 and at December 31, 2022. The Company’s performance versus its projections in both of the prior two years are considered significant negative evidence that is difficult to overcome on a “more likely than not” standard through objectively verifiable data. While the Company believes its financial outlook remains positive, under the accounting standards, objective verifiable evidence will have greater weight than subjective evidence such as the Company’s projections for future growth. ~~The~~In addition, the Company faces uncertainties from recent macroeconomic trends, including inflationary pressures, the economic downturn and the potential for a recession. As a result of all these factors, the Company maintained a full valuation allowance on its U.S. deferred tax assets ~~because of difficulties with forecasting financial results historically, and due to the uncertainties associated with the COVID-19 pandemic.~~at March 31.

Until an appropriate level of profitability is attained, the Company expects to maintain a full valuation allowance on its net deferred tax ~~assets.~~assets for the U.S. jurisdiction. Any U.S. or foreign tax benefits or tax expense recorded on its consolidated statements of operations will be offset with a corresponding valuation allowance until such time that the Company changes its determination related to the realization of deferred tax assets. In the event that the Company changes its determination as to the amount of deferred tax assets that can be realized, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such a determination is made.

Since the Company completed the transition of manufacturing from its Tianjin facility to contract manufacturers in 2022, the Company does not expect sufficient profits to utilize its China deferred tax assets. The Company had a full valuation allowance on its China deferred tax at March 31, 2023 and at December 31, 2022. The Company maintained a partial valuation allowance on its Sweden

deferred tax assets at March 31, 2023 and at December 31, 2022. Based on positive book and taxable income in 2021 and 2022 and because results exceeded projections, the Company reversed a portion of its valuation allowance related to Sweden deferred tax assets during 2022.

The analysis that the Company prepared to determine the valuation allowance required significant judgment and assumptions regarding future market conditions as well as forecasts for profits, taxable income, and taxable income by jurisdiction. Due to the sensitivity of the analysis, changes to the assumptions in subsequent periods could have a material effect on the valuation allowance.

The Company files a consolidated federal income tax return, income tax returns with various states, and foreign income tax returns in various foreign jurisdictions. The Company’s U.S. federal tax returns remain subject to examination for ~~2017~~2018 and subsequent periods. The Company’s U.S. state tax returns remain subject to examination for 2015 and subsequent periods. The Company’s foreign tax returns remain subject to examination for 2011 and subsequent periods. The Company’s gross unrecognized tax benefit ~~was $0.8 million at March 31, 2022 and December 31, 2021.~~

~~The Company had a liability of$0.8 million~~ related to income tax uncertainties was $1.0 million at March 31, ~~2022~~2023 and December 31, ~~2021.~~2022. We do not know the timing of the settlement of this liability.

On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security Act” (CARES Act) was signed into law. The CARES Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Under the CARES Act, the Company deferred the employer portion of social security taxes and applied for a refund of its Alternative Minimum Tax credit. As of March 31, 2022, the Company had deferred $0.2 million of payroll taxes which will be paid on December 31, 2022. The amount to be paid on December 31, 2022 is not deductible for 2021 income tax purposes.

Product Line Information:

The following tables are the product line revenues and gross profits for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


	Three Months Ended March 31, 2023
	Antennas & Industrial IoT Devices			Test & Measurement Products			Corporate			Total

Revenues	$	15,614		$	7,427		$	(68	)	$	22,973
Gross Profit	$	6,120		$	5,383		$	29		$	11,532
Gross Profit %		39.2	%		72.5	%	NA				50.2	%


	Three Months Ended March 31, 2022
	Antennas & Industrial IoT Devices			Test & Measurement Products			Corporate			Total

Revenues	$	17,102		$	5,583		$	(143	)	$	22,542
Gross Profit	$	5,247		$	4,162		$	(76	)	$	9,333
Gross Profit %		30.7	%		74.5	%	NA				41.4	%

Three Months Ended March 31, 2021

Antennas & Industrial IoT Devices

Test & Measurement Products

Corporate

Total

Revenues

$
11,723

$
6,205

$
(221
)

$
17,707

Gross Profit

$
3,747

$
4,588

$
3

$
8,338

Gross Profit %

32.0
%

73.9
%

NA

47.1
%

Geographic Information:

The Company’s revenue from customers by geographic location, as a percent of total revenues for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, was as follows:


	Three Months Ended March 31,
Region	2023	2022
Europe, Middle East & Africa	20%	27%
Asia Pacific	11%	6%
Other Americas	4%	2%
Total Foreign sales	35%	35%

Three Months Ended March 31,

Region

2022

2021

Europe, Middle East & Africa

27%

23%

Asia Pacific

6%

8%

Other Americas

2%

4%

Total Foreign sales

35%

35%

During the three months ended March 31, ~~2022~~ 2023 and ~~2021,~~2022, the customer concentration related to revenues was as follows:

Three Months Ended March 31,

Revenues

2022

2021

Customer B

12%

6%

Customer C

10%

10%

The following table represents the customers that accounted for 10% or more of total trade accounts receivable:

13. Revenue from Contracts with Customers

Under Topic 606, a contract with a customer is an agreement that both parties have approved, that creates enforceable rights and obligations, has commercial substance, and specified payment terms, and for which collectability is probable. Once the Company has entered into a contract, it is evaluated to identify performance obligations. For each performance obligation, revenue is recognized as control of promised goods or services transfers to the customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The amount of revenue recognized takes into account variable consideration, such as returns and volume rebates. A majority of the Company’s revenue is short cycle in nature with shipments within one year from order.The Company's payment terms generally range between 30 to 90 days.

