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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, ~~2021~~2022

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

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

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

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

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

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

none

(Title of Class)

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

Yes ☐ No ☒

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

Yes ☒ No ☐

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

Yes ☒ No ☐

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

Yes ☒ No ☐

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

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

Large accelerated filer ☐	Accelerated filer ☐

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

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

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

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

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

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

Yes ☐ No ☒

The aggregate market value of the registrants’ Common Stock, $.01 par value, held by non-affiliates and computed by reference to the closing price as reported by NYSE American on June 30, ~~2021~~2022: $6923,~~130~~925,~~053~~676. As of March 6, ~~2022~~2023, there were 2221,~~666~~371,~~074~~047 shares of the Company’s common stock ($.01 par value) outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement relating to the ~~2021~~2022 Annual Meeting of Stockholders (the “~~2021~~2023 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

		Page
PART I	~~PART I~~
Item 1.	Business	3
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	1816
Item 2.	Properties	1816
Item 3.	Legal Proceedings	1816
Item 4.	Mine Safety Disclosures	1816
PART II	~~PART II~~
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	1917
Item 6.	[Reserved]	1917
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2018
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	3126
Item 8.	Financial Statements and Supplementary Data	3126
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	6656
Item 9A.	Controls and Procedures	6656
Item 9B.	Other Information	6656
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	6656
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	6757
Item 11.	Executive Compensation	6757
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	6757
Item 13.	Certain Relationships and Related Transactions, and Director Independence	6757
Item 14.	Principal Accountant Fees and Services	6757
PART IV
Item 15.	Exhibits and Financial Statement Schedules	6858
Signatures		7362

PART I

Item 1. Business

Overview

Wireless Telecom Group, Inc., a New Jersey corporation, together with its subsidiaries (“we”, “us”, “our” or the “Company”), ~~specializes~~is inpursuing strategic alternatives to accelerate the ~~design~~realization ~~and~~of ~~manufacture~~value for our shareholders. On January 1, 2022, the Company was comprised of ~~advanced~~Wireless ~~radio~~Telecom ~~frequency~~Group, Inc., doing business as, and ~~microwave~~operating ~~devices~~under ~~which~~the ~~enable~~trade name NoiseCom, Inc., ~~the~~and ~~development~~its wholly owned subsidiaries including Boonton Electronics Corporation, ~~testing~~Microlab/FXR LLC, Wireless Telecommunications Group Ltd., CommAgility Limited and ~~deployment~~Holzworth ofInstrumentation, ~~wireless~~Inc. ~~technology~~(NoiseCom, Inc., ~~The~~Boonton ~~Company~~Electronics ~~provides~~Corporation, ~~unique~~Microlab/FXR LLC, ~~highly~~CommAgility Limited ~~customized~~Ltd., and ~~configured~~Holzworth ~~solutions~~Instrumentation, Inc. are hereinafter referred to as “Noisecom”, “Boonton”, “Microlab”, ~~which~~“CommAgility” ~~drive~~and ~~innovation~~“Holzworth”, ~~across~~respectively). aOur ~~wide~~product ~~range~~groups were organized as follows: Radio Frequency Components (“RFC”) was comprised of ~~traditional~~our Microlab brand; Radio, Baseband, Software (“RBS”) was comprised of our CommAgility brand; and ~~emerging~~Test ~~wireless~~and ~~technologies~~Measurement (“T&M”) was comprised of our Boonton, Noisecom and Holzworth brands.

~~The~~As ~~consolidated~~more ~~financial~~fully ~~statements~~described ~~for~~under ~~the~~Divestitures ~~2021~~below, ~~fiscal~~on ~~year~~March ~~include~~1, 2022, the ~~accounts~~Company ofcompleted ~~Wireless~~the ~~Telecom~~sale ~~Group,~~of ~~Inc.,~~Microlab ~~doing~~to ~~business~~RF asIndustries, Ltd and ~~operating~~on ~~under~~December 30, 2022 completed the ~~trade~~sale ~~name~~of ~~Noise~~CommAgility ~~Com~~to E-Space Acquisitions, ~~Inc~~LLC., Subsequent to the divestitures of Microlab and ~~its~~CommAgility, the ~~wholly~~Company ~~owned~~is ~~subsidiaries~~comprised ~~including~~of ~~Boonton~~the ~~Electronics~~T&M ~~Corporation~~business, ~~Microlab/FXR, Wireless~~which ~~Telecommunications~~is ~~Ltd.,~~made ~~CommAgility~~up ~~Limited~~of our Boonton, Noisecom and Holzworth ~~Instrumentation, Inc~~brands. The ~~corporate~~T&M ~~website~~business provides ~~address~~radio isfrequency ~~www.wirelesstelecomgroup.com. Noise~~(“RF”) ~~Com,~~and ~~Inc.,~~microwave ~~Boonton~~test ~~Electronics~~equipment ~~Corporation,~~and ~~Microlab/FXR,~~low ~~CommAgility~~phase ~~Limited~~noise ~~Ltd.~~RF synthesizers to equipment manufacturers, aerospace and ~~Holzworth~~defense ~~Instrumentation~~companies, ~~Inc.~~military ~~are~~and ~~hereinafter referred~~government toagencies, assatellite ~~“Noisecom”,~~communication ~~“Boonton”~~companies, ~~“Microlab”,~~semiconductor ~~“CommAgility”~~companies and ~~“Holzworth”,~~other ~~respectively~~global technology companies.

In ~~2021,~~accordance ~~Microlab,~~with ~~Boonton,~~applicable ~~Noisecom~~accounting guidance, ~~CommAgility~~the ~~and~~results ~~Holzworth~~of ~~were~~Microlab ~~organized as one reporting segment~~ and ~~three~~CommAgility ~~product groups. Our product groups~~ are ~~organized~~presented as ~~follows:~~discontinued ~~Radio~~operations ~~Frequency~~in ~~Components (“RFC”) is comprised of our Microlab brand; Radio, Baseband,~~the ~~Software~~Consolidated ~~(“RBS”)~~Statements ~~is comprised~~ of ~~our~~Operations ~~CommAgility brand;~~ and ~~Test~~Comprehensive ~~and Measurement~~ Income/(~~“T&M”~~Loss) isand, ~~comprised~~as ~~of our Boonton~~such, ~~Noisecom~~have ~~and~~been ~~Holzworth~~excluded ~~brands.~~from Ascontinuing ~~more~~operations. ~~fully described under Recent Event below~~Further, ~~on December 16, 2021,~~ the Company ~~entered into~~reclassified ~~an agreement to sell~~ the ~~membership~~assets ~~interests~~and liabilities of Microlab toand RFCommAgility ~~Industries,~~as ~~Ltd.~~assets ~~The~~and ~~transaction~~liabilities ~~closed~~of ondiscontinued ~~March~~operations in 1,the ~~2022.~~Consolidated ~~Accordingly, following~~Balance ~~the~~Sheet ~~close~~as of ~~the~~December ~~sale~~31, ~~the~~2021. ~~Company~~The ~~will~~Consolidated beStatements ~~comprised~~ of ~~the~~Cash ~~Boonton,~~Flows ~~Holzworth,~~are ~~and~~presented ~~Noisecom~~on ~~brands~~a ~~within our T&M product~~consolidated ~~group~~basis ~~and~~for ~~CommAgility~~both ~~within~~continuing ~~our~~operations ~~RBS~~and ~~product~~discontinued ~~group~~operations. ~~All~~Our ofconsolidated ~~the~~ financial ~~information~~statements ~~included~~from incontinuing ~~this~~operations ~~Annual Report on Form 10K includes~~include the ~~financial~~accounts ~~results~~ of ~~Microlab for the fiscal year ended 2021. In fiscal 2022~~Noisecom, ~~the~~Boonton ~~results~~and ~~of Microlab will be reported as a discontinued operation~~Holzworth.

~~Recent~~Divestiture ~~Event~~of Microlab and CommAgility

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

At closing the Company received approximately $2322.98 million, in proceeds net of ~~$250,000~~indemnification ofand ~~indemnity~~purchase ~~holdback~~price ~~amounts~~adjustment ~~placed~~holdbacks inof $150,000 ~~escrow~~and ~~accounts~~$100,000, respectively, and direct expenses of ~~which~~ approximately $41.21 million ~~was~~including ~~used~~fees to ~~repay~~ our ~~outstanding~~advisors. ~~term~~In ~~loan~~July ~~with Muzinich BDC~~2022, the ~~approximately~~Company received $~~700~~225,000 ~~was~~in ~~used~~final topurchase ~~repay~~price ~~our~~adjustment ~~outstanding revolver~~primarily ~~balance~~ related to the ~~Bank~~working ofcapital ~~America~~adjustment ~~credit agreement~~and, ~~$486~~on March 1,~~000~~ 2023, ~~was~~the ~~used~~Company toreceived ~~pay~~the ~~our~~indemnification ~~advisors~~holdback ~~and~~amount of $~~455~~150,000. ~~will~~In betotal, ~~used to~~the ~~pay~~Company ~~certain~~received ~~transaction~~net ~~bonuses~~proceeds ~~resulting~~of ~~in an additional~~ approximately $1823.01 million inrelated ~~cash~~ to the ~~balance~~Microlab ~~sheet in March~~Transaction. WeIn ~~believe~~2022, the ~~Transaction allows~~Company usused to$4.2 ~~prepare~~million ~~for~~of the ~~next~~Microlab ~~stage~~Transaction ofproceeds ~~transformation~~to ~~with~~repay in afull ~~stronger~~our ~~concentration~~outstanding ofterm ~~revenues~~loan inwith ~~specialized~~Muzinich 5GBDC ~~software~~ and ~~services for~~approximately 5G$600,000 ~~private~~was ~~networks~~used ~~and~~to ~~test~~repay ~~and~~in ~~measurement~~full ~~applications~~our ~~for~~outstanding ~~the~~revolver ~~satellite~~balance related ~~communications,~~to ~~semiconductor~~the ~~and~~Bank ~~aerospace~~of ~~and~~America ~~defense industries~~credit agreement. ~~Furthermore,~~The ~~with~~Company ~~the~~terminated ~~repayment~~both of the Muzinich term loan and ~~the~~ Bank of America credit ~~agreement~~facility as of the Microlab Transaction date. Additionally, weconcurrent ~~have~~with ~~strengthened our~~the ~~balance~~closing, ~~sheet~~the ~~and~~Company ~~increased~~entered ~~our~~into ~~liquidity~~a ~~allowing~~sublease uswith ~~flexibility~~RF toIndustries, Ltd ~~invest~~for inapproximately one-half of the square footage of our ~~higher~~corporate ~~margin~~headquarters ~~product~~in ~~groups~~Parsippany, NJ.

~~The~~On ~~Consolidated~~December ~~Financial~~4, ~~Statements~~2022, the Company, and ~~Management’s~~its ~~Discussion~~wholly ~~and~~owned ~~Analysis~~subsidiary, ofWireless ~~Financial~~Telecommunications ~~Condition~~Group, Ltd, a company organized under the laws of England and ~~Results~~Wales (“Holdings”), which owns 100% of ~~Operations~~the ~~presented~~outstanding securities of CommAgility, entered into a Securities inPurchase ~~this~~Agreement ~~Annual~~(the ~~Report~~“CommAgility onPurchase ~~Form~~Agreement”) 10with E-KSpace Acquisitions LLC, a Delaware limited liability company (“Buyer” or “E-Space”), and eSpace Inc., a Delaware corporation, as guarantor. The CommAgility Purchase Agreement provided for the ~~fiscal~~purchase ~~year~~by ~~ended~~the ~~2021~~Buyer ~~include~~of 100% of the ~~results~~issued and outstanding equity interests of ~~Microlab~~Holdings ~~for~~(the ~~all~~“Securities”) from ~~periods~~the ~~presented~~Company. ~~because~~The board of directors or other governing body of each of the Company and the Buyer unanimously approved the CommAgility Purchase Agreement and the transactions contemplated thereby (collectively, the “CommAgility Transaction”). Under the terms of the CommAgility Purchase Agreement, the purchase price for the Securities was ~~consummated~~estimated onto ~~March~~be 1approximately $14.5 million, ~~2022~~inclusive of $13.8 million in cash consideration and a $750,000 note payable, under which the note was subject to agreed-upon reductions of $650,000.

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

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

The Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations presented in this Annual Report on Form 10-K for the fiscal year ended 2022 exclude the results of Microlab and CommAgility for all periods presented. The results of Microlab and CommAgility have been recorded as discontinued operations in accordance with the applicable accounting guidance. Further, the assets and liabilities of Microlab and CommAgility have been reclassified as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of December 31, 2021.

Customers

Our customers include ~~wireless carriers,~~ aerospace and defense companies, military and government agencies, satellite communication companies, ~~network~~ ~~equipment~~ semiconductor manufacturers, ~~tower~~and ~~companies,~~other ~~semiconductor~~global technology companies,. ~~system~~For ~~integrators~~the years ended December 31, ~~neutral~~2022 ~~host~~and ~~providers~~December 31, ~~medical~~2021, ~~device~~one customer accounted ~~manufacturers~~for 15% and ~~other~~13% ~~global~~of ~~technology~~total ~~companies~~consolidated revenues, respectively.

Products

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

Market

Since the Company’s incorporation in the State of New Jersey in 1985, it has been primarily engaged in supplying noise source components and instruments, and electronic testing and measurement instruments~~, and radio frequency (“RF”) passive components to customers~~. ~~With~~ the CommAgility acquisition in February 2017, the Company expanded to include the delivery of digital signal processing hardware cards and the delivery, implementation and configuration of LTE and 5G physical layer and stack software. In February 2020, we acquired Holzworth which specializes in supplying RF ~~signal~~synthesizers ~~generators~~ and phase noise analyzers to global aerospace and defense companies, the semiconductor industry and ~~government~~for ~~labs.~~quantum computing. Approximately 8365% and 8263% of the Company’s consolidated revenues in fiscal years ~~2021~~2022 and ~~2020~~2021, respectively, were derived from commercial customers. The remaining consolidated revenues (approximately 1735% and 1837% in ~~2021~~2022 and ~~2020~~2021, respectively) were comprised of revenues from the United States government (particularly the armed forces) and prime defense contractors.

Brands and Products

Boonton

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

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

Noisecom

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

● simulate challenging signaling conditions in data and radio frequency transmission systems, such as jitter testing for high speed data lines used in modern computer architecture; ● send signals for noise measurement to allow wireless receivers and transmitters to be optimized;

● are used for jamming radio frequency signals, blocking or disturbing enemy radar and other communications and insulating and protecting friendly communications; and ● comprise components in radar systems as part of built-in test equipment to continuously monitor the radar receiver and in-satellite communications where the use of back-up receivers is becoming more common.Noisecom

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

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

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

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

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

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

Holzworth

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

CommAgility

CommAgility develops the software which enables specialized LTE and 5G deployments, applications and private network solutions including the LTE physical layer and stack software, for mobile network and related applications. CommAgility also develops embedded signal processing hardware and RF modules which enable 5G and LTE mobile network and application solutions. Combining the latest digital processing platforms and RF technologies with advanced, industry-leading software, CommAgility provides compact, powerful and reliable products for integration into high performance test equipment, specialized radio and intelligence systems, satellite systems and research and development demonstrators.

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

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

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

Microlab

As noted above Microlab was sold to RF Industries, Ltd. on March 1, 2022.

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

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

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

Marketing and Sales

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

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

Customers

The Company currently sells the majority of its products to aerospace and defense companies, technology component distributors, telecommunications service providers, systems integrators, neutral host operators, global technology and services companies, U.S. and foreign governments, and medical device manufacturers. For the years ended December 31, 2021 and December 31, 2020, no one customer accounted for more than 10% of total consolidated revenues.

Competition

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

The Company believes its competitive strengths include:

● long-standing relationships with a core group of diverse customers in the ~~wireless, telecommunication,~~ satellite, military, aerospace, semiconductor and ~~medical~~quantum computing industries ● agility in providing highly customized and configured solutions to the customer’s technical specifications ● a long tradition of developing highly engineered wireless solutions through our strong design capabilities and technology know-how ● long-standing, well-established sales channels and relationships which allow us to bring new solutions to market quickly ● diversification across multiple customer segments, providing solutions to enable development, testing and deployment ● an embedded base of products and instruments which leads to recurring purchases of our ~~Boonton, Noisecom and Holzworth~~ products ● extensive knowhow and IP related to ~~3GPP,~~high ~~LTE~~frequency ~~and~~noise 5Ggeneration, ~~wireless~~high ~~standards~~performance ~~which~~RF ~~enable~~power usmeasurement ~~to address complex~~ and ~~customized~~low ~~requirements~~phase ~~for~~noise ~~specialized networks~~performance

Backlog

The Company’s consolidated backlog of firm orders to be shipped in the next twelve months was approximately $116.76 million at December 31, ~~2021~~2022, compared to approximately $85.3 million at December 31, ~~2020~~2021. The increase in backlog is due to higher order flow ~~from~~in ~~our~~the ~~T&M~~second ~~and~~half ~~RFC~~of ~~product~~fiscal ~~groups~~2022 as compared to the prior year. ~~Excluding~~Management ~~Microlab,~~anticipates ~~the Company’s backlog at December 31, 2021 was $9.2 million which was approximately $2.1 million or 30% higher than December 31, 2020. It is anticipated~~ that the majority of the backlog orders at December 31, ~~2021~~ 2022 will be filled during the current year. The stated backlog is not necessarily indicative of Company revenues for any future period nor is a backlog any assurance that the Company will realize a profit from the orders.

Inventory, Supplies and Manufacturing

The Company purchases electronic components, ~~devices~~diodes, ~~and~~aluminum ~~subassemblies~~housings ~~from~~and aprinted ~~wide~~wiring ~~variety~~assemblies offrom ~~sources~~domestic suppliers. The Company’s procurement policy requires maintaining adequate levels of raw materials inventory to minimize the Company’s production lead times with third-party suppliers and to improve the Company’s capacity to expedite fulfillment of customer orders. During 2022 and 2021, the Company experienced component shortages and longer lead times from suppliers. Although there was no material impact to our consolidated financial statements in 2022 or 2021 as a result of supply chain disruptions, continued component shortages or extended lead times in the future may have an adverse impact on the Company’s operations. ~~For~~Two ~~the~~suppliers ~~year~~accounting ~~ended~~for ~~December~~approximately ~~31,~~33% ~~2021~~and ~~two suppliers each accounted for 12~~37% of ~~total~~ consolidated ~~inventory~~ inventory purchases. ~~For~~for the year ended December 31, ~~2020,~~2022 ~~two~~and ~~suppliers~~2021, ~~each accounted for 14% of total consolidated inventory purchases~~respectively.

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

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

Approximately 51% of Microlab’s revenues are traced to products that are sourced from offshore vendors. The majority of Microlab products that come from offshore suppliers are subject to tariffs. The remainder of Microlab products are designed and manufactured by the Company in Parsippany, New Jersey. All Microlab products are tested by the Company in Parsippany, New Jersey.

