<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended
June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number
1-11916
WIRELESS TELECOM GROUP, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-2582295
---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
East 49 Midland Avenue
Paramus, New Jersey 07652 07652
------------------------- -----
(Address of principal executive offices) (Zip Code)
(201) 261-8797
--------------
Registrant's telephone number, including area code
- - --------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90
days. YES X NO
--- ---
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the most recent practicable date.
Common Stock - Par Value $.01 17,354,258
- - ------------------------------ ------------------
Class Outstanding Shares
At July 8, 1996
<PAGE>
WIRELESS TELECOM GROUP, INC.
Table of Contents
PART I. FINANCIAL INFORMATION Page(s)
Item 1 -- Consolidated Financial Statements:
Condensed Balance Sheets as of June 30, 1996
(unaudited) and December 31, 1995 3
Condensed Statements of Operations for the Three
and Six Months Ended June 30, 1996 and 1995
(unaudited) 4
Condensed Statements of Cash Flows for the Six
Months Ended June 30, 1996 and 1995 (unaudited) 5
Notes to Interim Condensed Financial Statements
(unaudited) 6 - 7
Item 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 - 10
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings 11
Item 2 -- Changes in Securities 11
Item 3 -- Defaults upon Senior Securities 11
Item 4 -- Submission of Matters to a Vote of Security Holders 11
Item 5 -- Other Information 11
Item 6 -- Exhibits and Reports on Form 8-K 11
Signatures 12
Exhibit 11.1 13
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
- ASSETS -
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,585,819 $ 5,839,865
Accounts receivable -- net of allowance for
doubtful accounts of $50,415 and
$35,610, respectively 4,107,805 3,364,189
Inventories 3,571,475 2,773,925
Prepaid expenses and other current assets 434,294 576,237
---------- ----------
TOTAL CURRENT ASSETS 14,699,393 12,554,216
PROPERTY, PLANT AND EQUIPMENT - NET 741,537 575,149
OTHER ASSETS 458,778 272,988
---------- ----------
$ 15,899,708 $ 13,402,353
========== ==========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES $ 1,017,610 $ 903,242
--------- -------
DEFERRED INCOME TAXES 54,291 50,696
--------- -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value, 2,000,000
shares authorized, none issued - -
Common stock, $.01 par value, 30,000,000 shares
authorized, 17,494,258 and 8,713,749 shares
issued, respectively 174,943 87,138
Additional paid-in-capital 5,990,396 5,833,138
Retained earnings 8,727,794 6,593,465
Treasury stock, 140,000 and 70,000 shares,
at cost (65,326) (65,326)
---------- ----------
14,827,807 12,448,415
---------- ----------
$15,899,708 $13,402,353
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
NET SALES $ 5,031,174 $ 4,059,175 $ 10,379,138 $ 7,486,634
---------- ---------- ---------- ---------
COSTS AND EXPENSES
Cost of sales 1,473,592 1,090,436 2,798,444 2,035,441
Operating expenses 1,188,099 963,139 2,381,860 1,772,172
Interest, dividend
and other income (76,950) (72,436) (162,400) (137,343)
--------- --------- --------- ---------
TOTAL COSTS AND EXPENSES 2,584,741 1,981,139 5,017,904 3,670,270
--------- --------- --------- ---------
INCOME FROM OPERATIONS
BEFORE PROVISION FOR
INCOME TAXES 2,446,433 2,078,036 5,361,234 3,816,364
PROVISION FOR INCOME TAXES 915,965 797,882 2,013,819 1,466,171
--------- --------- --------- ---------
NET INCOME $ 1,530,468 $ 1,280,154 $ 3,347,415 $ 2,350,193
========= ========= ========= =========
NET INCOME PER COMMON SHARE (Note 2)
PRIMARY $ .09 $ .07 $ .19 $ .14
--- --- --- ---
FULLY DILUTED $ .09 $ .07 $ .19 $ .13
--- --- --- ---
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 3,347,415 $ 2,350,193
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 76,511 56,956
Deferred income taxes (benefit) 3,595 (500)
Provision for losses on accounts receivable 14,805 10,149
Changes in assets and liabilities:
(Increase) in accounts receivable (758,421) (797,052)
(Increase) in inventories (797,550) (700,790)
Decrease in prepaid expenses and other assets 95,998 35,509
Increase in accounts payable and accrued expenses 114,368 454,677
--------- ---------
Net cash provided by operating activities 2,096,721 1,409,142
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (242,899) (167,432)
Officer's life insurance (139,845) (107,333)
--------- ---------
Net cash (used) for investing activities (382,744) (274,765)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (1,213,086) (567,290)
Proceeds from exercise of stock options 245,063 61,375
--------- --------
Net cash (used) for financing activities (968,023) (505,915)
NET INCREASE IN CASH AND CASH EQUIVALENTS 745,954 628,462
Cash and cash equivalents, at beginning of year 5,839,865 3,901,481
--------- ---------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 6,585,819 $ 4,529,943
========= =========
SUPPLEMENTAL INFORMATION:
Cash paid during the period for:
Interest $ - $ -
Taxes 1,697,000 1,455,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
WIRELESS TELECOM GROUP, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES
The condensed consolidated balance sheet as of June 30, 1996 and the condensed
consolidated statements of operations for the three and six month periods ended
June 30,1996 and 1995 and the condensed consolidated statements of cash flows
for the six month periods ended June 30, 1996 and 1995 have been prepared by the
Company without audit. The consolidated financial statements include the
accounts of Wireless Telecom Group,Inc. and its wholly-owned subsidiary WTG
Foreign Sales Corporation. WTG Foreign Sales Corporation began operations as a
subsidiary of the Company in February 1996.