All of the Company’s revenue relates to contracts with customers. The Company’s accounting contracts are from purchase orders or purchase orders combined with purchase agreements. The majority of the Company’s revenue is recognized on a “point-in-time” basis and a nominal amount of revenue is recognized “over time.” For the sale of antennas and Industrial IoT devices and test & measurement products, the Company satisfies its performance obligations generally at the time of shipment or upon delivery based on the contractual terms with its customers. For products shipped on consignment, the Company recognizes revenue upon delivery from the consignment location. For its test & measurement software tools, the Company has a performance obligation to provide software maintenance and support for one ~~year.~~year. The Company recognizes ~~revenues~~revenue for the maintenance and support over this period.

The Company considers the shipping and handling performed by the Company as fulfillment activities. Amounts billed for shipping and handling are included in revenues, while costs incurred for shipping and handling are included in the cost of revenues. The Company excludes taxes from the transaction price. ~~Cost~~The cost of contracts include sales commissions. The Company expenses the cost of contracts when incurred because the amortization period is one year or less.

The Company allows its major distributors and certain other customers to return unused product under specified terms and conditions. The Company estimates product returns based on historical sales and return trends and records a corresponding refund liability. The refund liability was ~~$0.2~~$0.2 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, and is included within accrued liabilities in the accompanying condensed consolidated balance sheets. The Company records an asset based on historical experience for the amount of product it expects to return to inventory as a result of customer returns, which is recorded in inventories in the accompanying condensed consolidated balance sheets. The product return asset was ~~$0.1~~$0.1 million at each of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.

There were 0no contract assets at March 31, ~~2022~~2023 or December 31, ~~2021.~~2022. The Company records contract liabilities for deferred revenue and customer prepayments. Contract liabilities are recorded in accrued liabilities in the accompanying condensed consolidated balance sheets. The contract liability was ~~$0.8~~$0.8 million and ~~$0.9~~$0.9 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The Company recognized revenue of ~~$0.4~~$0.5 million and ~~$0.2~~$0.4 million during the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, related to contract liabilities that existed at the beginning of the period.

~~16.~~14. Subsequent Events

The Company evaluates subsequent events occurring between the most recent balance sheet date and the date that the financial statements are available to be issued in order to determine whether the subsequent events are to be recorded and/or disclosed in the Company’s financial statements and footnotes. The financial statements are considered to be available to be issued at the time that they are filed with the SEC. There were no subsequent events or transactions that required recognition or disclosure in the unaudited interim condensed consolidated financial statements.

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the unaudited interim condensed consolidated financial statements of PCTEL, Inc. (“("PCTEL,~~” the “Company,”~~" "the Company", “we,” “our,” and “us”) and the notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and in conjunction with the consolidated financial statements for the year ended December 31, ~~2021~~2022 contained in ~~our Annual Report on~~2022 Form ~~10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).~~10-K. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, you can identify these forward-looking statements by words such as “may,” “will,” “plans,” “seeks,” “expects,” “anticipates,” “intends,” “believes” and words of similar meaning. Investors in our common stock are cautioned not to place undue reliance on these forward-looking statements. Specifically, these statements include, but are not limited to, statements ~~concerning~~concerning: our growth strategy; our future financial performance; growth of our antenna solutions and Industrial ~~IoT~~Internet of Things business and our test ~~and~~& measurement business; ~~the impact of the acquisition of Smarteq on the Company’s~~our ability to ~~offer additional products and,~~continue to innovate new products; our ability to expand product lines in the European market and ~~generate revenue; the impact of the war in Ukraine, disruption in petroleum and other markets, and cost inflation;~~through distribution channels; the impact of our transition plan for manufacturing inside and outside China; the impact of the ~~ongoing~~ COVID-19 pandemic and the ensuing supply chain disruptions; the impact of geopolitical conditions, including the ongoing ~~conflict~~war in Ukraine and related ~~sanctions;~~sanctions and disruption in petroleum and other markets; the impact of economic conditions, including inflation, higher interest rates, economic weakness, and potential recession; the anticipated demand for certain products, including those related to public safety, Industrial IoT, 5G (e.g., the Gflex scanning receiver), agriculture and intelligent ~~transportation.~~transportation; and the anticipated growth of public and private wireless systems. These statements are based on management’s current expectations and actual results may differ materially from those projected as a result of certain risks and uncertainties. Important factors that could cause such differences include, but are not limited toto: the impact of adverse and uncertain economic and political conditions within and outside the U.S., including inflationary pressures, higher interest rates, economic downturn, the potential for a recession, and the ongoing war in Ukraine; inflation and increases in product and material costs; competition within the wireless product industry; ~~volatility~~disruptions to our workforce, operations, supply chain and ~~delays in~~ customer demand caused by the COVID-19 pandemic ~~and/or the war in Ukraine,~~and the impact of ~~uncertainty in our~~the pandemic and the ensuing supply chain ~~as well as labor shortages~~disruption on our results of operations, financial condition, and ~~shipping delays and disruptions,~~stock price; our ability to accurately forecast demand for our products; our ability to continue to successfully integrate Smarteq and any future acquisitions into our existing operations; the impact of uncertainty as a result of doing business in China and Europe; the impact of ~~adverse and uncertain economic and political conditions in the U.S. and international market, the impact of~~ tariffs on certain imports from China; ~~and~~ delays in our sales ~~cycles resulting~~cycles; the impact of data densification and IoT on capacity and coverage demand; the impact of 5G; customer demand and growth generally in our defined market segments; our ability to access the ~~cancellation of purchases of~~government market and create demand for our products; ~~macroeconomic conditions, including inflation~~to expand our European presence and ~~increases in~~benefit from additional antenna and Industrial IoT product ~~and material costs;~~offerings from Smarteq; and our ability to grow our business and create, protect and implement new technologies and solutions. These and other risks and uncertainties are detailed in our filings with the Securities and Exchange Commission (“SEC”). These forward-looking statements are made only as of the date hereof. We do not undertake, and expressly disclaim, any obligation to update or revise any forward-looking statements whether because of new information, future events or otherwise, except as may be required by applicable law. Investors should carefully review the information contained in Item 1A Risk Factors.