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

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

Warranty and Service

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

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

Product Liability Coverage

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

Intellectual Property

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

Regulation

Environmental

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

As a result of the Microlab divestiture, the Company filed a General Information Notice with the New Jersey Department of Environmental Protection (“NJDEP”) for our corporate headquarters in Parsippany, N.J. in accordance with the New Jersey Industrial Site Recovery Act (“ISRA”). Additionally, the Company engaged a Licensed Site Remediation Professional (“LSRP”) to perform a Preliminary Assessment (“PA”) atand ~~the~~Site ~~site~~Investigation (“SI”) in accordance with the provisions of ISRA. ~~The PA is identifying several~~ ~~areas requiring further environmental investigation.~~ In accordance with ISRA, in February 2022, the Company posted a $100,000 letter of credit with the NJDEP. The ~~Company~~PA ~~will~~identified ~~engage~~several ~~the~~areas requiring ~~LSRP to perform~~ further environmental investigation ~~and~~which ~~testing~~were ataddressed ~~the~~as ~~site~~part ~~during~~of ~~2022 in order to determine what, if any, remediation is required. At this time, while it cannot be guaranteed,~~ the ~~Company~~SI ~~does not anticipate that material expenditures will be required to meet current or pending environmental requirements under ISRA~~report.

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

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

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

Workplace Safety

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

ITAR and Export Controls

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

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

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

FAR and DFARS

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

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

Cybersecurity Maturity Model Certification

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

8Human Capital

~~Employees~~The Company is not subject to collective bargaining agreements and considers its relationship with its employees to be good. Subsequent to the Microlab and CommAgility divestitures, on March 1, 2023, the Company has 68 total full-time employees.

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

Investor Information

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

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

Item 1A. Risk Factors

~~Pandemic-Related~~Global Economic and Supply-Chain Risks

~~The~~Adverse ~~COVID-19~~global ~~pandemic~~economic ~~could~~conditions ~~materially~~and ~~adversely~~the ~~affect~~related ~~our~~impact ~~financial~~on ~~condition,~~our ~~future~~supply ~~plans~~chain and the markets where we do business could adversely affect our results of operations.

The ~~COVID-19~~uncertain ~~pandemic~~state ~~has~~of ~~had~~the aglobal ~~significant~~economy ~~adverse~~(including ~~effect on~~ the ~~economy~~current inconflict ~~the~~between ~~United~~Russia ~~States~~ and ~~globally~~Ukraine and onrelated ~~most~~economic ~~businesses.~~and ~~The~~other ~~Company~~retaliatory ismeasures ~~not~~taken ~~able~~by tothe ~~predict~~United ~~the~~States, ~~ultimate~~European ~~impact~~Union ~~that~~and ~~COVID~~others) ~~-19~~continues ~~will~~to ~~have~~impact onbusinesses ~~its~~around ~~business;~~the ~~however,~~world. ifThe ~~the~~conflict ~~pandemic~~between Russia and ~~government~~Ukraine ~~action~~has ~~in response~~led ~~thereto~~to ~~impose~~and ~~limitations~~is onexpected ~~operations~~to ofcontinue ~~our~~to ~~customers~~lead orto ~~suppliers~~disruption, orinstability ~~result~~and volatility in aglobal ~~prolonged~~markets ~~supply-chain~~and ~~constraints, labor~~industries. ~~shortages,~~Our ~~economic~~business ~~recession~~has orbeen ~~depression,~~and ~~the~~may ~~Company’s~~continue ~~development~~to ~~and~~be ~~implementation~~negatively ofimpacted ~~its~~by ~~strategic~~such ~~plan,~~conflict. asThe ~~well~~U.S. asgovernment ~~our~~and other governments in jurisdictions ~~ability~~in towhich ~~generate~~we ~~material~~operate ~~revenue~~have ~~therefrom,~~imposed ~~could~~severe besanctions ~~hindered,~~and ~~which~~export ~~would~~controls ~~have~~against aRussia ~~material~~and ~~negative~~Russian ~~impact~~interests onand ~~the~~threatened ~~Company’s~~additional sanctions and controls. Deteriorating economic conditions or financial ~~condition~~uncertainty ~~and~~in ~~results~~any of ~~operations.~~the ~~While~~markets ~~vaccinations~~in ~~beginning~~which inwe ~~2021~~sell ~~allowed~~our ~~for~~products could ~~economic~~reduce ~~recovery,~~business ~~recent~~confidence and ~~evolving variants~~adversely ofimpact ~~the~~spending ~~virus~~patterns, asand ~~well~~thereby ascould ~~reduced~~adversely ~~efficacy~~affect ofour ~~vaccines~~sales ~~over~~and ~~time~~results of operations. In challenging and ~~the~~uncertain ~~possibility~~economic ~~that~~environments asuch ~~large~~as ~~number~~the ofcurrent ~~people~~one, ~~decline~~we ~~to get~~cannot ~~vaccinated~~predict whether or ~~receive~~when ~~booster~~such ~~shots,~~circumstances may ~~creates~~improve ~~inherent~~or ~~uncertainty~~worsen, asor towhat ~~the~~impact, ~~potential~~if ~~future~~any, ~~impact~~such ofcircumstances ~~the~~could ~~pandemic~~have on our business, ~~our~~ ~~industry~~financial condition and results of operations, or on the ~~economy~~price inof ~~general~~our common stock.

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

Rising inflation may negatively impact our profit margins

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

Strategic Risks

~~The~~Our ~~Microlab~~operating ~~business~~results ~~has~~and ~~historically~~financial ~~accounted~~condition ~~for~~could abe ~~substantial~~harmed ~~portion~~if ~~of our revenue. Subsequent to~~ the ~~divestiture~~markets ofinto ~~Microlab~~which onwe ~~March 1,~~sell ~~2022,~~our weproducts ~~are~~decline ~~entirely~~or ~~dependent~~do onnot ~~our~~grow ~~remaining~~as ~~business units~~anticipated.

~~The~~Visibility ~~Microlab~~into ~~business~~our ~~accounted~~markets ~~for~~is 36limited.1% Our quarterly sales and ~~42.3%~~operating ofresults ~~our~~are ~~consolidated~~highly ~~revenues~~dependent ~~for~~on the ~~years~~volume ~~ended~~and ~~December~~timing ~~31,~~of ~~2021~~technology-related spending and ~~2020,~~orders ~~respectively. Effective~~received ~~March~~during 1,the ~~2022~~fiscal quarter, wewhich ~~sold~~are ~~Microlab~~difficult to forecast and ~~will~~may nobe ~~longer~~cancelled ~~benefit~~by ~~from~~our ~~its~~customers. ~~performance~~In addition, our revenues and earnings forecasts for future fiscal quarters are ~~entirely~~often ~~dependent~~based ~~upon~~on the ~~Boonton, Holzworth~~expected ~~and~~seasonality ~~Noisecom~~or ~~brands~~cyclicality ~~within~~of our ~~test~~markets. However, due to the uncertainties and ~~measurement~~volatile ~~product~~economic ~~group~~environment created by increased geopolitical tensions, ~~and~~including the ~~CommAgility~~war ~~brand~~between Russia ~~within~~and ~~our~~Ukraine, ~~radio~~the impact of inflation, ~~baseband~~the potential for future recession, and ~~software~~ ~~product~~continued ~~group.~~supply ~~Although~~chain challenges, the markets we serve ~~expect~~may experience increased volatility and may not experience the ~~revenue~~seasonality ~~generated~~or ~~from~~cyclicality that we expect. Any decline in our ~~remaining~~customers’ markets ~~businesses~~would tolikely ~~grow~~result in ~~the~~a ~~future,~~reduction in demand for our ~~business~~products ~~will~~and services. If our customers’ markets decline, we may not be ~~substantially~~able ~~different~~to ~~following~~collect ~~the~~on ~~sale~~outstanding amounts due to us. Such declines could harm our financial position, results of ~~Microlab~~operations, cash flows and ~~there~~stock ~~can~~price, beand nocould ~~assurance~~limit ~~that~~our weprofitability. ~~will~~In ~~achieve~~such ~~sustained~~an ~~growth~~environment, ~~achieve~~pricing pressures could intensify. Since a significant portion orof ~~sustain~~our ~~profitability,~~operating orexpenses ~~generate~~is ~~positive~~relatively ~~cash~~fixed ~~flows~~in ~~from~~nature ~~the~~due ~~test~~to ~~and~~sales, ~~measurement~~R&D and ~~radio~~manufacturing costs, ~~baseband~~if ~~and~~we ~~software~~were ~~product~~unable ~~groups,~~to respond quickly orenough, inthese ~~new~~pricing ~~products~~pressures orcould ~~business~~further ~~opportunities~~reduce weour ~~may~~operating ~~pursue~~margins.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We also compete on price. Our competitors may introduce products that are competitively priced, have increased performance or functionality or incorporate technological advances that we have not yet developed or implemented.

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

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

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

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

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

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

To the extent that we pay the consideration for any future acquisitions or investments in cash or any potential cash earn outs, it has reduced and may in the future reduce the amount of cash available to us for other purposes. Such payments also may increase our cash flow and liquidity risk. Future acquisitions or investments could also result in dilutive issuances of our equity securities or the incurrence of debt, contingent liabilities, amortization expenses or impairment charges against goodwill or intangible assets on our balance sheet, any of which could have a material adverse effect on our business, results of operations and financial condition.

Operational Risks

~~Shortages~~Failure orto ~~delays~~renegotiate the terms of ~~supplies~~our current lease for ~~component~~our ~~parts~~corporate ~~could~~headquarters ~~adversely~~or ~~affect~~find ~~our~~another ~~operating~~location ~~results~~suitable ~~until~~for ~~alternate~~our ~~sources~~operations ~~can~~could adversely beimpact ~~developed~~our results of operations.

Our ~~operations~~lease ~~are~~for ~~dependent~~our oncorporate ~~the~~headquarters ~~ability of suppliers to deliver quality components, devices~~ and ~~subassemblies~~N.J operations in ~~time~~Parsippany toexpires ~~meet~~on ~~critical manufacturing~~March ~~and~~31, ~~distribution schedules~~2023. IfWe weare ~~experience~~in ~~any~~negotiations ~~constrained~~with ~~supply~~the ~~of component parts, such constraints, if persistent,~~landlord ~~could~~for ~~adversely~~an ~~affect~~extension ~~operating~~and ~~results~~are ~~until~~also ~~alternate~~exploring ~~sourcing~~other ~~can~~locations beto ~~developed~~lease. ~~There~~Should ~~could be an increased risk of supplier constraints in periods where~~ we ~~are~~not ~~increasing~~come ~~production volume~~ to ~~meet~~terms ~~customer~~with ~~demands. Volatility in~~ the ~~prices~~landlord ofon ~~these~~an ~~component~~extension ~~parts,~~by anthe ~~inability~~lease totermination ~~secure~~date ~~enough~~we ~~components~~could atincur ~~reasonable~~charges ~~prices~~above tofair ~~build~~value ~~new~~for ~~products~~rent infor aindustrial ~~timely manner in the quantities~~ and ~~configurations demanded~~office ~~or,~~property ~~conversely,~~which ~~a temporary oversupply of these parts,~~ could ~~adversely~~have ~~affect~~an adverse impact our ~~future~~results ~~operating~~of ~~results~~operations.

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

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

~~Additionally,~~We ~~the~~believe ~~design~~our ~~and~~pay ~~manufacture~~levels ofare ~~our~~competitive ~~products~~within ~~require~~the ~~substantial~~regions ~~technical capabilities~~ in ~~many~~which ~~disparate~~we ~~disciplines~~operate. However, ~~from~~global ~~engineering~~labor shortages, inflationary pressure ~~software~~on ~~programming~~wages, ~~mechanics~~ and ~~computer~~increased ~~science~~global toattrition ~~electronics~~have ~~and~~intensified ~~mathematics.~~competition Infor ~~the~~talent ~~last~~in 12most ~~months~~fields in which we ~~have~~operate, ~~lost~~and ~~several~~it ~~key~~may ~~engineering~~become ~~resources.~~more Wedifficult ~~believe~~to ~~that~~retain ~~the~~key ~~continued~~employees. ~~employment~~If ofwe ~~key~~fail ~~members~~to ofretain ~~our~~key ~~technical~~personnel and ~~sales~~are ~~staffs~~unable ~~will~~to hire highly qualified replacements, we may not be ~~important~~able to usmeet ~~but~~key objectives, such as ~~with~~ ~~our~~launching ~~management~~effective ~~team,~~product weinnovations ~~cannot~~and ~~assure~~meeting ~~you~~financial ~~that~~goals, ~~they~~and ~~will~~maintain ~~remain~~or ~~employed~~expand our ~~by us~~business.

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

Our future research and development projects might not be successful.

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

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

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

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

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

Our business and operations could suffer in the event of security breaches.

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

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

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

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

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

Financial Risks

Rising inflation may negatively impact our profit margins

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

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

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

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

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

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

The market price of our common stock has experienced significant volatility and may continue to be subject to rapid swings in the future. From January 1, 2015 to February 317, ~~2022~~2023, the trading prices of our stock have ranged from $0.71 to $4.07 per share. There are several factors which could affect the price of our common stock unrelated to our financial performance, including announcements of technological innovations for new commercial products by us or our competitors, developments concerning propriety rights, new or revised governmental regulation or general conditions in the market or for our products, and the entrance of additional competitors into our markets.

Although our common stock is listed for trading on the NYSE American, the trading volume in our common stock is less than that of other, larger companies in the ~~wireless~~test and ~~advanced~~measurement ~~communications industries~~industry. Traditionally, the trading volume of our common stock has been limited. For example, for the 90 trading days ending on February 1517, ~~2022~~2023, the average daily trading volume was approximately 6822,000 shares per day and ranged from between ~~2,300~~900 shares per day and approximately ~~2.3~~109,000 ~~million~~ shares per day. Furthermore, we only have 2221,~~666~~438,~~074~~571 shares of common stock outstanding as of the date of this report. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. Because of our limited trading volume, holders of our common stock may not be able to sell quickly any significant number of shares, and any attempted sales of a large number of our shares will likely have a material adverse impact on the price of our common stock.

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

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

Legal and Regulatory Risks

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

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

In connection with the Microlab divestiture the Company engaged an LSRP to perform a preliminary environmental assessment and site investigation in accordance with ISRA. The site investigation detected hazardous substances in the groundwater at our headquarter in Parsippany NJ. The Company believes the contamination predates our occupancy and, accordingly, remediation should not be the responsibility of the Company. However, we cannot guarantee that we will be successful in absolving the Company of the remediation liability. Based on our reasonable position that we did not cause the contamination we do not think our potential liability would be material.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

International Risks

The conflict between Russia and Ukraine, and related sanctions could negatively impact us.

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

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

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

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

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

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

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

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

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

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

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

Forward-Looking Statements

The statements contained in this Annual Report on Form 10-K that are not historical facts, including, without limitation, the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,” “intends,” “plans,” “may,” “will,” “should,” “anticipates” or “continues” or the negative thereof of other variations thereon or comparable terminology, or by discussions of strategy that involves risks and uncertainties. These statements are based on the Company’s current expectations of future events and are subject to a number of risks and uncertainties that may cause the Company’s actual results to differ materially from those described in the forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. The Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We currently lease our corporate headquarters located in Hanover Township, Parsippany, New Jersey which also serves as a manufacturing plant for our Noisecom and Boonton brands. We also lease office ~~space in Leicestershire, England~~ and ~~Duisberg, Germany for the CommAgility operations and office and~~ manufacturing space in Boulder, Colorado for our Holzworth brand. The table below shows a summary of the square footage of these locations as of December 31, ~~2021~~2022:

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

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

Effective with the Microlab divestiture on March 1, 2022, the Company entered into a sublease with RF Industries, Ltd for approximately one-half of the square footage of our corporate headquarters in Parsippany, NJ. The sublease expires on March 30, 2023. The Company and RF Industries are discussing a possible extension of the sublease.

Item 3. Legal Proceedings

None

Item 4. Mine Safety Disclosures

Not applicable.

1816

PART II

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

The common stock of the Company is traded on the NYSE American under the name Wireless Telecom Group, Inc. (Symbol: WTT). On March 6, ~~2022~~2023, the Company had ~~361~~352 stockholders of record. These stockholders of record do not include beneficial owners whose shares are held in “nominee” or “street name”.

Recent Sales of Unregistered Securities

~~As of~~None ~~December~~in ~~31, 2021~~ the ~~Company~~fourth ~~issued~~quarter ~~143,514 shares~~ of ~~unregistered common stock to the Holzworth founders as part of the payment~~ ~~for~~fiscal ~~the~~year ~~Year 1 Earnout, as defined, in the Holzworth Stock Purchase Agreement~~2022.

Issuer Purchases of Equity Securities

~~The Company~~In ~~did~~the ~~not~~fourth ~~repurchase~~quarter ~~any~~of ~~securities~~fiscal ~~during~~year 2022 the ~~year~~Company ~~ended~~repurchased ~~December 31~~38,868 shares ~~2021~~of common stock from employees to cover income tax withholding obligations for vested restricted common shares.

Equity Compensation Plan Information

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

Plan category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in the previous columns)

Equity compensation plans approved by security holders

32,~~256~~551,167

1.65

~~442~~378,~~500~~125

Equity compensation plans not approved by security holders

Total

32,~~256~~551,167

1.65

~~442~~378,~~500~~125

Item 6. [Reserved]

1917

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

Overview

~~The~~In ~~Company~~2021, isthe aCompany ~~global~~was ~~designer~~comprised ~~and manufacturer~~ of ~~advanced~~five ~~RF,~~brands ~~microwave~~– ~~and millimeter wave components~~Microlab, ~~modules~~Boonton, ~~systems and instruments. Serving the wireless~~Noisecom, ~~telecommunication,~~CommAgility ~~satellite, military, aerospace, semiconductor~~ and ~~medical~~Holzworth ~~industries,~~organized ~~Wireless~~as ~~Telecom~~three ~~Group~~product ~~products~~groups. ~~enable~~Our ~~innovation~~product ~~across~~groups awere ~~wide~~organized ~~range~~as offollows: ~~traditional~~Radio ~~and~~Frequency ~~emerging~~Components ~~wireless~~(“RFC”) ~~technologies.~~was ~~With~~comprised ~~a unique set~~ of ~~high-performance products~~our ~~including~~Microlab ~~peak power meters~~brand; Radio, ~~signal analyzers~~Baseband, ~~signal~~Software ~~generators,~~(“RBS”) ~~phase~~was ~~noise~~comprised ~~analyzers,~~of ~~signal~~our ~~processing~~CommAgility ~~modules,~~brand; ~~LTE~~ and 5G ~~physical~~Test ~~layer~~ and ~~stack~~Measurement ~~software, power splitters and combiners, GPS repeaters, public safety monitors, noise sources, and programmable~~(“T&M”) ~~noise~~was ~~generators,~~comprised ~~Wireless~~of ~~Telecom~~our ~~Group supports the development~~Boonton, ~~testing~~Noisecom and ~~deployment~~Holzworth ~~of wireless technologies around the globe~~brands.