In the opinion of management, the accompanying condensed consolidated financial
statements referred to above contain all necessary adjustments, consisting of
normal accruals and recurring entries only, which are necessary to present
fairly the Company's results for the interim periods being presented.
The accounting policies followed by the Company are set forth in Note 1 to the
Company's financial statements included in its annual report on Form 10-K for
the year ended December 31, 1995, which is incorporated herein by reference.
Specific reference is made to this report for a description of the Company's
securities and the notes to financial statements included therein.
The results of operations for the three and six month periods ended June 30,
1996 and 1995 are not necessarily indicative of the results to be expected for
the full year.
NOTE 2 - INCOME PER COMMON SHARE
Income per common share is computed by dividing the net income by the
weighted average number of common shares and common equivalent shares
outstanding during each period. See also Note 4 regarding the Company's Common
Stock splits.
NOTE 3 - REVOLVING CREDIT LINE
The Company renewed the agreement with its bank which provides for an unsecured
line of credit in the amount of $3,000,000 at the bank's prime lending rate.
There are no direct borrowings currently against the line of credit. This
agreement expires on June 30, 1997.
NOTE 4 - DIVIDENDS
On May 13, 1996 the Company announced the declaration of a two-for-one stock
split on the Company's common stock. The split was effective for shareholders
of record on May 22, 1996 and was paid on May 28, 1996. On June 12, 1995 the
Company announced the declaration of a three-for-two stock split on the
Company's common stock. The split was effective for shareholders of record on
July 5, 1995 and was paid on July 18, 1995. All share and per share data have
been retroactively adjusted to show the effects of these splits.
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<PAGE>
WIRELESS TELECOM GROUP, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 4 - DIVIDENDS (Continued)
On January 29, 1996 and May 13, 1996 the Company announced the declaration of
quarterly cash dividends of $.03 per share and $.04 per share to shareholders of
record on March 22, 1996 and June 24, 1996, respectively. These cash dividends
aggregated $1,213,086 and were paid by March 31, 1996 and June 30, 1996,
respectively.
It is the Company's present intention to maintain a quarterly dividend policy.
The Company paid cash dividends aggregating $.08 per share for the year ending
December 31, 1995.
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<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Wireless Telecom Group, Inc., formerly Noise Com, Inc., (the "Company")
develops, manufactures and markets a wide variety of electronic noise sources
and test instruments for wireless telecommunications. The Company's products
are used to test the performance and capability of satellite, cellular and
personal (PCS) communications, radio, radar, wireless local area network (WLAN),
high-definition television (HDTV) and other communications systems. To further
address the needs of the ever-evolving wireless telecommunications industry, the
Company has been developing and marketing test instruments designed to fulfill
the requirements of such customers. The Company is expanding its product
offerings to these customers as this emerging industry is expected to provide an
opportunity for substantial growth.
The financial information presented herein includes:
(i) Condensed consolidated balance sheets as of the six months ended June 30,
1996 and as of the year ended December 31, 1995 (ii) Condensed
consolidated statements of operations for the three and six month periods
ended June 30, 1996 and 1995 and (iii) Condensed consolidated statements of
cash flows for the six month periods ended June 30, 1996 and 1995.