The COVID-19 pandemic and associated counter-acting measures implemented by governments and businesses around the world, as well as subsequent recoveries in global business activity, continue to contribute uncertainty in the global business environment and has led to supply chain disruptions and shortages in global markets for commodities, logistics and labor, and as well as increased inflationary pressures. Currently our expectation is that the impact of material cost inflation, labor constraints and logistics challenges and supplier component shortages will continue in 2022.

Our foremost focus as we respond to the pandemic has been on the health and safety of our employees. We continue to maintain our enhanced health and safety protocols at our facilities and are encouraging our employees to obtain vaccinations. We also continue to closely monitor the risks posed by COVID-19 and the guidance from relevant authorities. We will adjust our practices accordingly, as we have throughout the pandemic.

The public health situation, as well as global measures and corresponding impacts on various markets remain fluid and uncertain and may lead to sudden changes in trajectory and outlook. We will continue to proactively respond to the situation and may take further actions that alter our business activity as may be required by governmental authorities or that we determine are in the best interests of our employees and operations.

PCTEL is a leading global provider of wireless technology, including purpose-built Industrial IoT devices, ~~antenna systems,~~antennas, and test & measurement ~~solutions.~~products. We strive to solve complex wireless challenges to help organizations stay connected, transform, and grow. We believe we have a strong brand presence and expertise in RF, digital and mechanical engineering. We have two product lines (antennas/Industrial IoT devices and test & ~~measurement)~~measurement solutions). Our antenna products include antennas deployed in small cells, enterprise Wi-Fi access points, fleet management, IoT applications, and transit systems. Our ~~industrial~~Industrial IoT devices include ruggedized access points, IoT interface cards and IoT sensor platforms for applications such as logistics, remote monitoring and control. Our test & measurement products are designed to improve the performance of wireless networks globally. Mobile operators, private enterprises, and network equipment manufacturers rely on our products to analyze, design, and optimize next generation wireless networks. We seek out product

applications that command a premium for product design and performance, and we avoid commodity markets. Our strength is solving complex wireless challenges for our customers through our products and solutions. To this end, we are constantly seeking to innovate and improve antenna, Industrial IoT, and wireless testing products and capabilities to capture the opportunities of the rapidly evolving wireless industry. We focus on engineering, research, and development to maintain and expand our competitiveness.

PCTEL designs and manufactures precision antennas and Industrial IoT devices, and we offer in-house wireless product development for our customers, including design, testing, radio integration, and manufacturing capabilities. Revenue growth in these markets is driven by the increased use and complexity of wireless communications.

Our antenna portfolio includes Wi-Fi, Bluetooth, Land Mobile Radio (“LMR”), Tetra, Global Navigation Satellite System (“GNSS”), Cellular, Industrial, Scientific, and Medical (“ISM”), Long Range (“LoRa”), and combination antenna solutions. The market applications for our antennas include public safety communications, military communications, utilities &and energy, precision agriculture,

smart traffic management, Electric Vehicle (“EV”) charging stations, ~~embedded~~passenger and cargo vehicles, forestry machinery &and off-road vehicles. For smart traffic management, we provide antenna systems for smart roadways and smart rail. Fleet antennas for public safety, including police vehicles, is a key market. We not only manufacture the antennas, but we also provide engineering design services to determine the layout of multi-antenna installations to minimize potential interference between each antenna element. Our customized solutions often result in general purpose products with ~~advance~~advanced capabilities, such as multi-element antenna systems in a single radome. These systems can include several LTE bands, Wi-Fi bands, and GPS navigation elements, all in one housing. An antenna designed for one application can be modified to be used for other applications.

Our Industrial IoT device portfolio includes access points, radio modules, sensor communication modules, and wireless communication sensors. The market applications for our Industrial IoT devices include utilities and smart grid, oil and gas, manufacturing, logistics, industrial automation, smart metering, and asset tracking.