InOn ~~2021~~March 1, ~~the~~2022, ~~Company~~we ~~was~~sold ~~comprised~~Microlab ofto ~~five~~RF ~~brands – Microlab~~Industries, ~~Boonton,~~Ltd ~~Noisecom, CommAgility~~ and ~~Holzworth~~on ~~organized~~December as30, ~~three~~2022 ~~product groups.~~we ~~Our~~sold ~~product~~CommAgility ~~groups~~to ~~were~~E-Space ~~organized~~Acquisitions, asLLC. ~~follows:~~Subsequent to ~~Radio~~the ~~Frequency~~divestitures ~~Components (“RFC”) was comprised~~ of ~~our~~ Microlab ~~brand; Radio,~~and ~~Baseband,~~CommAgility ~~Software~~the ~~(“RBS”)~~Company ~~was~~is comprised of ~~our~~the ~~CommAgility~~T&M ~~brand;~~business ~~and~~which ~~Test~~is ~~and~~made ~~Measurement~~up ~~(“T&M”) was comprised~~ of our Boonton, Noisecom and Holzworth brands. The ~~financial~~T&M ~~condition~~business ~~and~~provides ~~results~~RF ofand ~~operations~~microwave ~~described~~test inequipment ~~this~~and ~~Annual Report~~low onphase ~~Form~~noise ~~10-K~~RF ~~include~~synthesizers ~~the~~to ~~2021~~equipment manufacturers, ~~results~~aerospace ofand ~~Microlab.~~defense ~~On March 1~~companies, ~~2022,~~military weand ~~sold~~government ~~Microlab~~agencies, tosatellite RFcommunication ~~Industries~~companies, ~~Ltd.~~semiconductor ~~Accordingly, the~~companies ~~Company currently is comprised of the T&M~~ and ~~RBS~~other ~~products~~global ~~groups~~technology companies.

~~Key~~The ~~2021~~Consolidated ~~Developments~~Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations presented in this Annual Report on Form 10-K for the fiscal year ended 2022 exclude the results of Microlab and CommAgility for all periods presented. The results of Microlab and CommAgility have been recorded as discontinued operations in accordance with the applicable accounting guidance. Further, the assets and liabilities of Microlab and CommAgility have been reclassified as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of December 31, 2021.

InKey ~~2021~~2022 ~~our~~Developments ~~consolidated revenue increased 18.0% from the prior year, driven primarily by our T&M~~ and ~~RBS~~Financial revenues, as we experienced a recovery from COVID-19 related declines as well as strong demand for our T&M and RBS solutions. T&M product demand was driven by new product introductions, improved demand generation activities, and a rebound in customer spending outside the U.S. due in part to relaxed COVID-19 related restrictions. Also contributing to the overall increase in revenue were increased sales of our LTE and 5G software and services driven by new customer contracts for specialized applications and RBS digital signal processing cards.Results

~~Our~~In ~~consolidated~~2022, ~~gross~~the ~~margins~~Company ~~were~~disclosed ~~50.9%~~that inwe ~~2021~~were ~~compared~~pursuing tostrategic ~~50.2%~~alternatives ~~for~~in ~~the~~order ~~year~~to ~~ago~~maximize ~~period~~value ~~reflecting~~for ~~increased sales of~~ our ~~higher~~shareholders. ~~margin~~During the ~~T&M~~year ~~solutions.~~we ~~Our~~completed ~~2021~~two ~~GAAP~~divestitures ~~operating~~for ~~loss~~total ~~decreased~~proceeds ~~from~~of approximately $835.13 million inand ~~2020~~repaid toall ~~$145,000~~outstanding indebt ~~2021~~and earnout obligations. As ~~The~~of ~~2021~~December ~~GAAP~~31, ~~operating~~2022, ~~loss included~~we ahave ~~non-cash~~approximately ~~indefinite~~$20.7 ~~lived~~million ~~intangible~~in ~~asset~~cash. ~~impairment~~The ~~charge~~remaining ofT&M ~~$258,000~~business ~~and~~generated an57.4% ~~increase~~gross margins in fiscal ~~our~~2022 ~~contingent~~and ~~consideration~~ended ~~liability related~~the toyear ~~the~~with ~~Holzworth~~a ~~earnout~~backlog of $~~386,000~~6.6 ~~The~~million, ~~intangible~~which ~~asset impairment charge~~ was ~~recorded~~an asincrease ~~part~~ of ~~our~~$1.1 ~~required~~million ~~annual~~from ~~impairment testing and was triggered primarily by~~ the ~~lower~~prior ~~hardware~~year. ~~sales~~T&M atrevenue declined ~~CommAgility~~1.4% asfrom ~~compared~~the to prior ~~years.~~year Wedue ~~continue~~primarily to begeneral ~~optimistic about~~economic ~~CommAgility’s ability to grow software~~ and ~~services~~global ~~revenues~~uncertainties ~~as evidenced by our 2021 results~~ which ~~reflect~~delayed acapital ~~140%~~expenditure ~~growth~~decisions ~~from 2020 driven~~ by ~~new~~our customers ~~and~~for ~~applications. In addition,~~ our ~~recent~~products. ~~2020 acquisition of Holzworth in our~~ T&M ~~product~~second ~~group, continues~~half tobookings ~~outperform our expectations resulting~~ in an2022 ~~increase~~increased infrom the ~~contingent~~first ~~consideration~~half ~~liability noted above~~ of ~~$386,000 related~~the toyear ~~that~~signaling ~~brand’s~~a ~~financial performance~~ recovery in ~~2021.~~spend ~~The~~by ~~2021~~our ~~earn-out~~customers isresulting in the ~~second~~higher ~~and final earnout period for Holzworth~~backlog.

InThe ~~2021~~Company wecontinues ~~generated~~to ~~$4.6~~explore ~~million~~strategic ofalternatives ~~cash~~for ~~flow~~the ~~from~~remaining ~~operations,~~T&M ~~an increase of $1~~business.6 ~~million~~We ~~from~~do ~~the~~not ~~prior~~expect ~~year period, and we continued~~ to ~~carefully~~comment ~~manage~~further ~~our~~or ~~capital expenditures which totaled $524,000 for 2021. In June, we received forgiveness of our Paycheck Protection~~update ~~Program Loan in~~ the ~~amount~~market ofwith ~~$2.0~~any ~~million~~additional ~~which~~information ~~is recognized as a gain~~ on ~~extinguishment of debt in other income in~~ the ~~consolidated statement~~process ofunless ~~operations.~~and Inuntil ~~the~~its ~~third~~Board ~~quarter we raised $563,000 in cash, net~~ of ~~agent~~Directors ~~commissions~~has ~~and~~approved ~~professional~~a ~~fees,~~specific ~~as part of~~transaction ~~our~~or ~~At-the-Market~~otherwise ~~Common~~deems ~~Stock~~disclosure ~~Sales~~appropriate ~~offering~~or ~~and~~necessary. ~~later~~There incan ~~the~~be ~~third~~no ~~quarter~~assurance ~~made~~that athe ~~prepayment~~evaluation of ~~our~~strategic ~~Muzinich~~alternatives ~~term~~will result ~~debt~~ in ~~the~~any ~~amount of~~strategic ~~$3.7~~alternative ~~million. Overall~~transaction, ~~our debt less cash,~~ or ~~net~~any ~~debt,~~assurance as ofto ~~December~~its ~~31,~~outcome ~~2021~~or ~~is zero, a reduction of $3~~timing.~~4 million of net debt from December 31, 2020.~~

The financial information presented herein includes: (i) Consolidated Balance Sheets as of December 31, ~~2021~~2022 and ~~2020~~2021; (ii) Consolidated Statements of Operations and Comprehensive Income/(Loss) for the years ended December 31, ~~2021~~2022 and ~~2020~~2021; (iii) Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, ~~2021~~2022 and ~~2020~~2021; and (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020.

Critical Accounting Policies

Management’s discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amount of revenues and expenses for each period. The following represents a summary of the Company’s critical accounting policies, defined as those policies that the Company believes are: (a) the most important to the portrayal of our financial condition and results of operations, and (b) that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. Estimates and assumptions are made by management to assess the overall likelihood that an accounting estimate or assumption may require adjustment. It is reasonably possible that these estimates may ultimately differ materially from actual results. See Note 1 in the Notes to the Consolidated Financial Statements included elsewhere in this Form 10-K for a description of all of our significant accounting policies.

Discontinued Operations

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

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

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

Revenue Recognition

Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), (“Topic 606”) requires the Company to identify the performance obligations in our revenue arrangements – that is, those promised goods and services (or bundles of promised goods or services) that are distinct – and allocate the transaction price of the revenue arrangement to those performance obligations on the basis of estimated standalone selling prices (“SSP’s”).

Sales of ~~hardware~~our ~~which~~T&M ~~include~~products ~~sales of radio frequency solutions, digital signal processing hardware, power meters, analyzers, noise/signal generators, phase noise analyzers and other components~~ generally consist of one performance obligation which is satisfied upon shipment to the customer. When contract terms require transfer of control upon delivery at a customer’s location, revenue is recognized on the date of delivery. ~~Sales of hardware to distributors that include a limited right of return are recorded net of expected returns.~~

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

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

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

Leases

We lease office space and certain equipment under non-cancelable lease agreements. We apply ASU No. 2016-02, Leases (Topic 842) to our lease arrangements. In accordance with Topic 842, we assess all arrangements that convey the right to control the use of property, plant and equipment, at inception, to determine if it is, or contains, a lease based on the unique facts and circumstances present in that arrangement. For those leases identified, we determine the lease classification, recognition, and measurement at the lease commencement date. For arrangements that contain a lease we: (i) identify lease and non-lease components; (ii) determine the consideration in the contract; (iii) determine whether the lease is an operating or financing lease; and (iv) recognize lease Right of Use (“ROU”) assets and corresponding lease liabilities. Lease liabilities are recorded based on the present value of lease payments over the expected lease term. The corresponding ROU asset is measured from the initial lease liability, adjusted by (i) accrued or prepaid rents; (ii) remaining unamortized initial direct costs and lease incentives; and (iii) any impairments of the ROU asset. The interest rate implicit in our lease contracts is typically not readily determinable and as such, we use our incremental borrowing rate based on the information available at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment.

2119

Business Combinations

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

Valuation of Goodwill

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

The Company has ~~three~~one reporting ~~units~~unit with goodwill –which ~~Holzworth,~~is ~~Microlab and CommAgility~~Holzworth. The Company’s ~~performed a~~ qualitative assessment in ~~the fourth quarter~~ of ~~2021 of each reporting unit. The qualitative assessment of~~ Holzworth ~~and Microlab did not indicate any impairment of~~ goodwill. ~~As a result of~~ in the ~~reduced~~fourth ~~hardware~~quarter ~~sales from prior years, the Company performed a quantitative impairment test~~ of ~~the goodwill~~2022 ofindicated ~~the~~no ~~CommAgility reporting unit~~impairment.

For goodwill impairment testing using the quantitative approach, the Company estimates the fair value of the selected reporting unit using the income approach and the market approach. Fair value under the income approach is derived primarily through the use of a discounted cash flow model based on our best estimate of amounts and timing of future revenues and cash flows and our most recent business and strategic plans. Fair value under the market approach is derived by applying a multiple to our best estimate of future revenue. The Company applies equal weighting to the income approach and the market approach to arrive at an estimated fair value. The estimated fair value is compared to the carrying value of the reporting unit, including goodwill. If the fair value of the reporting unit exceeds the carrying value, no impairment charge is recorded. If the carrying value of the reporting unit exceeds the fair value an impairment charge is recorded to goodwill in the amount by which carrying value exceeds fair value. Both the income approach and market approach require judgmental assumptions about projected revenue growth, future operating margins, discount rates and terminal values over a multi-year period. There are inherent uncertainties related to these assumptions and management’s judgment in applying them to the analysis of goodwill impairment. While the Company believes it has made reasonable estimates and assumptions to calculate the fair value of its reporting units, it is possible a material change could occur.

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

In the fourth quarter of 2020, the Company recorded a goodwill impairment charge of $4.7 million related to the CommAgility reporting unit. The non-cash impairment charge was due to a number of factors that arose as part of our quantitative assessment as of the valuation date in the prior year, including an assessment of our historical results and the significant decline in hardware sales in 2020, the difficulty of predicting future customer demand, the uncertainty of future sales of 4G hardware cards, the uncertainty of the growth of 5G software and services revenues due to the early stages of 5G adoption for new technology and expectations for 5G deployments, the uncertainty of the impact of the COVID 19 pandemic on customer spending, and the uncertainty for enterprise spending and longer-term investment.

Due to the many variables inherent in the estimation of a reporting unit’s fair value and the relative size of our recorded goodwill, differences in assumptions may have a material effect on the results of our impairment analysis. As of December 31, 2021 and 2020, the Company’s consolidated goodwill balance of $11.5 million was comprised of $1.4 million related to the Microlab reporting unit, $6.0 million related to the Holzworth reporting unit and $4.1 million related to the CommAgility reporting unit.

Intangible and Long-lived Assets

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

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

Income taxes

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

Realization of the Company’s deferred tax assets is dependent upon the Company generating sufficient taxable income in the appropriate tax jurisdictions in future years to obtain benefit from the reversal of net deductible temporary differences and from utilization of net operating losses. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed.

Uncertain tax positions

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

The Company has analyzed its filing positions in all of the jurisdictions where it is required to file income tax returns. As of December 31, 2021 and 2020, the Company has identified its federal tax return, the state tax returns in New Jersey and Colorado and the United Kingdom as “major” tax jurisdictions, as defined in ASC 740, in which it is required to file income tax returns. Based on the evaluations noted above, the Company has concluded that there are no significant uncertain tax positions requiring recognition or disclosure in its consolidated financial statements.20

~~Based~~The onCompany ahas ~~review~~analyzed ofits ~~tax~~filing positions ~~for~~in all ~~open~~of ~~years~~the ~~and~~jurisdictions ~~contingencies~~where asit ~~set~~is ~~out~~required into ~~the~~file ~~Company’s~~income ~~Notes~~tax toreturns. ~~the~~As ~~consolidated~~of ~~financial~~December ~~statements~~31, no2022 ~~reserves~~and ~~for~~2021, ~~uncertain~~the ~~income~~Company ~~tax~~has ~~positions~~identified ~~have~~its ~~been~~federal ~~recorded~~tax ~~pursuant~~return, tothe ~~ASC~~state ~~740~~tax ~~during~~returns ~~the~~in ~~years~~New ~~ended~~Jersey, ~~December~~California ~~31,~~and Colorado as ~~2021~~“major” ~~and~~tax ~~2020~~jurisdictions, ~~and~~as ~~the~~defined ~~Company~~in ~~does~~ASC ~~not~~740, ~~anticipate~~in ~~that~~which it is ~~reasonably~~required ~~possible~~to ~~that~~file ~~any~~income ~~material~~tax ~~increase~~returns. orBased ~~decrease~~on inthe ~~its unrecognized~~evaluations noted above, the Company has concluded that there are no significant uncertain tax ~~benefits~~positions ~~will~~requiring ~~occur~~recognition ~~within~~or ~~the~~disclosure ~~next~~in ~~twelve~~its consolidated ~~months~~financial statements.

23Based on a review of tax positions for all open years and contingencies as set out in the Company’s Notes to the consolidated financial statements, no significant reserves for uncertain income tax positions have been recorded pursuant to ASC 740 during the years ended December 31, 2022 and 2021, and the Company does not anticipate that it is reasonably possible that any material increase or decrease in its unrecognized tax benefits will occur within the next twelve months.

Stock-based compensation

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

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

Inventories and Inventory Valuation

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

Allowances for doubtful accounts

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

Warranties

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

~~Comparison of the results of operations for the year ended December 31, 2021 with the year ended December 31, 2020~~ 21

~~Net~~Comparison ~~Revenues~~of ~~(in~~the ~~thousands)~~results of operations for the year ended December 31, 2022 with the year ended December 31, 2021

	Twelve months ended December 31
	Revenue				% of Revenue						Change
	2021		2020		2021			2020			Amount		Pct.
RF components (RFC)	$	17,756	$	17,667		36.1	%		42.3	%	$	89		0.5	%
Test and measurement (T&M)		22,676		20,551		46.0	%		49.2	%		2,125		10.3	%
Radio, baseband, software (RBS)		8,813		3,530		17.9	%		8.5	%		5,283		149.7	%
Total net revenues	$	49,245	$	41,748		100.0	%		100.0	%	$	7,497		18.0	%

Consolidated net revenue decreased from $22.7 million in fiscal year 2021 to $22.4 million in fiscal year 2022 or 1.4% due primarily to general negative economic and global uncertainties which caused delays in capital expenditure decisions by our customers resulting in lower sales of our products.

24Consolidated gross profit decreased 1% from the prior year period due to lower revenues. Consolidated gross profit margin of 57% was consistent with the prior year.

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

Gross Profit (in thousands)

	Twelve months ended December 31
	Gross Profit				Gross Profit %						Change
	2021		2020		2021			2020			Amount			Pct.
RF components (RFC)	$	7,497	$	7,695		42.2	%		43.6	%	$	(198	)		-2.6	%
Test and measurement (T&M)		12,965		11,347		57.2	%		55.2	%		1,618			14.3	%
Radio, baseband, software (RBS)		4,625		1,925		52.5	%		54.5	%		2,700			140.3	%
Total gross profit	$	25,087	$	20,967		50.9	%		50.2	%	$	4,120			19.6	%

Consolidated gross profit increased $4.1 million primarily due to higher net revenues at our RBS and T&M product groups as compared to the prior year. Consolidated gross profit margin increased marginally from the prior year. RBS gross profit margin declined marginally due to higher mix of service revenues in 2021 as compared to 2020 which had a lower margin than software revenues. T&M gross profit margin increased 200 basis points from the prior year, which included certain one-time non-cash purchase accounting adjustments of $448,000. RFC gross profit margin declined 140 basis points from the prior year due to mix and continued market pricing pressures.