OPERATIONS
For the six months ended June 30, 1996 as compared to the corresponding period
of the previous year, net sales increased to $10,379,138 from $7,486,634 an
increase of $2,892,504 or 38.6%. For the quarter ended June 30, 1996 as
compared to the corresponding period of the previous year, net sales
increased to $5,031,174 from $4,059,175 an increase of $971,999 or 23.9%.
These volume increases are the result of the continued growth of commercial
applications of the Company's products of which the most notable are the sales
of the Company's wireless telecommunications instruments. International sales
have continued to increase especially in the Pacific Rim.
The Company's gross profit on net sales for the six months ended June 30, 1996
was $7,580,694 or 73.0% as compared to $5,451,193 or 72.8% for the six months
ended June 30, 1995. Gross profit on net sales for the quarter ended June 30,
1996 was $3,557,582 or 70.7% as compared to $2,968,739 or 73.1% for the three
months ended June 30, 1995. Variations for the quarter are attributed to the
mix of product sales. The Company continues to rigidly monitor costs associated
with material acquisition, manufacturing and production.
Operating expenses for the six months ended June 30, 1996 were $2,381,860 or
22.9% of net sales as compared to $1,772,172 or 23.7% of net sales for the six
months ended June 30, 1995. Operating expenses for the quarter ended June 30,
1996 were $1,188,099, or 23.6% of net sales as compared to $963,139 or 23.7% of
net sales for the quarter ended June 30, 1995.
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<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
For the six months ended June 30, 1996 as compared to the same period of the
prior year, operating expenses increased in dollars by $609,688. Approximately
42% of this increase is due to greater expenditures for research and development
of new products. Additional personnel and increased salaries accounted for 30%
of the increase in dollars from 1995 and, 22% of the increase is attributable to
greater advertising expenses incurred to generate sales and to expand customer
awareness of the Company's wireless telecommunications instruments. These
increases were partially offset by a 8% decrease in commissions earned by
manufacturers' representatives. The Company has generated more sales via its
internal sales force.
For the quarter ended June 30, 1996 as compared to the same period of the prior
year, operating expenses increased in dollars by $224,960. Approximately 40% of
this increase is due to greater expenditures for research and development of new
products . Additional personnel and increased salaries accounted for 37% of
the increase in dollars from 1995 and, 23% of the increase is attributable to
greater advertising expenses. These increases were partially offset by a 24%
decrease in commissions earned by manufacturers' representatives.
Interest, dividend and other income increased by $25,057 for the six months
ended June 30, 1996 and by $4,514 for the quarter ended June 30, 1996. This
increase was due to additional cash generated by operations.
Net income increased to $3,347,415, or $.19 per share, for the six months ended
June 30, 1996 as compared to $2,350,193, or $.14 per share ($.13 per share on a
fully-diluted basis) for the six months ended June 30, 1995. Net income for the
quarter ended June 30, 1996 was $1,530,468, or $.09 per share as compared to
$1,280,154, or $.07 per share for the three months ended June 30, 1995. The
explanation of these increases can be derived from the analysis given above of
operations for the three and six month periods ending June 30, 1996 and 1995,
respectively.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's working capital has increased by $2,030,809 to $13,681,783 at June
30, 1996, from $11,650,974 at December 31, 1995. At June 30, 1996 the Company
had a current ratio of 14.4 to 1, and a ratio of debt to net worth of less
than .1 to 1. At December 31, 1995 the Company had a current ratio of 13.9 to
1, and a ratio of debt to net worth of less than .1 to 1.
Net cash provided from operations has allowed the Company to meet its liquidity
requirements, research and development activities and capital expenditures. The
principal source of cash has been from net income. To maximize the use of
funds, management has been closely monitoring accounts receivable and inventory.
Management believes that accounts receivable have been increasing commensurate
with the increase in sales. The Company has historically been able to turn over
its accounts receivable approximately every two months. This average collection
period has been sufficient to provide the working capital and liquidity
necessary to operate the Company.
Due to the Company's expanding product line, the volume of items and accordingly
the total dollar value of inventory has increased. As the Company plans to
further expand its product line, inventory is being monitored closely to balance
production requirements while maintaining manageable levels of goods on hand.
-9-
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
On January 29, 1996 and May 13, 1996 the Company announced the declaration of
quarterly cash dividends of $.03 per share and $.04 per share payable to
shareholders of record on March 22, 1996 and June 24, 1996, respectively. These
cash dividends aggregated $1,213,086 and were paid by March 31, 1996 and June
30, 1996, respectively.