Our strategy is to provide a “toolbox” of hardware solutions to our existing OEMs and distributors for Industrial IoT systems. We provide all of the field hardware required for wireless Industrial IoT systems - antennas, ruggedized Wi-Fi access points, radio modules, and integrated cellular sensors for Industrial IoT. Our go-to-market strategy for this growing sector is to sell more RF hardware components to our customers that traditionally purchase antennas from PCTEL.

Consistent with our mission to solve complex network engineering problems and to compete effectively in the antenna market, PCTEL maintains expertise in the following areas: radio frequency engineering, wireless network engineering, mechanical engineering, mobile antenna design, manufacturing, and product quality and testing. Competition among providers of antennas and Industrial IoT devices is fragmented. Competitors include Airgain, Amphenol, Panorama, Taoglas, and TE Connectivity.

PCTEL provides RF test & measurement products that improve the performance of wireless networks globally, with a focus on LTE, public safety, and 5G technologies. Revenue growth in this market is driven by the implementation and roll out of new wireless technology standards (i.e., 3G to 4G, 4G to 5G) and new market applications for public safety and government. The market applications for our test & measurement equipment includes cellular testing, public safety and private radio network testing, federal government communications testing, and indoor building network testing. Our portfolio includes scanning receivers, scanning receiver software, public safety solutions, automated spectrum monitoring solutions, interference location systems, mmwave transmitters, and a cloud-based reporting platform.

Our scanning receivers are software defined radios used to 1)(1) confirm adequate RF coverage during deployment, 2)(2) identify interfering signals ~~which~~that decrease capacity, 3)(3) troubleshoot system performance issues as networks expand, and 4)(4) benchmark competing networks because our scanning receivers can scan all technologies across all frequencies during one test. They are necessary for initial network deployment and throughout the entire life cycle of the mobile network. Most of our 4G scanners can be upgraded to 5G via firmware. Our new Gflex scanning receiver includes advanced features to address 5G and broader critical communication and government applications such as signal intelligence.

We provide test & measurement equipment to test in-building communication capability, which is important for first responders, ~~and~~ to certify that buildings meet certain in-building wireless communication ~~standards. We provide test & measurement equipment~~standards and to test public safety networks, including P25, Tetra and digital mobile radio (“DMR”).

Our cloud-based reporting platform for public safety is a subscription-based service for test management, storage and analytics that allows stakeholders, including engineering service companies, building owners and government jurisdictions, to easily manage the data collection process and access final reports through an online map-based interface.

Consistent with our mission to solve complex network engineering problems and to compete effectively in the RF test & measurement market, PCTEL maintains expertise in the following areas: RFradio frequency engineering, digital signal processing (“DSP”) engineering, wireless network engineering, mechanical engineering, manufacturing, and product quality and testing. Competitors for ~~PCTEL’s~~PCTEL's test & measurement products include OEMs such as Anritsu, Berkley Varitronics, Digital Receiver Technology, Rohde and Schwarz, and Viavi.

Revenues for the three months ended March 31, ~~2022~~2023 were ~~$22.5~~$23.0 million, an increase of ~~27.3%~~1.9% compared to ~~$17.7~~$22.5 million for the same period in ~~2021.~~2022. By product line, revenues ~~decreased~~increased by ~~$0.6~~$1.8 million ~~(10.0%~~(33.0%) to ~~$5.6~~$7.4 million for test & measurement products and ~~increased~~

decreased by ~~$5.4~~$1.5 million ~~(45.9%~~(8.7%) to ~~$17.1~~$15.6 million for antennas and Industrial IoT devices during the three months ended March 31, ~~2022.~~2023. The increase in revenues for test & measurement products was due to higher revenues from 5G scanning receiver sales in the U.S. and to global rental customers. The decrease in revenues for antennas and Industrial IoT devices was due to ~~both the acquisition of Smarteq~~lower revenues related to enterprise and ~~higher organic revenues.~~public safety applications. Gross profits of ~~$9.3~~$11.5 million for the quarter increased by ~~$1.0~~$2.2 million compared to the same period in ~~2021~~2022 due to a higher mix of test & measurement product revenue and higher gross margin percentage for antenna product revenue. Operating expenses of $10.2 million for the ~~revenue increases for antennas and Industrial IoT devices. Operating expense of $10.9~~three months ended March 31, 2023 were $0.7 million ~~was $1.9 million higher~~lower than the same period in 2022. There were no restructuring expenses during the first quarter 2023 but the first quarter 2022 included $0.9 million of ~~2021. The increase primarily resulted from the inclusion of Smarteq’s operating~~restructuring expenses ~~and higher expenses for sales and marketing~~ related to ~~travel and trade shows.~~the transition of our Tianjin manufacturing. The net impact of these changes resulted in income before tax of $1.5 million in the first quarter of 2023 compared to a loss before tax of $1.6 million ~~in the first quarter of 2022 compared to a loss before tax of $0.7 million~~ for the first quarter ~~2021.~~2022.

Our cash and investments ~~decreased~~increased by ~~$3.1~~$0.3 million during the first quarter ~~of 2022~~2023 primarily because we ~~used $1.3 million for operating activities and $1.4 million for financing activities.~~generated cash from operations. As of March 31, ~~2022,~~2023, we had cash and investments of ~~$27.7 million and debt of $0.1~~$30.3 million.