Operating Expenses (in thousands)

	Twelve months ended December 31
	Operating Expenses				% of Revenue						Change
	2021		2020		2021			2020			Amount			Pct.
	2022		2021		2022			2021			Amount			Pct.
Research and development	$	51,~~550~~791	$	61,~~389~~718		118.30	%		157.36	%	$	~~(839~~73	)		~~-13~~4.12	%
Sales and marketing		74,~~169~~046		64,~~955~~003		1418.61	%		1617.7	%		~~214~~43			31.1	%
General and administrative		119,~~869~~638		9,~~907~~076		2443.10	%		2340.70	%		~~1,962~~562			196.82	%
Goodwill and intangible asset impairment		258		4,742		0.5	%		11.4	%		(4,484	)		-94.6	%
Loss on change in fair value of contingent consideration		-		386		0.0	%		1.7	%		(386	)		-100.0	%
Loss on change in fair value of contingent consideration		386		1,073		0.8	%		2.6	%		(687	)		-64.0	%
Total operating expenses	$	15,475	$	15,183		69.2	%		67.0	%		292			1.9	%
Total operating expenses	$	25,232	$	29,066		51.2	%		69.6	%		(3,834	)		-13.2	%

Consolidated research and development expenses ~~decreased~~increased ~~$839,000~~nominally ~~or 13.1%~~ from the prior year period due primarily to ~~lower~~an ~~third~~increase ~~party~~in ~~research and~~headcount ~~development~~ expenses of approximately $~~543~~100,000 ~~related~~and toan ~~2020~~increase ~~product development initiatives~~ in ~~our~~depreciation ~~Boonton~~expense ~~and CommAgility brands. The mix~~ of ~~third-party~~ ~~research~~approximately ~~and~~$20,000 ~~development~~only ~~expenses~~partially tooffset ~~internal expenses varies~~ by ~~project.~~a Wedecrease ~~expect~~in ~~to continue~~ third -party ~~investments in~~ research and development ~~dependent upon project deadlines, new product development opportunities and longer term product roadmap dependencies which, in turn, may create increases and decreases to research and development~~ expenses ~~as a percentage~~ of revenue. Additionally, salaries expense declined from the prior year due primarily to our RBS engineers spending more time on customer service projects resulting in their salaries being classified as costs of revenue rather than research and development expense. These decreases were offset by an unfavorable foreign exchange impact of approximately $~~226~~50,000 ~~due to the strengthening of the Great British Pound (“GBP”) against the U~~.~~S. dollar as compared to the prior year.~~

25Sales and marketing expenses were flat with the prior year period. External commissions expense increased approximately $190,000 from the prior year due a larger mix of commissionable sales. Higher external commissions expense was offset by a decrease in headcount related expenses due to lower sales headcount of approximately $113,000 and a decrease in third-party marketing spend of approximately $40,000.

~~Sales~~General and ~~marketing~~administrative expenses increased $~~214~~562,000 orfrom ~~3.1%~~the prior year due primarily to ~~higher~~an ~~commissions~~increase ~~expense~~in non-cash stock compensation expense of $~~217~~700,000 due to restricted share awards to employees in fiscal year 2022 and ~~unfavorable~~an ~~foreign~~increase ~~exchange impact~~in non-recurring expenses of $56200,000 ~~due~~associated with toour ~~the~~strategic ~~strengthening~~alternatives ofprocess. ~~the~~These ~~GBP~~increases towere ~~the~~offset ~~U.S.~~by ~~dollar~~various asadministrative ~~compared~~expense toreductions ~~the~~of ~~prior~~approximately ~~year~~$300,000 in ~~offset~~the byfollowing ~~other~~areas: ~~miscellaneous declines~~third inparty ~~sales~~legal and ~~marketing~~accounting expenses, ~~from~~investor ~~the~~relations, ~~prior~~market ~~year~~research and consulting expenses and banking fees.

~~General~~The ~~and~~loss ~~administrative~~on ~~expenses~~change ~~increased~~in ~~$2.0~~contingent ~~million~~consideration orin ~~19.8%~~2021 ~~due~~relates ~~primarily~~ to higher salaries and benefits of $695,000 due to headcount increases at our RBS product group and the full year impact of our Chief Revenue Officer, a higher bonus accrual of $434,000, higher legal and merger and acquisition expenses of $514,000 related to the sale of Microlab, higher insurance costs of $122,000, higher consulting and other market research expenses related to our strategic review process of $300,000 and an ~~unfavorable~~adjustment ~~foreign exchange impact of $126,000 related~~ to the ~~strengthening~~Holzworth ofearnout ~~the GBP as compared to the prior year~~liability. ~~This~~The ~~was~~Holzworth ~~partially offset by a reduction in stock compensation~~earnout ~~expense~~liability ofwas ~~$217,000~~fully ~~due~~paid ~~to the reversal of expense related to certain performance based stock options which are not probable to vest due to the Microlab divestiture~~ as ~~well as the deferred Form S-3 cost expense~~ of ~~$255~~December 31,~~000~~ ~~that was incurred in the prior year~~2022.

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

~~The~~In ~~loss~~2022, ~~on change in fair value of contingent consideration in both 2020 and 2021 relate to~~ the ~~earnout~~Company ~~consideration~~recorded toa beloss ~~paid~~on inextinguishment ~~connection with~~of the ~~Holzworth~~Muzinich ~~acquisition.~~term ~~The~~loan ~~loss recognized in 2021~~ of $~~386~~792,000 ~~relates~~primarily related to the ~~additional~~write ~~consideration~~off ~~earned~~of ~~in relation to~~deferred ~~the~~financing ~~better~~fees. ~~than~~In ~~expected performance in fiscal year~~ 2021, ~~and~~ the ~~loss~~Company ofrecorded a $12.10 million ~~recognized~~gain inon ~~2020~~extinguishment ~~relates~~of to the ~~better~~Payroll ~~than~~Protection Program loan after we received ~~expected~~notice ~~performance~~that inour ~~fiscal~~loan ~~year~~was ~~2020~~fully forgiven.

Gain on Extinguishment of Debt

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

Other income/expense

Other income ~~decreased~~increased $~~117~~304,000 from the prior year due primarily to ~~gains~~sublease onincome ~~sales~~related to the sublease of ~~assets~~approximately ~~realized~~50% inof ~~2020~~our ~~and~~Parsippany, NJ ~~lower~~location ~~foreign~~to ~~currency~~RF ~~exchange gains~~Industries.

Interest Expense

Interest expense ~~increased~~decreased $~~158,000~~1.1 million due primarily to the ~~higher~~termination ~~interest~~of ~~rate~~the onMuzinich ~~our~~ term loan ~~facility~~on ~~with~~March ~~Muzinich~~1, ~~and~~2022 ~~the~~concurrent ~~prepayment fee associated~~ with the ~~loan payment made in the third quarter of 2021~~Microlab divestiture.

Tax

~~Consolidated~~Tax ~~tax~~ benefit ~~decreased~~increased $~~136~~177,000 from the prior year due ~~primarily~~ to a higher taxable ~~income~~loss infrom the USprior ~~jurisdiction partially offset by taxable losses in the UK due in part to research and development deductions~~year.

Net ~~Income/~~(Loss) from Continuing Operations

~~The~~Net ~~Company~~loss ~~generated~~from ~~net~~continuing ~~income~~operations ~~for~~increased ~~the year of~~ $1.58 million asdue ~~compared~~ to anlower ~~$8.1~~gross ~~million~~profit ~~net~~caused ~~loss~~by inlower ~~the~~revenues, ~~prior~~higher ~~year~~operating expenses due primarily to ~~higher~~stock ~~gross profit~~based ~~and~~compensation ~~lower~~expense ~~impairment~~ and ~~contingent~~expenses ~~consideration~~related ~~charges as compared~~ to ~~the~~our ~~prior~~strategic ~~year~~alternatives process and the ~~gain~~loss ~~recognized~~ on extinguishment of ~~the~~our ~~PPP~~debt. ~~loan~~This inwas ~~the current year which were~~ only partially offset by ~~higher~~lower interest expense as compared to the prior year and a ~~lower~~higher tax benefit ~~in the current year~~.

Net Income from Discontinued Operations, net of tax

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

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

Liquidity and Capital Resources

AsOn of December 3116, 2021, the Company ~~had~~and ~~three~~its ~~credit~~wholly ~~facilities~~owned –subsidiary anMicrolab ~~asset~~entered ~~based~~into ~~revolving~~the ~~loan~~Microlab ~~which~~Purchase ~~was~~Agreement ~~subject~~with RF Industries, whereby RF Industries agreed to purchase 100% of the membership interests in Microlab for a ~~borrowing~~purchase price of $24,250,000, subject to ~~base~~certain ~~calculation~~adjustments (as ~~defined)~~set ~~with~~forth ~~Bank~~in ofthe ~~America,~~Microlab NPurchase Agreement.A. ~~(the~~The ~~“Credit~~board ~~Facility”~~of ordirectors of each of the ~~“Revolver”),~~Company aand ~~term~~RF ~~loan~~Industries ~~facility~~unanimously ~~with~~approved ~~Muzinich~~the ~~BDC~~Microlab ~~Inc~~Transaction. ~~(“Muzinich”)~~On ~~(the~~February ~~“Term~~25, ~~Loan~~2022, ~~Facility”)~~the ~~which~~shareholders ~~was~~of ~~used~~the toCompany ~~finance~~approved the ~~Holzworth~~Microlab Transaction ~~acquisition~~at ina ~~February~~Special ~~2020,~~Meeting ~~and~~of ~~the~~Shareholders ~~Coronavirus~~held ~~Business~~virtually ~~Interruption~~via ~~Loan~~live ~~Agreement~~webcast ~~(“CIBLS~~and ~~Loan”)~~on ~~with~~March ~~Lloyds~~1, ~~Bank~~2022, ~~PLC (“Lloyds”)~~the Microlab Transaction closed.

26At closing the Company received approximately $22.8 million in proceeds net of indemnification and purchase price adjustment holdbacks of $150,000 and $100,000, respectively, and direct expenses of approximately $1.1 million including fees to our advisors. In July 2022, the Company received $225,000 in final purchase price adjustments primarily related to the working capital adjustment and on March 1, 2023 the Company received the indemnification holdback amount of $150,000. In total the Company received net proceeds of approximately $23.1 million related to the Microlab Transaction. In March 2022 the Company used $4.2 million of the Microlab Transaction proceeds to repay in full our outstanding term loan with Muzinich BDC and approximately $600,000 was used to repay in full our outstanding revolver balance related to the Bank of America credit agreement. The Company terminated both the Muzinich term loan and Bank of America credit facility as of the Microlab Transaction date.

On ~~March~~May 130, 2022, the Company ~~completed~~repaid the ~~divestiture~~previously ofoutstanding ~~Microlab~~Coronavirus ~~and~~Business ~~received~~Interruption ~~proceeds~~Loan ofAgreement ~~$23.9~~(“CIBLS ~~million which is subject to final purchase~~Loan”) ~~price adjustments in accordance~~ with ~~the~~Lloyds ~~Purchase~~Bank ~~Agreement.~~PLC ~~Simultaneous~~(“Lloyds”) ~~with~~in the ~~Microlab~~amount ~~close the Company used $4.2 million~~ of ~~such proceeds to repay its term loan related to the Term Loan Facility and approximately $700~~£250,000 ~~to repay its outstanding revolver balance related to the Credit Facility and terminated both the Term Loan Facility and Credit Facility~~. The Microlab transaction generated approximately $18.0 million of cash net of certain expenses and holdbacks. We expect our cash balance and cash generated by operations will be sufficient to meet our liquidity needs for the next twelve months. Our ability to meet our cash requirements will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control, including the fact that the Company will no longer benefit from the performance of the Microlab brand which historically accounted for a substantial portion of our consolidated revenue and that we will be entirely dependent on the RBS and T&M product groups.

~~The~~On ~~Microlab~~December ~~divestiture~~4, ~~will~~2022, bethe ~~treated~~Company, asand aHoldings ~~sale~~entered ofinto the ~~assets~~CommAgility ~~and~~Purchase ~~liabilities~~Agreement ofwith ~~Microlab~~E-Space, toand RFeSpace ~~Industries for U~~Inc.S., ~~federal~~a ~~and applicable~~Delaware ~~state~~corporation, ~~income~~as ~~tax purposes~~guarantor. The ~~Company~~CommAgility ~~has~~Purchase ~~approximately~~Agreement ~~$15.0~~provided ~~million~~for ofthe ~~U.S.~~purchase ~~federal~~by ~~net~~the ~~operating~~Buyer ~~loss~~of ~~carryforwards~~100% ~~and approximately $41.3 million~~ of ~~New~~the ~~Jersey~~Securities ~~state~~from ~~net~~the Company. ~~operating~~The ~~loss~~board ~~carryforwards as~~ of ~~December~~directors ~~31,~~or ~~2021.~~other Wegoverning ~~expect~~body toof ~~utilize~~each ~~all~~ of ~~our~~the ~~federal~~Company ~~net operating loss carryforwards~~ and ~~approximately~~the ~~50%~~Buyer ofhas ~~our~~unanimously ~~state~~approved ~~net~~the ~~operating~~CommAgility Transaction. ~~loss~~Under ~~carryforwards~~the toterms ~~offset~~of the ~~taxable~~CommAgility ~~gain~~Purchase ~~generated from~~Agreement, the ~~Microlab~~purchase ~~divestiture.~~price ~~Accordingly,~~for in the ~~future,~~Securities ~~the~~was ~~Company~~estimated ~~could~~to be ~~subject~~approximately $14.5 tomillion, ~~cash~~inclusive ~~income~~of ~~taxes which would reduce our liquidity~~$13. ~~Additionally,~~8 ~~CommAgility~~million ~~benefits~~in ~~from~~cash aconsideration ~~research~~ and ~~development~~a ~~deduction~~$750,000 ~~which~~note ~~significantly~~payable, ~~reduces~~subject ~~the cash needed~~ to ~~pay~~agreed-upon ~~taxes in~~reductions ~~the~~of UK$650,000.

~~Credit Facilities in Effect During Fiscal 2021~~23

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

The ~~Company~~CommAgility ~~entered~~Transaction ~~into~~and ~~the~~Microlab ~~Credit~~Transaction ~~Facility~~resulted ~~with~~in ~~Bank~~the net proceeds of ~~America,~~approximately N$35.A.3 ~~(“Bank~~million ofin ~~America”)~~2022. onAs ~~February~~of 16December 31, ~~2017.~~2022, ~~The~~the ~~Credit Facility~~Company ~~provided~~has ~~for~~ a ~~term~~cash ~~loan~~balance ~~in the aggregate principal amount~~ of $~~760,000~~20.7 ~~(the~~million ~~“Term~~with ~~Loan”)~~no ~~and~~debt anor ~~asset~~earnout ~~based~~liabilities. ~~revolving loan~~We ~~(the~~expect ~~“Revolver”),~~our ~~which~~cash ~~was~~balance ~~subject~~and tocash agenerated by ~~Borrowing~~operations ~~Base~~will ~~Calculation~~be ~~(as~~sufficient ~~defined~~to inmeet ~~the~~our ~~Credit~~liquidity ~~Facility)~~needs offor upthe tonext atwelve ~~maximum availability of $9~~months.0 ~~million~~Our ~~(“Revolver~~ability ~~Commitment~~to ~~Amount”).~~meet ~~The~~our ~~borrowing~~cash ~~base~~requirements ~~was~~will depend ~~calculated~~on asour aability ~~percentage~~to ofgenerate ~~eligible accounts~~cash ~~receivable~~in ~~and~~the ~~inventory~~future, aswhich ~~defined,~~is subject to ~~certain~~general ~~caps~~economic, ~~and~~financial, ~~limits.~~competitive, ~~The~~legislative, ~~borrowing base was calculated on a monthly basis~~regulatory and ~~interest~~other ~~was~~factors ~~calculated~~that atare ~~LIBOR~~beyond ~~plus~~our ~~a margin~~control. ~~The proceeds of the Term Loan and Revolver were used to finance the acquisition of CommAgility in 2017.~~

~~In connection~~The ~~with~~Microlab ~~the~~Transaction ~~Holzworth~~will be ~~acquisition,~~treated onas ~~February~~a 7,sale ~~2020,~~of the ~~Company~~assets and ~~certain~~liabilities of ~~its~~Microlab ~~subsidiaries~~to ~~(the~~RF ~~“Borrowers”),~~Industries for U.S. federal and applicable state income tax purposes and ~~Bank~~will ofresult ~~America~~in ~~entered~~a ~~into~~net ~~Amendment~~taxable Nogain. 5The toCommAgility ~~the~~Transaction ~~Credit~~will ~~Facility~~be ~~(“BOA~~treated ~~Amendment~~as ~~5”).~~a Bysale ~~entering~~of ~~into~~stock ~~BOA~~for ~~Amendment~~U.S. federal and applicable 5,state ~~Holzworth,~~income ~~together~~tax ~~with~~purposes ~~CommAgility~~and ~~Limited,~~will ~~became~~result ~~borrowers~~in ~~under~~a ~~the~~net ~~Credit~~taxable ~~Facility~~loss. ~~The~~We ~~obligations~~will utilize approximately $9.8 million of ~~the~~our ~~Borrowers~~federal ~~under~~net ~~the~~operating ~~Credit~~loss ~~Facility~~carryforwards ~~were~~and ~~guaranteed~~approximately by$8.0 ~~Wireless~~million ~~Telecom~~of ~~Group,~~our ~~Ltd.~~New ~~CommAgility~~Jersey ~~Limited~~state ~~and~~net ~~Wireless~~operating ~~Telecom~~loss ~~Group,~~carryforwards ~~Ltd.~~to ~~are~~offset ~~both~~the ~~wholly owned~~net ~~subsidiaries~~taxable ofgain generated from the ~~Company~~2022 divestitures. ~~Additionally~~As of December 31, ~~the~~2022, ~~Company~~after ~~prepaid~~utilization of the ~~remaining~~net ~~principal~~operating ~~balance~~loss ofcarryforwards, the ~~Term~~Company has ~~Loan~~$5.2 million in ~~the~~U.S. ~~amount~~federal of net operating loss carryforwards and $~~304,000~~33.3 million in New Jersey state net operating loss carryforwards.

OnThe ~~May 4, 2020, the~~ Company, ~~its~~currently ~~subsidiaries~~is ~~and~~pursuing ~~Bank~~possible ofstrategic ~~America~~opportunities, ~~entered~~including ~~into~~potential ~~Amendment~~divestitures, ~~No.~~acquisitions, ~~6 which~~mergers, ~~among~~or other ~~things~~activities, ~~amended the definition~~ ofwhich ~~“Debt”~~may torequire ~~include~~significant ~~the~~use ~~PPP~~of ~~loan as long as~~ the ~~proceeds~~Company’s ~~were~~capital ~~used~~resources. ~~for~~The ~~allowable~~Company ~~purposes~~may ~~under~~incur ~~the~~costs ~~CARES Act (~~as ~~defined below)~~a ~~and~~result ~~the~~of ~~Company~~such ~~promptly submitted an application for forgiveness~~ activities and ~~substantially~~such ~~all~~activities ofmay affect the ~~loan was forgiven. The~~ Company ~~received~~’s ~~notice~~liquidity in ~~June~~future ~~2021 that the loan and accrued interest were fully forgiven, as described below~~periods.

On February 25, 2021, the Company, its subsidiaries and Bank of America entered into Amendment No. 7 which revised the Credit Facility to accommodate the changes to the deferred purchase price payments to and notes with the Holzworth sellers, as described above, and provided Bank of America’s consent to the Company entering into the Muzinich Second Amendment, as described below.

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

As of December 31, 2021, the Company had no balance drawn on the Revolver and the interest rate was 2.00%.

Muzinch Term Loan Facility

In connection with the Holzworth acquisition, on February 7, 2020, the Company, as borrower, and its subsidiaries, as guarantors, and Muzinich BDC, Inc., as lender (“Muzinich”), entered into a Term Loan Facility, which provides for a term loan in the principal amount of $8.4 million (the “Initial Term Loan”). All proceeds of the Initial Term Loan were used to fund the cash portion of the purchase price for the Holzworth acquisition. Principal payments on the Initial Term Loan were $21,000 per quarter with a balloon payment at maturity which was February 7, 2025. The Term Loan Facility included an upfront fee of 2.50% of the aggregate principal amount of the Initial Term Loan. In connection with the Term Loan Facility, the Company incurred costs of $1.0 million, including the aforementioned 2.50% upfront fee to Muzinich, which were recorded as a reduction of the carrying amount of the debt and are being amortized over the term of the loan.