In February 1996, the Company established a Foreign Sales Corporation.
On May 13, 1996 the Company announced the declaration of a two-for-one stock
split on the Company's common stock. The split was effective for shareholders
of record on May 22, 1996 and was paid on May 28, 1996. On June 12, 1995 the
Company announce d the declaration of a three-for-two stock split on the
Company's common stock. The split was effective for shareholders of record on
July 5, 1995 and was paid on July 18, 1995. All share and per share data have
been retroactively adjusted to show the effects of these splits.
During 1995, the Company declared quarterly cash dividends aggregating
$1,430,755 or $.08 per common share. It is the Company's present intention to
maintain a quarterly dividend policy.
The Company believes that its financial resources from working capital provided
by operations and its bank line of credit are adequate to meet current
requirements.
INFLATION AND SEASONALITY
The Company does not anticipate that inflation will significantly impact its
business nor does it believe that its business is seasonal.
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<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Not applicable.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders was held on May 10, 1996.
(b) The following matters were voted upon and the results were
as follows:
(1) The following persons were nominated by management
and each were elected to serve as directors until
the next Annual Meeting of Stockholders or until
their successors are elected and shall qualify:
Franklin H. Blecher, Ph.D., Demir Eden, Seymour
Kramer, Saul Panken, Dominick Scaringella, Gary
Simonyan, Joanne Simonyan, Dale Sydnor, John
Wilchek. The Stockholders voted 8,101,299 shares
in the affirmative and 168,957 shares in the
negative for the directors listed above.
(2) The Stockholders voted 4,612,556 shares in the
affirmative, 219,616 shares in the negative and
56,827 shares abstained to amend the Company's
existing 1995 Incentive Stock Option Plan
increasing the number of shares of Common Stock
available under the plan from 750,000 to 1,750,000
(as adjusted for the two-for-one stock split).
Item 5. OTHER INFORMATION
On May 13, 1996 the Company announced the declaration of a
two-for-one stock split payable on May 28, 1996 to
shareholders of record on May 22, 1996. On May 13,1996 the
Company also announced a cash dividend of $.04 per share to
shareholders of record on June 24, 1996. The cash dividend
was paid by June 30, 1996.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11.1 Computation of per share earnings
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the
quarterly period ended June 30, 1996.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WIRELESS TELECOM GROUP, INC.
(Registrant)
Date: July 15, 1996 /S/Dale Sydnor
Dale Sydnor
Chief Executive Officer
Date: July 15, 1996 /S/Eugene Ferrara
Eugene Ferrara
Chief Financial Officer
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<PAGE>
Exhibit 11.1
WIRELESS TELECOM GROUP, INC.
COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET INCOME $ 1,530,468 $ 1,280,154 $ 3,347,415 $ 2,350,193
--------- --------- --------- ---------
PRIMARY
Weighted average shares 17,329,144 16,999,830 17,310,290 16,986,117
Assumed conversions:
Stock options and warrants 525,850 535,587 386,161 410,904
---------- ---------- ---------- ----------
Total weighted average
shares outstanding 17,854,994 17,535,417 17,696,451 17,397,021
========== ========== ========== ==========
Per share amounts $ .09 $ .07 $ .19 $ .14
=== === === ===
FULLY DILUTED
Weighted average shares 17,329,144 16,999,830 17,310,290 16,986,117
Assumed conversions:
Stock options and warrants 529,601 598,026 485,622 535,962
---------- ---------- ---------- ----------
Total weighted average
shares outstanding 17,858,745 17,597,856 17,795,912 17,522,079
========== ========== ========== ==========
Per share amounts $ .09 $ .07 $ .19 $ .13
=== === === ===
</TABLE>
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6585819
<SECURITIES> 0
<RECEIVABLES> 4158220
<ALLOWANCES> 50415
<INVENTORY> 3571475
<CURRENT-ASSETS> 14699393
<PP&E> 1389246
<DEPRECIATION> 647709
<TOTAL-ASSETS> 15899708
<CURRENT-LIABILITIES> 1017610
<BONDS> 0
0
0
<COMMON> 174943
<OTHER-SE> 14652864
<TOTAL-LIABILITY-AND-EQUITY> 15899708
<SALES> 10379138
<TOTAL-REVENUES> 10379138
<CGS> 2798444
<TOTAL-COSTS> 5017904
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5361234
<INCOME-TAX> 2013819
<INCOME-CONTINUING> 3347415
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3347415
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