On April 30, 2021, we acquired all the outstanding stock of Smarteq, a Swedish company based in Kista, Sweden, that designs antennas for specialized Industrial IoT and vehicular applications (“Smarteq”), pursuant to a Share Sale and Purchase Agreement between PCTEL and Allgon Aktiebolag, a Swedish company and holder of the outstanding stock of Smarteq (the “Agreement”). Smarteq owns all the outstanding stock of SAS Smarteq France, which engages in sales of Smarteq products. PCTEL paid cash consideration of SEK 56.8 million ($6.8 million) at the close of the transaction, all of which was provided from PCTEL’s existing cash. The acquisition of Smarteq provides us with a strong European presence, technical and engineering expertise, and channel partners in Europe, as well as a complementary portfolio of products for our Industrial IoT and intelligent transportation customers worldwide. The revenues and gross margins for Smarteq are combined with the Company’s antenna and Industrial IoT device product line.

Revenues increased ~~27.3%~~1.9% for the three months ended March 31, ~~2022~~2023 compared to the same period in ~~2021~~2022 due to higher revenues for ~~antennas and Industrial IoT devices.~~test & measurement products. Revenues for the test & measurement product line ~~decreased~~increased by ~~10.0%~~33.0% for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021~~2022 due to ~~lower~~higher revenues ~~for products with~~from 5G ~~technologies.~~scanning receiver sales in the U.S. and to global rental customers. For the three months ended March 31, ~~2022,~~2023, revenues for the antennas and Industrial IoT devices product line ~~increased~~decreased by ~~45.9%~~8.7% compared to the same period in ~~2021 as a result of~~2022 due to lower antenna revenues ~~from the contribution of Smarteq~~for enterprise and ~~from higher organic revenues generated by antennas for~~ public safety ~~and fleet~~ applications.

The gross profit percentage ~~decreased~~increased by ~~5.7%~~8.8% for the three months ended March 31, ~~2022~~2023 compared to the same period in ~~2021~~2022 due to a higher mix of ~~antennas and Industrial IoT devices~~test & measurement products and a ~~lower~~higher gross margin percentage for antennas and Industrial IoT devices. The gross profit percentage for the antennas and Industrial IoT devices ~~decreased~~increased by ~~1.3%~~8.5% for the three months ended March 31, ~~2022~~

2023 compared to the same period in ~~2021 primarily~~2022 due to ~~higher freight costs and less~~ favorable product ~~mix.~~mix and lower logistics costs. The gross profit percentage for test & measurement products ~~increased~~decreased by ~~0.6%~~2.0% for the three months ended March 31, ~~2022~~2023 compared to the same period in ~~2021~~2022 primarily due to ~~favorable product and customer mix.~~higher component costs.

Research and development expenses were ~~higher~~lower by ~~$0.1~~$0.3 million for the three months ended March 31, ~~2022~~2023 compared to the same period in ~~2021 as the inclusion of research and~~2022 due to lower development expenses ~~related to Smarteq offset the reduction in expense resulting from the termination of engineering employees in Beijing, China during the fourth quarter 2021.~~and lower stock compensation expenses.

Sales and marketing expenses include costs associated with the sales and marketing employees, product line management, and trade show expenses.

Sales and marketing expenses increased ~~$0.6~~$0.2 million for the three months ended March 31, ~~2022~~2023 compared to the same period in ~~2021 due to inclusion of~~2022 as higher expenses for sales commissions, travel, and marketing ~~expenses for Smarteq of $0.2 million, other employee related expenses of $0.2 million, higher travel expenses of $0.1 million, and higher marketing expenses of $0.1 million.~~offset lower stock compensation expenses.

General and administrative expenses include costs associated with general management, finance, human resources, IT, legal, public company costs, and other operating expenses to the extent not otherwise allocated to business segments.

General and administrative expenses increased by ~~$0.2~~$0.4 million for the three months ended March 31, ~~2022~~2023 compared to the same period in ~~2021~~2022 primarily due to ~~inclusion of general~~higher non-recurring legal expenses and ~~administrative expenses for Smarteq and non-recurring~~ professional fees ~~associated with the business acquisitions.~~related to exploring strategic alternatives.

Amortization of intangible assets within operating expenses ~~during~~were approximately the ~~first quarter 2022 relates to amortization~~same for the ~~intangible assets for~~three months ended March 31, 2023 compared to the ~~Smarteq acquisition.~~same period in 2022.

Restructuring expenses in 2022 ~~relate~~related to expenses for the transition of manufacturing operations from our Tianjin, China facility to contract manufacturers. Restructuring expenses of $0.9 million for the three months ended March 31, 2022 consisted primarily of employee severance and payroll related costs associated with the termination of 69 employees in Tianjin. We completed the manufacturing transition during the first quarter 2022.

Other income, net consists of interest income, foreign exchange ~~gains and~~ losses, and interest expense. Interest income from investment securities ~~decreased~~increased by ~~$18~~$212 during the three months ended March 31, ~~2022~~2023 compared to the prior year, due to ~~lower investment balances and lower~~higher average interest rates.

We recorded income tax expense of $8$0.2 million and $6$8 for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The expense recorded for the three months ended March 31, ~~2022~~2023 and ~~2021 differed from the Federal statutory rate of 21% primarily~~March 31, 2022 because we have a full valuation allowance on our U.S. deferred tax assets.