On May 4, 2020, the Company entered into the First Amendment to the Term Loan Facility which, among other things, amended the definition of “Indebtedness” to include the PPP (as defined below) loan as long as the proceeds were used for allowable purposes under the CARES Act, the receipt of the loan did not violate the Credit Facility and the Company submitted an application for forgiveness and substantially all of the loan was forgiven. The Company received notice in June 2021 that the loan and accrued interest were fully forgiven, as described below.

On February 25, 2021, the Company and its subsidiaries entered into the Second Amendment to the Credit Agreement and Limited Waiver (“Amendment 2”) with Muzinich, in which Muzinich agreed to waive the Company’s obligation to comply with the consolidated leverage ratio and fixed charge coverage ratio financial covenants in the Term Loan Facility for the fiscal quarter ending December 31, 2020. We were not in compliance with such covenants primarily as a result of the impact the COVID-19 pandemic had on our consolidated financial results. Amendment 2, among other things, amended the definition of consolidated EBITDA to include certain cash tax benefits related to our U.K. tax jurisdiction and reduced our consolidated leverage ratio for the twelve month periods ended September 30, 2021 from 3.00 to 2.75, December 31, 2021 from 2.75 to 2.25, March 31, 2022 from 2.50 to 2.00 and June 30, 2022 from 2.25 to 2.00. Additionally, the interest rate margin was increased from 7.25% to 9.25% effective January 1, 2021 and would step down to 8.50% and 7.25% upon the Company achieving consolidated EBITDA on a trailing twelve-month basis of $4.0 million and $6.3 million, respectively. Muzinich and the Company also agreed on an excess cash flow payment of $428,000 which was made in March 2021 and Muzinich provided consent for the Company to change the deferred purchase price payments to and enter into notes with the Holzworth sellers in the amount of $750,000, as described above in Note 2.

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

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

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

As of December 31, 2021, the principal balance on the Term Loan Facility was $4.1 million and the interest rate was 9.75%. On March 1, 2022 the Company repaid the outstanding principal balance and accrued interest on the Term Loan Facility and the Term Loan Facility was terminated.

PPP Loan

On May 4, 2020, the Company received $2.0 million pursuant to a loan from Bank of America N.A. under the Paycheck Protection Program (“PPP”) of the 2020 Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) administered by the Small Business Association (“SBA”). The loan had an interest rate of 1% and a term of 24 months. A repayment schedule was not provided by Bank of America. Accordingly, as of December 31, 2020 the full amount of the term loan was shown as due in May 2022. Funds from the loan were used only for certain permitted purposes, including payroll, benefits, rent and utilities. The CARES Act and the PPP provided a mechanism for forgiveness of up to the full amount of the loan upon application to the SBA for forgiveness by the Company. The Company applied for forgiveness of the loan and received notice that the loan and accrued interest were fully forgiven. The Company elected to account for the loan in accordance with Accounting Standard Codification 470 Debt. Accordingly, the Company recorded a gain on extinguishment of debt on the Consolidated Statement of Operations and Comprehensive Income/(Loss) in the twelve months ended December 31, 2021.

CIBLS Loan

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

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

Sources and Uses of Cash

As of December 31, ~~2021~~2022, the Company’s consolidated cash balance was $420.57 million as compared to $4.95 million as of the prior year. No funds were drawn on our Revolver and we had availability under our borrowing base of $6.1 million as of December 31, 2021. The outstanding balances of our Term Loan Facility and CIBLS Loan were $4.1 million and $337,000, respectively.

Our primary sources of cash were net ~~cash~~proceeds of the Microlab Transaction and CommAgility Transaction which generated ~~from~~an ~~operations~~aggregate amount of $35.3 million. Our primary uses of cash were the repayment of the Muzinich term loan of $4.64 million, acquisition of treasury stock of $~~562,000~~2.5 million and final payment of ~~net~~contingent ~~proceeds~~consideration and deferred purchase price related to ~~shares~~the ~~sold~~Holzworth ~~under~~acquisition ~~our~~$3.2 million, of which $1.4 million is classified atwithin ~~the~~financing ~~market~~activities ~~common~~on ~~stock~~the ~~offering~~consolidated ~~and~~cash flow statement, $~~345~~250,000 ~~related~~is toclassified ~~the~~within ~~receipt~~investing ofactivities ~~the~~and ~~CIBLS~~$1.6 ~~Loan~~million is classified within operating activities. Additionally, ~~which~~working ~~was~~capital ~~used~~increased approximately $5.6 million due to ~~fund~~higher ~~additional~~accounts ~~payments~~receivable onrelated ~~the~~to ~~Muzinich~~timing ~~term~~of ~~loan~~shipments inat the ~~amount~~end of ~~$4.1~~the ~~million~~year, higher inventory balances to mitigate long lead times caused by supply chain disruption and $1estimated U.3S. ~~million~~federal ofand state tax payments ~~related~~made toduring ~~Holzworth~~the ~~acquisition~~year.

Operating Activities

Cash ~~provided~~used by operating activities ~~increased~~was ~~from~~ $39.07 million in fiscal year 2022 as compared to cash provided by operating activities of $4.6 million in fiscal year 2021. The cash usage in fiscal year 2022 was due primarily to an increase in working capital due to ~~improved~~higher ~~operating~~accounts ~~income~~receivable caused ~~offset~~by timing of shipments at the end of the year, higher inventory balances caused by ~~lower~~higher levels of safety stock to mitigate long ~~cash~~lead ~~generated~~times, ~~from~~estimated ~~working~~U.S. ~~capital~~federal asand ~~compared~~state totax ~~the~~payments ~~prior~~made in fiscal year 2022 of approximately $900,000 and the Holzworth earnout payment of $1.6 million which is classified in operating activities.

Investing Activities

Cash ~~used~~provided by investing activities ~~decreased~~was ~~from~~ $834.63 million toin ~~$724,000~~fiscal year 2022 due primarily to net cash ~~paid~~proceeds ~~for~~of ~~the~~$35.3 ~~Holzworth~~million ~~acquisition~~from inthe ~~2020 only partially~~Microlab ~~offset~~Transaction byand ~~increased~~CommAgility ~~capital expenditures~~Transaction.

Financing Activities

Cash ~~from~~used by financing activities ~~decreased~~increased from $64.32 million in the prior year to $48.2 million ~~of cash used~~ in ~~the~~fiscal ~~current~~ year 2022 due primarily to ~~the receipt~~ repurchases of ~~the~~our ~~$8.4~~common ~~million~~stock ~~Term Loan Facility, net~~ of ~~debt issuance costs and~~ $2.05 million ~~PPP~~and ~~loan~~final inpayment ~~2020 compared to $4.2 million~~ of ~~term~~the ~~loan~~Holzworth ~~repayments~~earnout ~~and~~liability of $1.14 million ~~of contingent consideration payments related to the Holzworth acquisition made in 2021~~.

2924

Holzworth Deferred Purchase Price and Earnout

OnAs ~~February~~of ~~19,~~December ~~2021~~31, 2022 the Company ~~entered~~had ~~into~~paid the ~~Second~~final ~~Amendment~~earnout ~~with Holzworth~~ and ~~Sellers. The Second Amendment, among other things, converts the second~~ deferred purchase price ofliabilities ~~$750,000~~related ~~into~~to ~~unsecured~~the ~~seller~~Holzworth ~~notes with interest at an annual rate of 6~~acquisition.~~5% starting~~ ~~from~~There ~~April~~are 1,no ~~2021~~remaining ~~until~~purchase ~~final~~price ~~payment~~liabilities. ~~The payment date has been changed from March 31, 2021 to three equal installments of $250,000, plus accrued interest, due on July 1, 2021, October 1, 2021 and January 1, 2022.~~

~~Additionally,~~On ~~the~~August ~~parties~~27, ~~amended~~2018, the ~~payment~~Company ~~dates~~filed ofa ~~the~~shelf ~~earnout~~registration ~~consideration.~~statement ~~The~~on ~~payment~~Form ~~date~~S-3 ofwhich ~~the~~was ~~first~~declared ~~earnout~~effective ~~payment~~on ~~based~~September on17, ~~the~~2018. ~~financial~~On ~~results~~July ~~of the calendar year ended 2020 (“Year 1 Earnout”) has been amended from March 31~~21, 2021, tothe ~~(i)~~Company ~~six~~entered ~~(6)~~into ~~equal~~an ~~quarterly installments~~At ofMarket ~~10%~~Issuance ofSales ~~the~~Agreement ~~Year 1 Earnout payable on~~ (the ~~last~~“Sales ~~business~~Agreement”) ~~day~~with ofB. ~~each~~Riley ~~calendar quarter between June 30~~Securities, ~~2021 and September~~ ~~30,~~Inc. ~~2022 and~~ (~~ii)~~the ~~one (1~~“Agent”) ~~installment~~to ~~payment~~issue ~~equal~~and tosell ~~40%~~through of the ~~Year 1 Earnout on December 31~~Agent, ~~2022. The Year 1 Earnout is payable in cash or~~ shares of the Company’s common stock, ~~based~~par onvalue ~~the 90 trading day volume weighted average price immediately preceding final determination of the Year 1 Earnout or~~ $20.1901 per share., having ~~The~~an ~~estimated~~aggregate ~~payment~~offering ~~for~~price ~~the~~of ~~Year~~up 1to ~~Earnout is~~ $312,000.4000 ~~million. The payment date for~~ (the ~~second earnout payment which is based on the financial results of the calendar year ended 2021 (~~“~~Year 2 Earnout~~Shares”) ~~has been amended from March 31~~, ~~2022~~as todescribed ~~four~~in ~~equal~~Note ~~quarterly~~5 ~~installments~~– ~~payable~~Equity. onFrom ~~the last business day of each calendar quarter between~~July ~~March 31~~21, ~~2022~~2021 ~~and~~through ~~December~~August 316, ~~2022.~~2021, ~~The~~the ~~Year~~Agent 2sold ~~Earnout~~254,701 isshares ~~also~~of ~~payable in cash or stock at~~ the ~~Company~~company’s ~~discretion.~~common ~~The~~stock ~~aggregate earnout~~for ~~payments~~net proceeds of ~~the~~$739,000 ~~Year~~after deducting 1sales ~~Earnout~~commissions ~~and~~paid to the ~~Year~~Agent 2in ~~Earnout~~accordance ~~cannot~~with ~~exceed~~the ~~$7.0~~terms ~~million. As~~ of ~~December 31, 2021,~~ the ~~Earnout~~Sales ~~accrual was~~Agreement ~~$2.9~~and ~~million~~$560,000 ofafter ~~which~~deducting ~~$2.5~~direct legal ~~million is related to the Year 1 Earnout~~ and ~~$386,000~~accounting isfees ~~related~~associated towith the ~~Year~~offering. 2The ~~Earnout~~shelf ~~and~~registration isstatement ~~included in~~expired ~~accrued~~on ~~expenses~~September ~~and~~17, ~~other~~2021 ~~current~~and ~~liabilities~~was innot renewed by the ~~consolidated balance sheet~~Company.

~~The~~Purchase ~~parties~~obligations ~~also~~consist ~~amended~~of ~~the~~inventory ~~provisions~~that ~~with~~arises ~~respect~~in ~~to restrictions on transfer to adjust for~~ the ~~change~~normal incourse ~~timing~~ of ~~earnout~~business ~~payments, as described above~~operations. ~~Finally,~~Future ~~the~~obligations ~~parties~~and ~~added~~commitments aas ~~requirement~~of ~~that any earned but unpaid earnout consideration will be accelerated in~~December ~~the~~31, ~~event~~2022 ~~the~~consisted ~~Company~~of ~~desires to enter into a material asset or equity acquisition in~~ the ~~future.~~following:

OnTable August 27, 2018 the Company filed a shelf registration statement on Form S-3 which was declared effective on September 17, 2018. On July 21, 2021, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”) to issue and sell through the Agent, shares of ~~the~~Contractual Company’s common stock, par value $0.01 per share, having an aggregate offering price of up to $12,000.000 (the “Shares”), as described in Note 4 – Equity. From July 21, 2021 through August 6, 2021, the Agent sold 254,701 shares of the company’s common stock for net proceeds of $739,000 after deducting sales commissions paid to the Agent in accordance with the terms of the Sales Agreement and $560,000 after deducting direct legal and accounting fees associated with the offering. The shelf registration statement expired on September 17, 2021 and was not renewed by the Company.Obligations

~~Purchase obligations~~Payments ~~consist~~by ofyear ~~inventory that arises~~ (in ~~the normal course of business operations. Future obligations and commitments as of December 31, 2021 consisted of the following:~~thousands)

Table of Contractual Obligations Payments by year (in thousands)

	Total		2023		2024		2025		2026		Thereafter
Facility leases	$	666	$	276	$	158	$	163	$	69	$	-
Operating and equipment leases		97		29		29		29		10		-
Purchase obligations		4,535		4,535		-		-		-		-
	$	5,298	$	4,840	$	187	$	192	$	79	$	-

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

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

Off-Balance Sheet Arrangements

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

Recent Accounting Pronouncements Affecting the Company

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8. Financial Statements and Supplementary Data

	~~Page~~	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 127)	32	27
Consolidated Financial Statements:
Balance Sheets as of December 31, 2021 and 2020	34
Balance Sheets as of December 31, 2022 and 2021		29
Statements of Operations and Comprehensive Income/(Loss) for the Two Years Ended December 31, 2021	35
Statements of Operations and Comprehensive Income/(Loss) for the Two Years Ended December 31, 2022		30
Statement of Changes in Shareholders’ Equity for the Two Years Ended December 31, 2021	36
Statement of Changes in Shareholders’ Equity for the Two Years Ended December 31, 2022		31
Statements of Cash Flows for the Two Years Ended December 31, 2021	37
Statements of Cash Flows for the Two Years Ended December 31, 2022		32
Notes to Consolidated Financial Statements	38	33

3126

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Wireless Telecom Group, Inc.

To the Board of Directors and Shareholders

Wireless Telecom Group, Inc.

Parsippany, NJ

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Wireless Telecom Group, Inc. and subsidiaries (the “Company”) as of December 31, ~~2021~~2022 and ~~2020~~2021, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity and cash flows for each of the two years in the period ended December 31, ~~2021~~2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2021~~2022 and ~~2020~~2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, ~~2021~~2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

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

Critical Audit ~~Matters~~Matter

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

32Discontinued operations – Refer to Note 2 to the financial statements

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

As described in Notes 1 and 7 to the consolidated financial statements, the Company’s balance of goodwill, net as of December 31, 2021 was $11.5 million. Management evaluates goodwill, at the reporting unit level, for impairment annually during the fourth quarter of its reporting period, or more frequently, if events occur or circumstances change which would indicate that goodwill might be impaired. As a result of the Company’s qualitative evaluation of goodwill, the Holzworth and Microlab reporting units did not indicate any impairment of goodwill. As a result of the factors identified in Note 1, the Company performed a quantitative impairment test of the goodwill of one of the Company’s reporting units, CommAgility as of October 1, 2021. Fair value of the reporting unit was estimated using a combination of the income approach and the market approach methods. The Company used a discounted cash flow model for the income approach method and the guideline public company method for the market approach method. The determination of the fair value of the reporting unit required management to make significant estimates and assumptions related to projected revenue growth, future operating margins, discount rates and terminal values. As disclosed by management, changes in these estimates and assumptions could have a significant impact on the fair value of the reporting unit, the amount of any goodwill impairment, or both. As a result of the quantitative impairment assessment discussed above, the Company determined the excess of fair value above its carrying value was approximately 25% of the fair value at the measurement date.27

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

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

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

AsOur ~~described~~audit inprocedures ~~Note~~related 14 to the consolidated financial statements, as of December 31, 2021, the Company has $5.6 million of total deferred tax assets, including $3.5 million for State net operating loss carryforwards. The deferred tax assets for State net operating loss carryforwards is partially offset by a valuation allowance of $2.1 million. As disclosed by management~~, realization of the Company~~’s ~~deferred tax~~determination ~~assets~~of ~~is dependent upon~~ the ~~Company~~gain ~~generating~~on ~~sufficient~~sale taxable income in the appropriate tax jurisdictions in future years to obtain benefit from the utilization of net operating losses. In determining whether a valuation allowance is warranted, management evaluates factors such as prior earnings history, expected future earnings, carryback and ~~carryforward~~resulting ~~periods,~~income ~~and~~ tax ~~strategies~~expense ~~that~~included ~~could potentially impact~~ the ~~likelihood of realization of a deferred tax asset. After evaluating the sale of Microlab FXR/LLC~~following, ~~as well as other opportunities~~ ~~that~~among may be available that will impact the utilization of the Company’s State net operating loss carryforwards, management expects to be able to realize some, but not all, of the State net operating loss carryforwards.others:

~~The principal~~● ~~considerations~~Evaluated ~~for~~the ~~our~~reasonableness ~~determination~~of ~~that~~the ~~performing~~RFC ~~procedures~~and ~~relating~~RBS toBusinesses net asset balances from the ~~valuation~~prior ~~allowance~~period, onresults ~~State~~of ~~net~~continuing ~~operating loss~~and ~~carryforwards~~discontinued isoperations aand ~~critical~~management’s ~~audit~~adjustments ~~matter~~made ~~include~~to ~~the~~these ~~significant~~balances ~~judgments~~● byEvaluated management’s ~~when~~calculations ~~assessing~~of ~~factors~~the ~~related~~gains toon ~~expected future~~sales ~~earnings,~~of ~~which~~the inbusinesses ~~turn~~including ~~led~~the tocompleteness aand ~~high~~accuracy ~~degree~~ of ~~auditor~~amounts ~~judgment,~~included ~~subjectivity,~~in such calculations and ~~audit~~the ~~effort~~mathematical inaccuracy ~~performing~~of ~~procedures~~the calculations ● Examined the sale contracts and ~~evaluating~~ management’s ~~significant~~evaluation ~~assumptions~~of ~~related~~the distinct assets and liabilities (or disposal groups) promised to ~~expected~~the ~~future~~counterparties ~~earnings.~~as well as consideration transferred to the Company ● With the assistance of our income tax specialists, evaluated:

~~Addressing the~~○ ~~matter~~The ~~involved~~reasonableness ~~performing~~of ~~procedures~~the ~~related~~methods, toassumptions, ~~among~~and ~~others,~~judgments ~~evaluating~~used by management’s ~~assessment~~to ofdetermine the ~~realizability~~income ~~of the deferred~~ tax ~~assets,~~expense ~~including~~○ ~~(i)~~How ~~testing~~such ~~the~~expense ~~underlying~~was ~~data~~allocated ~~used~~between bycontinuing ~~the~~and ~~Company~~discontinued inoperations ~~its~~○ ~~analysis~~The ~~and~~tax ~~(ii)~~treatment ~~evaluating the reasonableness~~ of ~~expected future earnings during~~ the ~~applicable~~gain ~~periods~~under U.S. ~~Evaluating~~Federal ~~the~~and ~~reasonableness~~various ofState ~~management’s~~jurisdictions ~~estimates~~ and ~~assumptions related~~in ~~to expected future earnings involved evaluating whether~~ the ~~estimates~~United ~~and~~Kingdom ~~assumptions~~○ ~~used~~The bymathematical ~~management~~accuracy ~~were reasonable considering (i) the current~~ and ~~past~~presentation ~~performance~~ of the ~~Company as filed in historical state~~ income tax ~~returns,~~expense ~~(ii)~~and ~~expected~~related ~~future events that could impact state apportionment of~~ income intax ~~future periods and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.~~liabilities

●

Assesses the presentation and disclosures related to discontinued operations to ensure proper application of ASC 205-20.

/s/ PKF O’Connor Davies, LLP

New York, New York

March 1723, ~~2022~~2023

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

33* * * * *

CONSOLIDATED BALANCE SHEETS

Wireless Telecom Group, Inc.

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

	December 31			December 31
	2021			2020
	2022			2021
CURRENT ASSETS
Cash & cash equivalents	$	420,~~472~~707		$	4,~~910~~472
Accounts receivable - net of reserves of $221 and $143, respectively		5,290			5,520
Accounts receivable - net of reserves of $100 and $91, respectively		4,762			2,044
Inventories - net of reserves of $909 and $1,129, respectively		9,074			8,796
Inventories - net of reserves of $499 and $468, respectively		5,087			4,439
Prepaid expenses and other current assets		1,~~689~~685			~~2,172~~394
TOTAL CURRENT ASSETS		20,525			21,398
Current assets of discontinued operations		-			9,176
PROPERTY PLANT AND EQUIPMENT - NET		1,532			1,824
TOTAL CURRENT ASSETS		32,241			20,525
PROPERTY PLANT AND EQUIPMENT - NET		467			469
OTHER ASSETS
Goodwill		116,~~459~~000			116,~~512~~000
Acquired intangible assets, net		32,~~661~~588			53,~~242~~161
Deferred income taxes, net		52,~~580~~913			52,~~701~~407
Right of use assets		~~1,146~~579			1,~~680~~146
Other assets		~~448~~185			~~561~~284
TOTAL OTHER ASSETS		22,294			24,696
Non current assets of discontinued operations		-			10,359
TOTAL ASSETS	$	44,351		$	47,918
TOTAL OTHER ASSETS		12,265			23,357
TOTAL ASSETS	$	44,973		$	44,351
CURRENT LIABILITIES
Short term debt	$	~~126~~-		$	~~512~~84
Accounts payable		~~2,264~~480			~~1,546~~644
Short term leases		~~585~~251			~~534~~585
Accrued expenses and other current liabilities		72,~~858~~693			75,~~997~~836
Deferred revenue		~~408~~123			~~924~~24
TOTAL CURRENT LIABILITIES		11,241			11,513
Current liabilities of discontinued operations		-			4,296
TOTAL CURRENT LIABILITIES		3,547			11,469
LONG TERM LIABILITIES
Long term debt		~~3,595~~-			83,~~895~~300
Long term leases		~~615~~364			~~1,200~~615
Other long term liabilities		5224			8252
Deferred tax liability		228			377
Non current liabilities of discontinued operations		-			295
TOTAL LONG TERM LIABILITIES		~~4,490~~388			104,~~554~~262
COMMITMENTS AND CONTINGENCIES		-			-
SHAREHOLDERS’ EQUITY
Preferred stock, $.01 par value, 2,000,000 shares authorized, none issued		-			-
Common stock, $.01 par value, 75,000,000 shares authorized, 35,915,636 and 34,888,904 shares issued, 22,666,074 and 21,669,361 shares outstanding		359			349
Common stock, $.01 par value, 75,000,000 shares authorized, 36,440,636 and 35,915,636 shares issued, 21,438,571 and 22,666,074 shares outstanding		365			359
Additional paid in capital		5152,~~555~~764			5051,~~163~~555
Retained earnings/(deficit)		554			(946	)
Retained earnings		15,143			554
Treasury stock at cost, 13,249,562 and 13,219,543 shares		(24,619	)		(24,556	)
Treasury stock at cost, 15,002,065 and 13,249,562 shares		(27,234	)		(24,619	)
Accumulated other comprehensive income		~~771~~-			~~841~~771
TOTAL SHAREHOLDERS’ EQUITY		2841,~~620~~038			2528,~~851~~620
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	44,~~351~~973		$	4744,~~918~~351

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

3429

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

Wireless Telecom Group, Inc.

(In thousands, except per share amounts)

	2021			2020
	2022			2021
	Twelve Months Ended
	December 31
	2021			2020
	2022			2021
Net revenues	$	4922,~~245~~367		$	4122,~~748~~676
Cost of revenues		249,~~158~~534			209,~~781~~711
Gross profit		2512,~~087~~833			2012,~~967~~965
Operating expenses
Research and development		51,~~550~~791			61,~~389~~718
Sales and marketing		74,~~169~~046			64,~~955~~003
General and administrative		119,~~869~~638			9,~~907~~076
Goodwill and intangibles impairment charge		258			4,742
Loss on change in fair value of contingent consideration		-			386
Loss on change in fair value of contingent consideration		386			1,073
Total operating expenses		15,475			15,183
Total operating expenses		25,232			29,066
Operating (loss)		(2,642	)		(2,218	)
Operating income/(loss)		(145	)		(8,099	)
(Loss)/gain on extinguishment of debt		(792	)		2,045
PPP Loan Forgiveness		2,045			-
Other income/(expense)		374			70
Other income/(expense)		70			187
Interest income/(expense)		(130	)		(1,143	)
Interest expense		(1,143	)		(985	)
(Loss) before taxes		(3,190	)		(1,246	)
Income/(Loss) before taxes		827			(8,897	)
Tax provision/(benefit)		(731	)		(554	)
Tax provision/(benefit)		(673	)		(809	)
Net income/(loss) from continuing operations	$	(2,459	)	$	(692	)
Net income/(loss)	$	1,500		$	(8,088	)
Net income from discontinued operations, net of taxes		17,048			2,192
Net income/(loss)	$	14,589		$	1,500
Other comprehensive income/(loss):
Foreign currency translation adjustments		(70771	)		~~190~~(70	)
Comprehensive income/(loss)	$	113,~~430~~818		$	(71,~~898~~430	)
Income/(Loss) per share:
Income/(loss) per share from continuing operations:
Basic	$	(0.0711	)	$	(0.3703	)
Diluted	$	(0.0611	)	$	(0.3703	)
Income per share from discontinued operations:
Basic	$	0.79		$	0.10
Diluted	$	0.76		$	0.09
Income/(loss) per share:
Basic	$	0.68		$	0.07
Diluted	$	0.65		$	0.06
Weighted average shares outstanding:
Basic		2221,~~050~~702			2122,~~657~~050
Diluted		2422,~~297~~540			2124,~~657~~297

In periods with a net loss, the basic loss per share equals the diluted loss per share as all common stock equivalents are excluded from the per share calculation because they are anti-dilutive.

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

3530

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Wireless Telecom Group, Inc.

(In thousands, except share amounts)

	Common Stock Issued			Common Stock Amount			Additional Paid In Capital			Retained Earnings/(Deficit)			Treasury Stock			Accumulated Other Comprehensive Income			Total Shareholders’ Equity
Balances at December 31, 2019		34,488,252		$	345		$	49,062		$	7,142		$	(24,509	)	$	651		$	32,691
Balances at December 31, 2020		34,488,904		$	349		$	50,163		$	(946	)	$	(24,556	)	$	841		$	25,851
Net loss		-			-			-			(81,~~088~~500	)		-			-			(81,~~088~~500	)
Issuance of shares in connection with stock options exercised		20,000			-			15			-			-			-			15
Issuance of restricted stock		50,000			1			(1	)		-			-			-			-
Forfeiture of restricted stock		(16,667	)		-			-			-			-			-			-
Issuance of shares in connection with Holzworth acquisition		347,319			3			462			-			-			-			465
Issuance of warrants		-			-			151			-			-			-			151
Shares withheld for employee taxes		-			-			-			-			(47	)		-			(47	)
Share-based compensation expense		-			-			474			-			-			-			474
Cumulative translation adjustment		-			-			-			-			-			190			190
Balances at December 31, 2020		34,888,904		$	349		$	50,163		$	(946	)	$	(24,556	)	$	841		$	25,851
Balances		34,888,904		$	349		$	50,163		$	(946	)	$	(24,556	)	$	841		$	25,851
Net income		-			-			-			1,500			-			-			1,500
Issuance of shares in connection with stock options exercised		140,000			1			207			-			-			-			208
Issuance of restricted stock		478,517			5			(5	)		-			-			-			-
Issuance of shares in connection with Holzworth acquisition		143,514			1			314			-			-			-			315
Shares withheld for employee taxes		-			-			-			-			(63	)		-			(63	)
Share-based compensation expense		-			-			316			-			-			-			316
ATM Shares Sold		264,701			3			560			-			-			-			563
Cumulative translation adjustment		-			-			-			-			-			(70	)		(70	)
Net income (loss)		-			-			-			1,500			-			-			1,500
Balances at December 31, 2021		35,915,636		$	359		$	51,555		$	554		$	(24,619	)	$	771		$	28,620
Balances		35,915,636		$	359		$	51,555		$	554		$	(24,619	)	$	771		$	28,620
Net income		-			-			-			14,589			-			-			14,589
Net income/(loss)		-			-			-			14,589			-			-			14,589
Issuance of shares in connection with stock options exercised		140,000			2			196			-			-			-			198
Issuance of restricted stock		520,000			5			(5	)		-			-			-			-
Restricted stock forfeitures		(135,000	)		(1	)		-			-			-			-			(1	)
Shares withheld for employee taxes		-			-			-			-			(90	)		-			(90	)
Share repurchase		-			-			-			-			(2,525	)		-			(2,525	)
Share-based compensation expense		-			-			1,018			-			-			-			1,018
Cumulative translation adjustment		-			-			-			-			-			(771	)		(771	)
Balances at December 31, 2022		36,440,636		$	365		$	52,764		$	15,143		$	(27,234	)	$	-		$	41,038

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

3631

CONSOLIDATED STATEMENTS OF CASH FLOWS

Wireless Telecom Group, Inc.

(In thousands)

	2021			2020
	2022			2021
	For the Twelve Months
	Ended December 31
	2021			2020
	2022			2021
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
CASH FLOWS (USED)/PROVIDED BY OPERATING ACTIVITIES
Net income/(loss)	$	1,500		$	(8,088	)
Net income	$	14,589		$	1,500
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net income to net cash (used)/ provided by operating activities:
Depreciation and amortization		21,~~152~~397			2,~~238~~152
PPP Loan Forgiveness		(2,045	)		-
Loss/(Gain) on extinguishment of debt		792			(2,045	)
Goodwill and intangibles impairment		258			4,742
(Gain) on sale of Microlab and CommAgility		(22,834	)		-
Amortization of debt issuance fees		335			297
Goodwill and intangibles impairment		-			258
Share-based compensation expense		316			474
Amortization of debt issuance fees		55			335
Deferred rent		(30	)		(29	)
Share-based compensation expense		1,018			316
Deferred income taxes		(26	)		178
Deferred rent		(30	)		(30	)
Provision for doubtful accounts		78			(31	)
Deferred income taxes		2,666			(26	)
Inventory reserves		141			157
Provision for doubtful accounts		9			78
Changes in assets and liabilities, net of acquisition:
Inventory reserves		62			141
Accounts receivable		150			1,209
Changes in assets and liabilities:
Inventories		(427	)		(186	)
Accounts receivable		(3,060	)		150
Prepaid expenses and other assets		976			923
Inventories		(845	)		(427	)
Accounts payable		770			(842	)
Prepaid expenses and other assets		(1,042	)		976
Deferred Revenue		(515	)		819
Accounts payable		(193	)		770
Accrued expenses and other liabilities		925			1,119
Deferred Revenue		(160	)		(515	)
Net cash provided by operating activities		4,558			2,980
Accrued expenses and other liabilities		(2,078	)		925
CASH FLOWS USED BY INVESTING ACTIVITIES
Net cash (used)/provided by operating activities		(9,654	)		4,558
Capital expenditures		(524	)		(364	)
CASH FLOWS PROVIDED/(USED) BY INVESTING ACTIVITIES
Acquisition of business, net of cash acquired		(200	)		(8,246	)
Capital expenditures		(722	)		(524	)
Net cash used by investing activities		(724	)		(8,610	)
Acquisition of business, net of cash acquired		(250	)		(200	)
CASH FLOWS PROVIDED/(USED) BY FINANCING ACTIVITIES
Divestiture of Microlab, net		23,069			-
Revolver borrowings/(repayments), net		-			(2,354	)
Divestiture of CommAgility, net		12,205			-
Term loan borrowings		345			8,400
Net cash provided/(used) by investing activities		34,302			(724	)
Term loan repayments		(4,212	)		(426	)
CASH FLOWS (USED) BY FINANCING ACTIVITIES
Debt issuance fees		-			(1,327	)
Term loan borrowings		-			345
Paycheck Protection Program loan		-			2,045
Term loan repayments		(4,415	)		(4,212	)
Payment of contingent consideration		(1,052	)		-
Acquisition of treasury stock		(2,525	)		-
Proceeds from exercise of stock options		208			16
Payment of contingent consideration		(1,388	)		(1,052	)
Tax withholding payments for vested equity awards		(63	)		(46	)
Proceeds from exercise of stock options		197			208
ATM Shares Sold		563			-
Tax withholding payments for vested equity awards		(90	)		(63	)
Net cash provided/(used) by financing activities		(4,211	)		6,308
ATM Shares Sold		-			563
Effect of exchange rate changes on cash and cash equivalents		(61	)		(13	)
Net cash (used) by financing activities		(8,221	)		(4,211	)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		(438	)		665
Effect of exchange rate changes on cash and cash equivalents		(192	)		(61	)
Cash and cash equivalents, at beginning of year		4,910			4,245
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		16,235			(438	)
CASH AND CASH EQUIVALENTS, AT END OF YEAR	$	4,472		$	4,910
Cash and cash equivalents, at beginning of year		4,472			4,910
CASH AND CASH EQUIVALENTS, AT END OF YEAR	$	20,707		$	4,472
SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest	$	~~810~~122		$	~~703~~810
Cash paid during the period for income taxes	$	~~187~~988		$	65187
Non cash issuance of common stock in connection with acquisition – see Note 2

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

3732

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

Organization and Basis of Presentation

Wireless Telecom Group, Inc., a New Jersey corporation, together with its subsidiaries (“we”, “us”, “our” or the “Company”), ~~specializes~~is inpursuing strategic alternatives to accelerate the ~~design~~realization ~~and~~of ~~manufacture~~value for our shareholders. On January 1, 2022, the Company was comprised of ~~advanced~~Wireless ~~radio~~Telecom ~~frequency~~Group, ~~(“RF”)~~Inc., doing business as, and ~~microwave~~operating under the trade name NoiseCom, Inc., ~~devices~~and ~~which~~its ~~enable~~wholly ~~the~~owned ~~development~~subsidiaries including Boonton Electronics Corporation, ~~testing~~Microlab/FXR, Wireless Telecommunications Group Ltd., CommAgility Limited and ~~deployment~~Holzworth ofInstrumentation, ~~wireless~~Inc. ~~technology~~(NoiseCom, Inc., ~~The~~Boonton ~~Company~~Electronics ~~provides~~Corporation, ~~unique~~Microlab/FXR LLC, ~~highly~~CommAgility ~~customized~~Limited Ltd., and Holzworth Instrumentation, Inc. are hereinafter referred to as “Noisecom”, “Boonton”, “Microlab”, ~~configured~~“CommAgility” ~~solutions~~and ~~which~~“Holzworth”, ~~drive~~respectively). ~~innovation~~Our ~~across~~product agroups ~~wide~~were ~~range~~organized as follows: Radio Frequency Components (“RFC”) was comprised of ~~traditional~~our Microlab brand; Radio, Baseband, Software (“RBS”) was comprised of our CommAgility brand; and ~~emerging~~Test ~~wireless~~and ~~technologies~~Measurement (“T&M”) was comprised of our Boonton, Noisecom and Holzworth brands.

~~Our~~As ~~customers~~more ~~include~~fully ~~wireless~~described ~~carriers~~in Note 2 below, ~~aerospace~~on ~~companies~~March 1, ~~defense~~2022, ~~contractors~~the Company completed the sale of Microlab to RF Industries, ~~military~~Ltd and ~~government~~on ~~agencies~~December 30, ~~satellite~~2022 ~~communication~~completed the sale of CommAgility to E-Space Acquisitions, LLC. Subsequent to the divestitures of Microlab and CommAgility, ~~companies~~the Company is comprised of the T&M business which is made up of our Boonton, ~~network~~Noisecom and Holzworth brands. The T&M business provides radio frequency (“RF”) and microwave test equipment and low phase noise RF synthesizers to equipment manufacturers, aerospace ~~tower~~and defense companies, ~~semiconductor~~military ~~device~~and ~~manufacturers~~government agencies, ~~system~~satellite ~~integrators~~communication companies, ~~neutral~~semiconductor ~~host~~companies ~~providers~~ and ~~medical~~other global ~~device~~technology ~~manufacturers~~companies.

~~Our~~In ~~products~~accordance ~~include~~with ~~components,~~applicable ~~modules,~~accounting ~~instruments~~guidance, ~~systems~~the ~~and~~results ~~software~~of ~~used~~Microlab ~~across~~and ~~the~~CommAgility ~~lifecycle~~are ofpresented ~~wireless~~as ~~connectivity~~discontinued ~~and~~operations ~~communication~~in the ~~development,~~Consolidated ~~deployment~~Statements of Operations and ~~testing.~~Comprehensive ~~Our~~Income/(Loss) ~~customers~~and, ~~use~~as ~~these~~such, ~~products~~have inbeen ~~relation~~excluded tofrom ~~commercial~~continuing ~~infrastructure~~operations. ~~development~~Further, the Company reclassified the ~~expansion~~ assets and ~~upgrade~~liabilities of ~~distributed~~Microlab ~~antenna~~and ~~systems,~~CommAgility ~~deployment~~as ofassets ~~small~~and ~~cell~~liabilities ~~technology,~~of ~~use~~discontinued ofoperations in ~~medical~~the ~~devices~~Consolidated ~~and~~Balance ~~private~~Sheet ~~long-term~~as ~~evolution (“LTE”)~~of ~~and~~December 5G31, ~~networks~~2021. InThe ~~addition,~~Consolidated ~~the~~Statements ~~Company’s~~of ~~products~~Cash Flows are ~~used~~presented inon ~~the~~a ~~development~~consolidated basis for both continuing operations and ~~testing~~discontinued ofoperations. ~~satellite~~Our ~~communication systems,~~consolidated ~~radar~~financial ~~systems,~~statements ~~semiconductor~~from ~~devices,~~continuing ~~automotive~~operations ~~electronics~~include the accounts of Noisecom, Boonton and ~~avionics~~Holzworth.