The ~~full~~deferred tax assets consist of domestic deferred tax assets of $12.0 million and foreign deferred tax assets of $3.1 million. Our valuation ~~allowance is~~allowances are due to ~~the~~ uncertainty regarding the utilization of the deferred tax assets.

On a regular basis, we evaluate the recoverability of deferred tax assets and the need for a valuation allowance. Such evaluations involve the application of significant judgment. We considered multiple factors in our evaluation of the need for a valuation allowance. ~~The~~At March 31, 2023 we had a full valuation allowance ~~against~~on our U.S. and China deferred tax assets ~~was $15.2 million at March 31, 2022~~ and ~~at December 31, 2021. The~~a partial valuation allowance related to our net deferred tax assets ~~consist of domestic deferred tax assets of $11.9 million and foreign deferred tax assets of $3.2 million.~~for Sweden.

We recorded ~~pretax~~pre-tax book income ~~during 2021~~for the prior three years and we believe our financial outlook remains ~~positive. However,~~positive, but we did not meet revenue or earnings expectations for the ~~COVID-19 pandemic and recent macroeconomic trends, including~~U.S. jurisdiction. Additionally, the ~~current environment~~Company recognized revenue for one-time projects in fiscal year 2022 which may not be repeated in 2023 or future years. Because of ~~inflationary pressures have created a high level of uncertainty. Due to this uncertainty, as well as~~ difficulties with forecasting financial results historically, weand due to the uncertainties associated with inflationary and recessionary issues, the Company maintained a full valuation allowance on ~~our~~its U.S. deferred tax assets at March 31, 2023.

The Company maintained a full valuation allowance on its China deferred tax assets. Since the Company completed the transition of manufacturing from its Tianjin facility to contract manufacturers in 2022, the Company does not expect sufficient profits to utilize its China deferred tax assets. The Company maintained a partial valuation allowance on its Sweden deferred tax assets at March 31, 2023.

Based on positive book and taxable income in 2021 and 2022 and because results exceeded projections, the Company reversed a portion of its valuation allowance related to Sweden deferred tax assets during 2022.

The analysis that we prepared to determine the valuation allowance required significant judgment and assumptions regarding future market conditions as well as forecasts for profits, taxable income, and taxable income by jurisdiction. Due to the sensitivity of the analysis, changes to the assumptions in subsequent periods could have a material effect on the valuation allowance. See Note 1311 to the condensed consolidated financial statements for more information related to income taxes.

We recorded net income of $1.3 million for the three months ended March 31, 2023 compared to a net loss of $1.6 million for the same period in 2022 due to the favorable impact of higher gross margins and lower operating expenses. Gross margins were higher by $2.2 million for the three months ended March 31, ~~2022~~2023 compared to ~~a net loss of $0.7 million for~~ the same period in ~~2021, as higher operating expenses offset higher~~2022 due to an increase in mix of test & measurement products and an increase in the antenna gross ~~profits.~~margin percentage. Operating expenses were ~~higher~~lower by ~~$1.9~~$0.7 million due to lower restructuring expenses ~~and~~being partially offset by higher ~~expenses for~~ sales and marketing ~~related to travel~~expenses and ~~trade shows.~~general and administrative expenses.

Our primary source of liquidity is cash provided by operations, with short-term swings in liquidity supported by a significant balance of cash and short-term investments. The balance has fluctuated with cash from operations, acquisitions and divestitures, payment of dividends, and the repurchase of our common shares.

Within operating activities, we are historically a net generator of operating funds from our income statement activities and during periods of expansion, we expect to use cash from our balance sheet.

Within investing activities, capital spending historically ranges between 2.0% and 4.0% of our revenues and the primary use of capital is for manufacturing, engineering, and product development. We historically have made significant transfers between investments and cash as we rotate our large cash balances and short-term investment balances between money market funds, which are accounted for as cash equivalents, and other investment vehicles. We have a history of supplementing our organic revenue with acquisitions of product lines or companies, resulting in significant uses of our cash and short-term investment balances from time to time. We expect the historical trend for capital spending and the variability caused by moving money between cash and investments and periodic merger and acquisition activity to continue in the future.

Within financing activities, we have historically generated funds from the exercise of stock options and proceeds from the issuance of common stock through our Employee Stock Purchase Plan (“ESPP”). We have historically used funds to issue dividends and we periodically repurchase shares of our common stock through share repurchase programs. ~~We used $3.2 million for the repurchase of shares during 2021. Share repurchases were funded with cash on hand.~~

At March 31, ~~2022,~~2023, our cash, cash equivalents, and investments were approximately ~~$27.7~~$30.3 million, and we had working capital of ~~$46.8~~$52.5 million. ~~Throughout the COVID-19 pandemic, we have proactively managed our costs and our working capital in order to protect our financial position and maintain our workforce.~~ Management believes our cash and investments provide adequate liquidity and working capital for the next twelve months from the date of this Quarterly Report on Form 10-Q to support our operations given our historic ability to generate free cash flow (cash flow from operations less capital spending) ~~and our low level of debt.~~.