The accompanying consolidated financial statements include the accounts of Wireless Telecom Group, Inc., doing business as and operating under the trade name, Noisecom, and its wholly owned subsidiaries including Boonton Electronics Corporation (“Boonton”), Microlab/FXR LLC (“Microlab”), Holzworth Instrumentation, Inc. (“Holzworth”), Wireless Telecommunications Ltd. and CommAgility Limited (“CommAgility”). They have been prepared using accounting principles generally accepted in the United ~~States~~ States (“U.S. GAAP”). All intercompany transactions and balances have been eliminated in consolidation.

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

Reclassification

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

Use of Estimates

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

3833

Concentrations of Credit Risk, Purchases and Fair Value

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable.

Credit evaluations are performed on customers requiring credit over a certain amount. Credit risk is mitigated to a lesser extent through collateral such as letters of credit, bank guarantees or payment terms like cash in advance.

For the ~~twelve~~years ~~months~~ ended December 31, ~~2021~~2022 and December 31, ~~2020~~2021, no one customer accounted for ~~more~~15% ~~than~~and 1013% of ~~the Company’s~~ total consolidated revenues., respectively. At December 31, ~~2021~~2022, no one customer accounted for ~~more than 10~~17% of consolidated gross accounts receivable. At December 31, ~~2020~~2021, one customer ~~exceeded~~accounted for 1011% of ~~consolidated~~ gross accounts receivable ~~at 12~~.~~7%.~~

For the year ended December 31, ~~2021~~2022, two suppliers ~~exceeded~~accounted 10for approximately 33% of total consolidated inventory purchases ~~at 12% each~~. For the year ended December 31, ~~2020~~2021, two suppliers ~~exceeded~~accounted 10for approximately 37% of total consolidated inventory purchases ~~at 14% each~~.

Cash and Cash Equivalents

Cash and cash equivalents represent deposits in banks and highly liquid investments purchased with maturities of three months or less at the date of purchase.

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable ~~and contract assets for unbilled receivables~~ are stated at the amount owed by the customer, net of allowances for doubtful accounts~~, returns and rebates~~. Estimated allowances for doubtful accounts are reviewed periodically taking into account the customer’s recent payment history, the customer’s current financial statements and other information regarding the customer’s credit worthiness. Account balances are charged off against the allowance when it is determined the receivable will not be recovered.

Inventories

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

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

Inventory carrying value is net of inventory reserves of approximately $~~909~~499,000 as of December 31, ~~2021~~2022 and $~~1.1~~468,000 ~~million~~ as of December 31, ~~2020~~2021.

SCHEDULE OF INVENTORY CURRENT

	December 31,		December 31,
Inventories consist of (in thousands):	December 31,		December 31,
Inventories consist of (in thousands):	2021		2020
	2022		2021
Raw materials	$	53,~~271~~450	$	42,~~644~~684
Work-in-process		~~821~~553		~~618~~492
Finished goods		21,~~982~~084		31,~~534~~263
Inventory net	$	95,~~074~~087	$	84,~~796~~439

3934

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets generally consist of ~~income~~prepaid ~~tax~~U.S. ~~receivables,~~federal ~~contract~~and ~~assets~~state ~~for unbilled receivables~~taxes, prepaid insurance, prepaid maintenance agreements and the short -term portion of debt issuance costs. ~~The~~Prepaid ~~income~~U.S. ~~tax~~federal ~~receivable~~and ~~balance~~state taxes included in prepaid and other current assets was $~~826~~866,000 ~~and $1.2 million~~ as of December 31, ~~2021 and December 31, 2020, respectively~~2022.

Property, Plant and Equipment

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

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

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

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

Business Combinations

Goodwill

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

The Company has ~~three~~one reporting ~~units~~unit with goodwill –which ~~Holzworth,~~is ~~Microlab and CommAgility~~Holzworth. The Company’s ~~performed a~~ qualitative assessment in ~~the fourth quarter~~ of ~~2021 of each reporting unit. The qualitative assessment of~~ Holzworth ~~and Microlab did not indicate any impairment of~~ goodwill. ~~As a result of declining hardware sales and the early stages of adoption of software and services for specialized applications~~in the ~~Company~~fourth ~~performed~~quarter ~~a quantitative impairment test~~ of ~~the~~2022 ~~goodwill~~indicated ofno ~~the CommAgility reporting unit~~impairment.

Intangible and Long-lived Assets

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - 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 markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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

The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The carrying amounts of the Company’s financial instruments, including cash, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. ~~The~~In fiscal 2021, the Company’s term loan and revolving credit facility yielded ~~bear~~ interest at a variable interest rate plus an applicable margin and, therefore, carrying amount ~~approximates fair value. We believe the carrying value of the loan obtained under the Paycheck Protection Program~~ approximated fair value ~~due to the expected short term nature of the loan~~.

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

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

Contingent Consideration

~~Under~~A ~~the~~portion ~~terms~~ of the Holzworth ~~Share~~purchase ~~Purchase~~consideration ~~Agreement~~was ~~(as~~contingent ~~defined~~upon incertain ~~Note~~financial 2)targets ~~the~~(“Holzworth ~~Company~~earnout”) isand required ~~to pay additional purchase price in~~ the ~~form~~Company ofto ~~deferred~~estimate ~~purchase~~the ~~price~~fair ~~payments~~value ~~and~~of anthe earnout ifusing ~~certain~~estimated ~~financial~~gross ~~targets~~revenues ~~are~~and ~~achieved~~Adjusted ~~for~~EBITDA ~~the~~and ~~years~~scenarios ~~ended~~for ~~December~~earnout ~~31,~~periods. ~~2020~~The ~~and~~liability ~~December~~was ~~31,~~adjusted in 2021 ~~(see~~and ~~Note~~a ~~2).~~loss Ason ofchange ~~the~~in ~~acquisition date, the Company estimated the~~ fair value of ~~the~~contingent ~~deferred~~consideration ~~purchase~~was ~~price and~~recorded ~~earnout~~in ~~remaining to be paid related to~~ the ~~2020~~Consolidated ~~and~~Statement of ~~2021~~Operations ~~financial targets to be $660,000~~ and ~~$2.4~~Comprehensive ~~million, respectively~~Income/(Loss). The ~~earnout may~~estimate beof ~~paid~~this incontingent ~~cash~~consideration orwas ~~common~~considered ~~stock~~a atLevel ~~the~~3 ~~Company’s option. The Company is required to reassess the~~ fair value ~~of the contingent consideration at each reporting period~~measurement.

~~The~~As ~~significant~~of ~~inputs~~December ~~used~~31, ~~in this fair value estimate include estimated gross revenues and Adjusted EBITDA~~2022, asall ~~defined in the~~ Holzworth ~~Share~~ Purchase Agreement, and scenarios for the earnout periods for which probabilities are assigned to each scenario to arrive at a single estimated outcome. The estimated outcome is then discounted based on the individual risk analysis of the liability. The contingent consideration ~~liabilities~~had ~~are~~been ~~considered a Level 3 fair value measurement~~paid.

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

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

Foreign Currency Translation

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

Aggregate foreign currency gains and losses, such as those resulting from the settlement of receivables or payables in a currency other than the subsidiary’s functional currency, are recorded in the Consolidated Statements of Operations and Comprehensive Income/(Loss) (included in other income/expense). Foreign currency transaction gains were $1352,000 and $6440,000 in fiscal ~~2021~~2022 and ~~2020~~2021, respectively.

Other Comprehensive Income/(Loss)

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

Research and Development Costs

Research and development (R&D) costs are charged to operations when incurred. R&D costs include salaries and benefits, depreciation expense on equipment used for R&D purposes and third-party material and consulting costs, if clearly related to an R&D activity. ~~Salaries and benefits of engineers working on customer contracts for which the Company is earning services or consulting revenues are allocated to costs of revenues.~~ The amounts charged to operations for R&D costs for the ~~years~~year ended December 31, ~~2021~~2022 and ~~2020~~2021 were $51.68 million and $61.47 million, respectively.

Advertising Costs

Advertising expenses are charged to operations during the year in which they are incurred and were $~~279~~268,000 and $~~235~~279,000 for the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively.

Stock-Based Compensation

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

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

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

Income Taxes

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

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

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

Earnings/(Loss) Per Common Share

Basic earnings/(loss) per share is calculated by dividing net income/(loss) available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings/(loss) per share is calculated by dividing net income/(loss) available to common shareholders by the weighted average number of common shares outstanding for the period and, when dilutive, potential shares from stock options using the treasury stock method, the weighted average number of unvested restricted shares, the weighted-average number of restricted stock units and the weighted average number of warrants to purchase common stock outstanding for the period. Shares from stock options and warrants are included in the diluted earnings per share calculation only when ~~options~~ exercise prices are lower than the average market value of the common shares for the period presented. In periods with a net loss, the basic loss per share equals the diluted loss per share as all common stock equivalents are excluded from the per share calculation because they are anti-dilutive. In accordance with ASC 260, “Earnings Per Share”, the following table reconciles basic shares outstanding to fully diluted shares outstanding.

	2021		2020
	2022		2021
	For the Years Ended December 31,
	2021		2020
	2022		2021
Weighted average common shares outstanding		2221,~~049~~701,~~636~~831		2122,~~656~~049,~~906~~636
Potentially dilutive equity awards		2838,~~247,470~~055		~~313~~2,~~341~~247,470
Weighted average common shares outstanding, assuming dilution		2422,~~297~~539,~~106~~886		2124,~~970~~297,~~247~~106

The weighted average number of options and warrants to purchase common stock not included in diluted loss per share because the effects are anti-dilutive, or the performance condition was not met in ~~2021~~2022, was 1,~~205~~785,~~000~~548. ~~The estimated number of shares issuable under the terms of the Holzworth earnout, if the balance of the earnout was paid in shares of common stock (see Note 2) at December 31, 2021 was 1,340,637.~~

The weighted average number of options and warrants to purchase common stock not included in diluted loss per share because the effects are anti-dilutive, or the performance condition was not met in ~~2020~~2021, was 31,~~114~~205,~~792~~000. The estimated number of shares issuable under the terms of the Holzworth earnout, if the ~~entire~~balance of the earnout was paid in shares of common stock, ~~(see Note 2)~~ at December 31, ~~2020~~2021 was 1,~~559~~340,~~807~~637.

44Recent Accounting Pronouncements Adopted in 2022

~~Recent~~There ~~Accounting~~were ~~Pronouncements~~no ~~Adopted~~material accounting pronouncement adoptions by the Company in ~~2021~~fiscal year 2022.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new ASU also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates. These changes aim to improve the overall usefulness of disclosures to financial statement users and reduce unnecessary costs to companies when preparing the disclosures. The guidance was effective for the Company beginning on January 1, 2021 and prescribes different transition methods for the various provisions. The adoption of this standard had no material impact on the Company’s financial statements or related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

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

InNOTE ~~March~~2 ~~2020,~~– ~~the~~DISCONTINUED FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are intended to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. The new standard is effective March 12, 2020 through December 31, 2022, with the adoption date being dependent upon the Company’s election. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.OPERATIONS

~~NOTE 2 - ACQUISITION OF HOLZWORTH~~Microlab

On ~~February~~December 716, ~~2020~~2021, the Company ~~completed~~and ~~the~~its ~~acquisition~~wholly ofowned ~~all~~subsidiary ofMicrolab ~~the~~entered ~~outstanding~~into ~~shares~~a ofMembership ~~Holzworth.~~Interest ~~Holzworth~~Purchase ~~instruments~~Agreement ~~which~~(the ~~include~~“Microlab ~~signal~~Purchase ~~generators~~Agreement”) ~~and~~with ~~phased~~RF ~~noise~~Industries, ~~analyzers~~Ltd., ~~are~~a ~~used~~Nevada bycorporation ~~government~~(the ~~labs,~~“Buyer”) whereby the ~~semiconductor~~Buyer ~~industry,~~agreed ~~and~~to ~~network~~purchase 100% ~~equipment~~of ~~providers, among~~the ~~others,~~membership interests in ~~research~~Microlab ~~labs~~for a purchase price of $24,250,000, ~~automated~~subject ~~test~~to ~~environments~~certain adjustments as set forth in the Microlab Purchase Agreement. The board of directors of each of the Company and ~~military~~the Buyer unanimously approved the Microlab Purchase Agreement and ~~aerospace~~the ~~production~~transactions ~~applications~~contemplated thereby (collectively, the “Microlab Transaction”). ~~Holzworth~~On isFebruary a25, ~~complimentary business~~2022, ~~for~~the ~~our~~shareholders of ~~Boonton~~the ~~and~~Company ~~Noisecom~~approved ~~brands~~the ~~with~~transaction at a ~~common~~Special ~~customer~~Meeting ~~base~~of Shareholders held virtually via live webcast and ~~channel~~on ~~partners~~March 1, 2022, the Microlab Transaction closed.

At closing the Company received approximately $22.8 million in proceeds net of indemnification and purchase price adjustment holdbacks of $150,000 and $100,000, respectively, and direct expenses of approximately $1.1 million including fees to our advisors. In July 2022, the Company received $225,000 in final purchase price adjustment primarily related to the working capital adjustment and on March 1, 2023 the Company received the indemnification holdback amount of $150,000. In total, the Company received net proceeds of approximately $23.1 million related to the Microlab Transaction. In 2022 the Company used $4.2 million of the Microlab Transaction proceeds to repay in full our outstanding term loan with Muzinich BDC and approximately $600,000 was used to repay in full our outstanding revolver balance related to the Bank of America credit agreement (see Note 4). The Company terminated both the Muzinich term loan and Bank of America credit facility as of the Microlab Transaction date. Additionally, concurrent with the closing, the Company entered into a sublease with RF Industries, Ltd for approximately one-half of the square footage of our corporate headquarters in Parsippany, NJ.

The Transaction was treated as a sale of the assets and liabilities of Microlab to RF Industries, Ltd. for U.S. federal and applicable state income tax purposes.

In accordance with ASC 205-20 Discontinued Operations, the results of Microlab are presented as discontinued operations in the Consolidated Statements of Operations and Comprehensive Income/(Loss) and, as such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of Microlab as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of December 31, 2021.

The following table summarizes the significant items included in income from discontinued operations for Microlab, net of tax in the Consolidated Statement of Operations and Comprehensive Income/(Loss) for the twelve months ended December 31, 2022 and 2021 (in thousands):

	December 31, 2022		December 31, 2021
	Twelve months ended
	December 31, 2022		December 31, 2021
Net revenues	$	2,477	$	17,756
Cost of revenues		1,626		10,259
Gross profit		851		7,497
Operating expenses		693		3,317
Other expense
Gain on divestiture, net of expenses		16,490		-
Income from Discontinued Operations before income taxes		16,648		4,180
Income tax expense		3,643		791
Income from Discontinued Operations, net of income taxes	$	13,005	$	3,389

The following table summarizes the carrying value of the significant classes of assets and liabilities of Microlab classified as discontinued operations as of December 31, 2021:

Current Assets
Accounts receivable, net	$	2,883
Inventories, net		3,986
Prepaid expenses and other current assets
Total current assets		6,869

Property, plant and equipment, net		479
Goodwill		1,351
Other intangible assets
Deferred tax asset		3,173
Other non current assets		165
Total non current assets		5,168

Total assets	$	12,037

Current liabilities
Accounts payable	$	783
Accrued expenses and other current liabilities		1,182
Short term debt
Deferred revenue
Deferred income taxes

Total current liabilities	$	1,965

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

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

In accordance with ASC 205-20 Discontinued Operations, the results of CommAgility are presented as discontinued operations in the Consolidated Statements of Operations and, as such, have been excluded from continuing operations. Further, the Company reclassified the assets and liabilities of CommAgility as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of December 31, 2021.

The following table summarizes the significant items included in income from discontinued operation for CommAgility, net of tax in the Consolidated Statement of Operations for the twelve months ended December 31, 2022 and 2021 (in thousands):

	December 31, 2022			December 31, 2021
	Twelve months ended
	December 31, 2022			December 31, 2021
Net revenues	$	5,009		$	8,813
Cost of revenues		2,174			4,187
Gross profit		2,835			4,626
Operating expenses		5,874			6,734
Other expense		162
Gain on divestiture, net of expenses		6,344			-
Income from Discontinued Operations before income taxes		3,143			(2,108	)
Income tax (benefit)		(900	)		(911	)
Income from Discontinued Operations, net of income taxes	$	4,043		$	(1,197	)

The following table summarizes the carrying value of the significant classes of assets and liabilities of CommAgility classified as discontinued operations as of December 31, 2021:

Current Assets
Accounts receivable, net	$	364
Inventories, net		648
Prepaid expenses and other current assets		1,295
Total current assets		2,307
Total current assets of discontinued operations		2,307

Property, plant and equipment, net		583
Goodwill and intangible assets, net		4,108
Other intangible assets		500
Total non current assets		5,191
Total non-current assets of discontinued operations		5,191

Total assets	$	7,497

Current liabilities
Accounts payable	$	883
Accrued expenses and other current liabilities		794
Short term debt		42
Deferred revenue		384
Deferred income taxes		228
Total current liabilities	$	2,331

Long term liabilities
Long term debt		295
Total non current liabilities	$	295
Total non-current liabilities of discontinued operations	$	295

The cash flows related to discontinued operations have not been segregated and are included in the consolidated statements of cash flows for all periods presented. Microlab depreciation expense for the two months ended March 1, 2022 was not material. Microlab depreciation expense for the twelve months ended December 31, 2021 and included in the consolidated statement of cash flows was $254,000. CommAgility depreciation expense for the twelve months ended December 31, 2022 and 2021 and included in the consolidated statement of cash flows was $360,000 and $984,000, respectively. Microlab capital expenditures were not material in the two months ended March 1, 2022 and were $97,000 for the twelve months ended December 31, 2021. CommAgility capital expenditures were $488,000 in fiscal 2022 and were $238,000 for the twelve months ended December 31, 2021.

NOTE 3 – ACQUISITION OF HOLZWORTH

On February 7, 2020, the Company completed the acquisition of all of the outstanding shares of Holzworth.

The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Accounting for acquisitions requires us to recognize separately from goodwill, the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the acquisition date fair values of the assets acquired and the liabilities assumed.

AtThe ~~closing,~~total apurchase ~~portion~~price for Holzworth was $13.5 million of ~~the~~which ~~purchase~~$12.7 ~~price~~million was paid toin ~~the~~cash. ~~sellers~~The ~~through~~cash portion of the ~~issuance~~purchase price was comprised of ~~347~~cash at close,~~319~~ ~~shares~~deferred purchase price, holdbacks net of ~~the~~working ~~Company’s~~capital ~~common stock,~~settlement ~~valued~~and atthe ~~approximately~~cash portion of earnout. Additionally, $~~500~~773,000 ~~based~~of ~~upon~~the apurchase ~~90-day~~price ~~volume~~was ~~weighted~~paid ~~average~~in ~~price for~~ shares of ~~stock of~~ the Company’s common stock. The total number of shares of the Company’s common stock issued toas ~~the~~purchase ~~sellers~~price was 487,890. There are ~~subject~~no toadditional ~~Lock-up~~earnout ~~and~~payments ~~Voting~~due ~~Agreements~~for the Holzworth acquisition.