Operating activities provided $2.4 million of cash during the three months ended March 31, 2023 primarily because we generated $2.3 million of cash from our statement of operations. The cash impact from changes in the balance sheet was approximately neutral during the three months ended March 31, 2023. Cash as payments for accrued liabilities and accounts payable offset the positive impact of net reductions in accounts receivable and inventories. Accounts receivable decreased by $3.3 million during the first quarter of 2023 due to lower sequential revenues and a decrease in days sales outstanding, and inventories were lower in the first quarter 2023 due to lower antenna-related inventories.

Operating activities used $1.3 million of cash during the three months ended March 31, 2022. We used $0.3 million of cash from our statement of operations and $1.0 million from the balance sheet. The balance sheet was a net use of cash as payments of accrued liabilities and accounts payable offset the positive impact of net reductions in accounts receivable and inventories. Accounts receivable decreased by $1.5 million during the first quarter of 2022 due to lower sequential revenues, and inventories were lower in the first quarter of 2022 due to the completion of our transition from Tianjin manufacturing to contract manufacturers.

Our investing activities ~~generated $1.7~~provided $0.3 million of cash during the three months ended March 31, ~~2021. We generated $0.7 million of~~

cash from our statement of operations activities and $1.0 million from the balance sheet. The balance sheet was a net source of cash as reductions in accounts receivable were partially offset by the reduction in accounts payable. Accounts receivable decreased by $2.0 million primarily because revenues declined by $3.5 million for2023. During the three months ended March 31, ~~2021 compared to~~2023, redemptions and maturities of our investments provided $7.3 million in funds and we rotated $6.7 million of cash into new investments. We used $0.4 million for capital expenditures during the three months ended ~~December~~March 31, ~~2020. The reduction in accounts payable primarily relates to reduced purchases of inventory and the timing of supplier payments.~~

Our investing activities used $0.3 million of cash during the three months ended March 31, 2022. During the three months ended March 31, 2022, redemptions and maturities of our investments provided $8.2 million in funds and we rotated $8.2 million of cash into new investments. We used $0.3 million for capital expenditures during the three months ended March 31, 2022.

We used $1.8 million in cash for financing activities ~~provided $7.1 million of cash~~ during the three months ended March 31, ~~2021. During the three months ended March 31, 2021, redemptions and maturities of our investments provided $13.4 million in funds and we rotated $6.0 million of cash into new investments.~~2023. We used ~~$0.4~~$1.0 million for ~~capital expenditures during the three months ended March 31, 2021.~~ quarterly cash dividends and $0.7 million for payroll taxes related to stock-based compensation in this period. The tax payments primarily related to restricted stock awards.

We used $1.4 million in cash for financing activities during the three months ended March 31, 2022. We used $1.0 million for quarterly cash dividends and $0.4 million for payroll taxes related to stock-based compensation in this period. The tax payments related to restricted stock awards.

We used $1.7 million in cash for financing activities during the three months ended March 31, 2021. We used $1.0 million for quarterly cash dividends. We used $0.7 million for payroll taxes related to restricted stock awards and shares issued under the short-term incentive plan.

Our material cash requirements from known contractual and other obligations primarily relate to ~~non-cancelable~~non-cancellable purchase obligations.

We use certain critical accounting policies and estimates as described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” of the ~~2021~~2022 Form ~~10-K.~~10-K which is incorporated by reference in response to this item. There have been no material changes in

any of our critical accounting policies and estimates since December 31, ~~2021.~~2022. See Note 1 to the condensed consolidated financial statements for a discussion of recent accounting pronouncements.

~~See our 2021 Form 10-K (Item 7A).~~ As ~~of March 31, 2022, there have been no material changes~~a "smaller reporting company," we are not required to provide disclosure in this ~~information.~~Quarterly Report on Form 10-Q in response to this item.

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and

evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act, as amended (the “Exchange Act”) were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized, and reported within time periods specified in the SEC rules and ~~forms of the SEC.~~ forms.

In connection with the evaluation required by Rule 13a-15(d), management, with the participation of the Chief Executive Officer and Chief Financial Officer, has identified that there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting ~~during the COVID-19 pandemic,~~ despite previously having a remote working environment for all non-production related employees and now having a hybrid work environment. We are continually monitoring and assessing the impact of COVID-19 on our internal controls to minimize the impact to their design and operating effectiveness.

We may, from time to time, be the subject of various pending or threatened legal actions in the ordinary course of our business. All such matters are subject to many uncertainties and outcomes that are not predictable with assurance. To our knowledge, as of March 31, ~~2022,~~2023, there were no claims or litigation pending against the Company that would be reasonably likely to have a material adverse effect on our consolidated financial position, results of operations or liquidity.

See Item 1A of our ~~2021~~2022 Form 10-K. As of March 31, ~~2022,~~2023, there have been no material changes to the Risk Factors set forth in ~~this information.~~Item 1A of our 2022 Form 19-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:


Delaware		77-0364943
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)

471 Brighton Drive,
Bloomingdale, IL		60108
(Address of Principal Executive Office)		(Zip Code)


PART I	FINANCIAL INFORMATION	Page
Item 1	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of Stockholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to the Condensed Consolidated Financial Statements	9
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	2924
Item 3	Quantitative and Qualitative Disclosures about Market Risk	3529
Item 4	Controls and Procedures	3529

PART II	OTHER INFORMATION	3631
Item 1	Legal Proceedings	3631
Item 1A	Risk Factors	3631
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	3631
Item 3	Defaults Upon Senior Securities	3631
Item 4	Mine Safety ~~Disclosures~~Disclosure	3631
Item 5	Other Information	3631
Item 6	Exhibits	3731
	Signatures		3832

Fair value of purchase consideration
Cash	$	6,785
Working capital adjustment		(5	)
Total purchase consideration	$	6,780

Purchase Price Allocation:
Cash	$	503
Accounts receivable		1,415
Prepaid expenses and other assets		109
Inventories		1,286
Right of use assets		232
Property and equipment		131
Intangible assets		1,983
Accounts payable		(981	)
Accrued liabilities		(837	)
Lease liabilities - short-term		(102	)
Lease liabilities - long-term		(112	)
Debt		(91	)
Identifiable assets acquired	$	3,536
Goodwill		3,244
Total purchase price	$	6,780

Finite-lived assets:

Customer relationships	$	787
Trade names		639
Technology		438
Other intangible assets		119
	$	1,983


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

~~Intangible Assets:~~	~~Useful Life~~
~~Customer relationships~~	~~5 years~~
~~Trade names~~	~~5 years~~
~~Technology~~	~~5 years~~
~~Other intangible assets~~	~~.5 to 5 years~~

	Three Months Ended March 31,
	2021
Net Revenue	$	17,707
Add: Net Revenue - acquired business		1,857
Net Revenue - pro forma combined	$	19,564

Fiscal Year	Amount
2022 (remaining nine months)	$	270
2023		360
2024		346
2025		340
2026		113
Thereafter		0
Total	$	1,429


Balance at December 31, 2021	$	26
Current period benefit for credit losses		(10	)
Balance at March 31, 2022	$	16


Award Type	Remaining Unrecognized Compensation Expense		Weighted Average Life (Years)		Remaining Unrecognized Compensation Expense		Weighted Average Life (Years)
Service-based awards	$	2,257		1.6	$	1,409		1.4
Performance-based awards	$	2,593		2.1	$	1,407		1.9

	Tianjin
	Manufacturing			Beijing			Total
Balance at December 31, 2021	$	0		$	368		$	368
Restructuring expense		935			0			935
Payments made		(935	)		(368	)		(1,303	)
Balance at March 31, 2022	$	0		$	0		$	0


	March 31, ~~2022~~	2023
Weighted-average remaining lease term - finance leases	~~2.9~~2.4 years
Weighted-average remaining lease term - operating leases	~~8.2~~7.2 years
Weighted-average discount rate - finance leases	~~3.9%~~	4.3%
Weighted-average discount rate - operating leases	~~5.0%~~	5.0%


Leases	Consolidated Balance Sheet Classification	March 31, 2023		December 31, 2022
Assets:
Operating right-of-use assets	Other noncurrent assets	$	2,156	$	2,241
Finance right-of-use assets	Other noncurrent assets		106		120
Total leased assets		$	2,262	$	2,361
Liabilities:
Current
Operating lease liabilities	Accrued liabilities	$	535	$	527
Finance lease liabilities	Accrued liabilities		49		51
Noncurrent
Operating lease liabilities	Long-term liabilities		3,172		3,327
Finance lease liabilities	Long-term liabilities		62		73
Total lease liabilities		$	3,818	$	3,978

	Three Months Ended March 31, 2021
	Antennas & Industrial IoT Devices			Test & Measurement Products			Corporate			Total

Revenues	$	11,723		$	6,205		$	(221	)	$	17,707
Gross Profit	$	3,747		$	4,588		$	3		$	8,338
Gross Profit %		32.0	%		73.9	%	NA				47.1	%

Trade Accounts Receivable	March 31, 2022	December 31, 2021
Customer B	14%	4%
Customer C	10%	9%

	Three Months Ended March 31,				Three Months Ended March 31,		% of Revenues
	2022		Change		2021		2022			2021
Research and development	$	3,250	$	56	$	3,194		14.4	%		18.0	%
Sales and marketing		3,402		639		2,763		15.1	%		15.6	%
General and administrative		3,242		166		3,076		14.4	%		17.4	%
Amortization of intangible assets		71		71		0		0.3	%		0.0	%
Restructuring benefits (expenses)		935		935		0		4.1	%		0.0	%
Total	$	10,900	$	1,867	$	9,033		48.3	%		51.0	%

	Payments Due by Period
			Less than						After
	Total		1 year		1-3 years		4-5 years		5 years
Purchase obligations	$	22,254	$	22,157	$	97	$	0	$	0


Exhibit No.	Description


31.1*	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002~~2002.	.
31.2*	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002~~2002.	.

32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002~~2002.	.
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	The following materials from PCTEL, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2022~~2023 formatted Inline XBRL (eXtensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Statement of Operations, (ii) the Unaudited Condensed Consolidated Balance Sheet, (iii) the Unaudited Condensed Consolidated Statement of Stockholders' Equity, (iv) the Unaudited Condensed Consolidated Statement of Cash Flows, and (v) Notes to the Unaudited Condensed Consolidated Financial Statements.
104*	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). * filed herewith ** furnished herewith