During 2020, the Company paid $8.3 million in net cash to the sellers consisting of $7.2 million in cash at close, $600,000 in indemnification holdback payments and $750,000 in deferred purchase price reduced by $292,000 of a working capital adjustment that was owed to the Company by the sellers. The final indemnification holdback payment of $200,000 was paid on March 31, 2021.41

~~The~~NOTE sellers earned a second deferred purchase price payment of $750,000 when Holzworth exceeded $1.25 million in EBITDA (as defined in the Share Purchase Agreement) for the twelve months ended December 31, 2020. Additionally, the sellers earned $3.4 ~~million~~– ~~in additional purchase price in the form of an earnout (“Year 1 Earnout”) which was also based on Holzworth’s EBITDA for the twelve months ended December 31, 2020.~~DEBT

OnTermination February 19, 2021, the Company entered into the Second Amendment to Share Purchase Agreement (the “Second Amendment”) with Holzworth. The Second Amendment, among other things, converted the second deferred purchase price of ~~$750,000~~Muzinich ~~into~~Term ~~unsecured~~Loan ~~seller~~Facility ~~notes with~~and ~~interest~~Bank ~~at an annual rate~~ of ~~6.5%~~America ~~starting from April 1, 2021 until final payment~~N.A. ~~The~~Credit ~~payment~~Facility ~~date was changed from March 31, 2021 to three equal installments of $250,000, plus accrued interest, due on July 1, 2021, October 1, 2021 and January 1, 2022.~~

45On March 1, 2022, the Company repaid in full and terminated that certain Credit Agreement dated February 7, 2020, among the Company, its subsidiaries and Muzinich BDC, Inc., as amended on May 4, 2020, February 25, 2021, May 27, 2021, and September 28, 2021 (the “Term Loan Facility”). The Company repaid the outstanding principal balance of $4.1 million and accrued interest thereon. Additionally, on March 1, 2022, the Company terminated that certain Loan and Security Agreement dated as of February 16, 2017 among the Company, its subsidiaries and Bank of America, as amended on June 30, 2017, January 23, 2019, February 27, 2019, November 8, 2019, February 7, 2020, May 1, 2020, February 25, 2021 and September 28, 2021 (the “Credit Facility”), which included an asset based revolving loan (“revolver”) which was subject to a borrowing base calculation. The outstanding balance of the revolver at March 1, 2022 was approximately $600,000. The repayment of the Term Loan Facility and Revolver were funded by the proceeds of the Microlab divestiture.

~~Additionally,~~The ~~the~~Company ~~parties~~accounted ~~amended~~for the ~~payment~~termination ~~dates~~ of the ~~earnout~~Term ~~consideration.~~Loan ~~The~~Facility payment date of the Year 1 Earnout was amended from March 31, 2021 to (i) six (6) equal quarterly installments of 10% of the Year 1 Earnout payable on the last business day of each calendar quarter between June 30, 2021 and ~~September~~Credit ~~30,~~Facility ~~2022~~as ~~and~~an ~~(ii)~~extinguishment ~~one (1) installment payment equal to 40%~~ of ~~the~~debt ~~Year~~in 1accordance ~~Earnout~~with ~~on December 31,~~ASC ~~2022~~470 Debt. The ~~Year 1 Earnout is payable in cash or shares of the~~ Company’s ~~common~~recognized ~~stock,~~a atloss ~~the Company’s option, based~~ on ~~the 90~~extinguishment ~~trading day volume weighted average price immediately preceding final determination~~ of ~~the~~debt ~~Year 1 Earnout or $2.19 per share. The total payment for the Year 1 Earnout is $3.4 million,~~ of ~~which~~ $~~552~~792,000 ~~was~~which ~~paid in cash and $315,000~~ was ~~issued~~primarily incomprised ~~common~~of ~~stock~~unamortized ~~as of~~debt ~~December~~issuance ~~31, 2021~~costs. ~~The Year 1 Earnout accrual is $2.6 million as of December 31, 2021.~~

The Company may also be required to pay additional amounts in cash and stock as earnout consideration based on Holzworth’s EBITDA for the fiscal year ending December 31, 2021 (“Year 2 Earnout”). The Year 2 Earnout will be equal to two times the amount, if any, by which Holzworth’s EBITDA for fiscal year December 31, 2021 exceeds Holzworth’s EBITDA for fiscal year 2020. Pursuant to the Second Amendment, the Year 2 Earnout is payable in four equal quarterly installments payable on the last business day of each calendar quarter between March 31, 2022 and December 31, 2022. The aggregate payments of the Year 1 Earnout and Year 2 Earnout cannot exceed $7.0 million and the aggregate purchase price cannot exceed $17.0 million.

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

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

The following table summarizes the components of the purchase price and the allocation of the purchase price at fair value at the acquisition date (in thousands):

SCHEDULE OF BUSINESS CONSIDERATION

	Amounts Recognized as of Acquisition Date
Cash at close	$	7,219
Equity issued at close		465
Purchase price holdback		800
Working capital adjustment		(292	)
Deferred purchase price		1,410
Contingent consideration		2,440
Total purchase price		12,042
Cash		30
Accounts receivable		514
Inventory		1,438
Intangible assets		4,260
Other assets		967
Fixed assets		144
Accounts payable		(129	)
Accrued expenses		(429	)
Deferred revenue		(13	)
Other long term liabilities		(740	)
Net assets acquired		6,042
Goodwill	$	6,000

Goodwill is calculated as the excess of consideration paid over the net assets acquired and represents synergies, assembled workforce, organic growth and other benefits that are expected to arise from integrating Holzworth into our operations. The goodwill recorded in this transaction is tax deductible.

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

NOTE 3 - DEBT

Debt consists of the following (in thousands):

SCHEDULE OF DEBT

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

Term loan payments by period (in thousands):

SCHEDULE OF TERM LOAN PAYMENTS

2022	$	126
2023		168
2024		168
2025		3,936
2026		43
Total	$	4,441

Muzinich Term Loan Facility

In connection with the Holzworth acquisition, on February 7, 2020, the Company, as borrower, and its subsidiaries, as guarantors, and Muzinich BDC, Inc., as lender (“Muzinich”), entered into a Term Loan Facility, which provided for a term loan in the principal amount of $8.4 million (the “Initial Term Loan”). All proceeds of the Initial Term Loan were used to fund the cash portion of the purchase price for the Holzworth acquisition. Principal payments on the Initial Term Loan are $21,000 per quarter with a balloon payment at maturity on February 7, 2025. The Term Loan Facility included an upfront fee of 2.50% of the aggregate principal amount of the Initial Term Loan. In connection with the Term Loan Facility, the Company incurred costs of $1.0 million, including the aforementioned 2.50% upfront fee to Muzinich, which were recorded as a reduction of the carrying amount of the debt and are being amortized over the term of the loan.

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

Credit Facility with Bank of America, N.A.

The Company entered into a Credit Facility with Bank of America, N.A. (“Bank of America”) on February 16, 2017 (the “Credit Facility”), which provided for a term loan in the aggregate principal amount of $760,000 (the “Term Loan”) and an asset based revolving loan (the “Revolver”), which is subject to a Borrowing Base Calculation (as defined in the Credit Facility) of up to a maximum availability of $9.0 million (“Revolver Commitment Amount”). The borrowing base is calculated as a percentage of eligible accounts receivable and inventory, as defined, subject to certain caps and limits. The borrowing base was calculated on a monthly basis and interest was calculated at LIBOR plus a margin. The proceeds of the Term Loan and Revolver were used to finance the acquisition of CommAgility in 2017.

In connection with the Holzworth acquisition, on February 7, 2020, the Company and certain of its subsidiaries (the “Borrowers”), and Bank of America entered into Amendment No. 5 to the Credit Facility (“BOA Amendment 5”). By entering into BOA Amendment 5, Holzworth, together with CommAgility Limited, became borrowers under the Credit Facility. The obligations of the Borrowers under the Credit Facility were guaranteed by Wireless Telecom Group, Ltd. CommAgility Limited and Wireless Telecom Group, Ltd. are both wholly owned subsidiaries of the Company. Additionally, the Company prepaid the remaining principal balance of the BOA Term Loan in the amount of $304,000.

On May 4, 2020, the Company, its subsidiaries and Bank of America entered into Amendment No. 6 which, among other things, amended the definition of “Debt” to include the PPP loan as long as the proceeds were used for allowable purposes under the CARES Act and the Company promptly submitted an application for forgiveness and substantially all of the loan was forgiven. The Company received notice in June 2021 that the loan and accrued interest were fully forgiven, as described below.

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

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

PPP Loan

On May 4, 2020, the Company received $2.0 million pursuant to a loan from Bank of America N.A. under the Paycheck Protection Program (“PPP”) of the 2020 Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) administered by the Small Business Association (“SBA”). The loan had an interest rate of 1% and a term of 24 months. A repayment schedule was not provided by Bank of America. Accordingly, as of December 31, 2020 the full amount of the term loan was shown as due in May 2022. Funds from the loan were used only for certain permitted purposes, including payroll, benefits, rent and utilities. The CARES Act and the PPP provided a mechanism for forgiveness of up to the full amount of the loan upon application to the SBA for forgiveness by the Company. The Company applied for forgiveness of the loan and received notice that the loan and accrued interest were fully forgiven on June 5, 2021. The Company elected to account for the loan in accordance with Accounting Standard Codification 470 Debt. Accordingly, the Company recorded a gain on extinguishment of debt in the amount of $2.0 million on the Consolidated Statement of Operations and Comprehensive Income/(Loss) in the twelve months ended December 31, 2021.

CIBLS Loan

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

On July 1, 2021, CommAgility executed a draw down of the maximum amount of £250,000. AsOn ofMay ~~December 31~~30, ~~2021~~2022, ~~$42,000~~CommAgility isrepaid ~~included~~the inCIBLS ~~short~~Loan ~~term~~in ~~debt and $295,000 is included long term debt on the Consolidated Balance Sheet~~full.

As of December 31, 2022, the Company has no outstanding debt obligations.

Issuance of Stock Warrants

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

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

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

~~NOTE 4 - EQUITY~~ 42

NOTE 5 - EQUITY

On May 4, 2022, the Board of Directors of the Company authorized up to $4 million for a share repurchase program for the Company’s outstanding stock. The share repurchase program expired on December 31, 2022. During 2022, the Company repurchased 1,683,160 shares of common stock for $2.5 million inclusive of commissions. These shares have been recorded as treasury stock on the Consolidated Balance Sheet.

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

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

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

NOTE 56 - LEASES

The Company’s lease agreements consist of building leases for its operating locations and office equipment leases for printers and copiers with lease terms that range from less than 12 months to 8 years. At inception, the Company determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. The Company’s leases for office equipment such as printers and copiers contain lease and non-lease components (i.e. maintenance). The Company accounts for lease and non-lease components of office equipment as a single lease component.

All of the Company’s leases are operating leases and are presented as right of use lease asset, short term lease liability and long term lease liability on the Consolidated Balance Sheets as of December 31, ~~2021~~2022 and ~~2020~~2021. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s incremental borrowing rate. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

Lease expense is recognized on a straight-line basis over the lease term and is included in cost of revenues and general and administrative expenses on the Consolidated Statement of Operations and Comprehensive Income/(Loss).

An initial right-of-use asset of $1.9 million was recognized as a non-cash asset addition with the adoption of the new lease accounting standard on January 1, 2019. With our acquisition of Holzworth on February 7, 2020, we acquired a right-of-use asset of $789,000. There have been no other right-of-use assets recognized since the date of adoption of the new lease standard. Cash paid for amounts included in the present value of operating lease liabilities was $~~668~~637,000 and $~~648~~618,000 during the twelve months ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively, and is included in operating cash flows.

50Operating lease costs were $988,000 and $934,000 during the twelve months ended December 31, 2022 and 2021, respectively. In 2022, the Company recognized $304,000 in sublease income in connection with our sublease with Microlab which is recorded in other income on the consolidate statement of operations and comprehensive income/(loss).

~~Operating lease costs were $1.1 million and $1.0 million during the twelve months ended December 31, 2021 and 2020, respectively.~~43

The following table presents information about the amount and timing of cash flows arising from the Company’s operating leases as of December 31, ~~2021~~2022.

(in thousands)	December 31, ~~2021~~2022
Maturity of Lease Liabilities
2022	$	637
2023	$	276
2023		276
2024		158
2025		163
2026		69
Total undiscounted operating lease payments		~~1,303~~666
Less: imputed interest		(~~103~~51	)
Present Value of operating lease liabilities	$	~~1,200~~615
Balance sheet classification
Current lease liabilities	$	~~585~~251
Long-term lease liabilities		~~615~~364
Total operating lease liabilities	$	~~1,200~~615
Other information
Weighted-average remaining lease term (months)		3534
Weighted-average discount rate for operating leases		5.88	%

NOTE 67 -– REVENUE

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s performance obligations are satisfied ~~either over time or~~ at a point in time. Revenue from performance obligations that transferred at a point in time accounted for approximately 96% and 99% of the Company’s total revenue for the twelve months ended December 31, 2021 and 2020, respectively.

Nature of Products and Services

Hardware

The Company generally has one performance obligation in its arrangements involving the sales of ~~radio~~our ~~frequency~~T&M ~~solutions,~~products ~~digital signal processing hardware, power meters, analyzers, noise/signal generators, phase noise analyzers and other components~~. When the terms of a contract include the transfer of multiple products, each distinct product is identified as a separate performance obligation. Generally, satisfaction occurs when control of the promised goods is transferred to the customer in exchange for consideration in an amount for which we expect to be entitled. Generally, control is transferred when legal title of the asset moves from the Company to the customer. We sell our products to a customer based on a purchase order, and the shipping terms per each individual order are primarily used to satisfy the single performance obligation. However, in order to determine control has transferred to the customer, the Company also considers:

	●	when the Company has a present right to payment for the asset
	●	when the Company has transferred physical possession of the asset to the customer
	●	when the customer has the significant risks and rewards of ownership of the asset
	●	when the customer has accepted the asset

Software

Arrangements involving licenses of software in the CommAgility brand may involve multiple performance obligations, most notably subsequent releases of the software. The Company has concluded that each software release in a multiple deliverable arrangement involving CommAgility software licenses is a distinct performance obligation and, accordingly, transaction price is allocated to each release when the customer obtains control of the software.

Performance obligations that are not distinct at contract inception are combined. Specifically, with the Company’s sales of software, contracts that include customization may result in the combination of the customization services with the license as one distinct performance obligation and recognized over time. The duration of these performance obligations are typically one year or less.

Services

Arrangements involving calibration and repair services of the Company’s products are generally considered a single performance obligation and are recognized as the services are rendered.

Shipping and Handling

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

Significant Judgments

For the Company’s more complex software and services arrangements significant judgment is required in determining whether licenses and services are distinct performance obligations that should be accounted for separately, or, are not distinct and thus accounted for together. Further, in cases where we determine that performance obligations should be accounted for separately, judgment is required to determine the standalone selling price for each distinct performance obligation.

Certain of the Company shipments include a limited return right. In accordance with Topic 606 the Company recognizes revenue net of expected returns.

Contract Balances

The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in contract assets (unbilled revenue) or contract liabilities (deferred revenue) on the Company’s Consolidated Balance Sheet. The Company records a contract asset when revenue is recognized prior to invoicing, or deferred revenue when revenue is recognized subsequent to invoicing. Unbilled revenue is $292,000 and $260,000 as of December 31, 2021 and 2020, respectively, and recorded in prepaid expenses and other current assets. Deferred revenue is $408,000 and $924,000 as of December 31, 2021 and 2020, respectively. The decrease in deferred revenue from the prior year is primarily due to recognition of billings in advance of revenue recognition for certain CommAgility projects involving multiple performance obligations which were deferred at December 31, 2020, only partially offset by new contract billings in advance of revenue recognition in 2021.

Disaggregated Revenue

We disaggregate our revenue from contracts with customers by product family and geographic location as we believe it best depicts how the nature, timing and uncertainty of our revenue and cash flows are affected by economic factors. See details in the tables below (in thousands).

SCHEDULE OF DISAGGREGATED REVENUE

	Twelve Months Ended December 31, 2021		Twelve Months Ended December 31, 2020
	Twelve Months Ended December 31, 2022		Twelve Months Ended December 31, 2021
Total net revenues by revenue type
Passive and active RF solutions	$	17,743	$	17,633
Noise generators and components		13,785		13,744
Noise generators and components		13,744		13,356
Power meters and analyzers		6,775		7,154
Power meters and analyzers		7,154		5,737
Services		1,807		1,778
Signal processing hardware		4,884		1,672
Total net revenue	$	22,367	$	22,676
Software licenses		1,892		1,284
Services		3,828		2,066
Total net revenue	$	49,245	$	41,748
Total net revenues by geographic areas
Americas	$	3516,~~800~~177	$	3116,~~329~~354
EMEA		72,~~366~~828		62,~~329~~508
APAC		63,~~079~~362		43,~~090~~814
Total net revenue	$	4922,~~245~~367	$	4122,~~748~~676

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

The majority of shipments in the Americas are to customers located within the United States. For the years ended December 31, ~~2021~~2022 and ~~2020~~2021, sales in the United States amounted to $3315.89 million and $3015.61 million, respectively.

For the year ended December 31, ~~2021~~2022, shipments to the EMEA region were largely concentrated in ~~the~~Germany UK and ~~Germany~~Israel. Shipments to ~~the UK and~~ Germany and Israel in ~~2021~~2022 amounted to $~~5.3~~971,000 ~~million~~ and $~~1.0 million~~625,000, respectively. For the year ended December 31, ~~2020~~2021 shipments to the EMEA region were largely concentrated in ~~the~~Germany ~~UK, Russia~~ and ~~France~~the U.K. Shipments to ~~the~~Germany ~~UK, Russia~~ and ~~France~~the U.K. in ~~2020~~2021 amounted to $~~1.7 million~~846, ~~$897,~~000 and $~~859~~473,000, respectively.

The largest concentration of shipments in the APAC region iswere to China and Hong Kong, where shipments amounted to $~~2.0~~840,000 ~~million~~and $492,000 for ~~both~~the ~~years~~year ended December 31, ~~2021~~2022, respectively, and ~~2020~~$944,000 ~~There~~and ~~were~~$737,000 nofor ~~other~~the ~~shipments~~year ~~significantly~~ended ~~concentrated~~December in31, ~~one~~2021, ~~country in the APAC region~~respectively.

~~NOTE 7 - GOODWILL AND INTANGIBLE ASSETS~~45

~~Goodwill~~NOTE ~~consists~~8 of- ~~the~~GOODWILL ~~following~~AND ~~(in~~INTANGIBLE ~~thousands):~~ASSETS

~~SCHEDULE~~Goodwill OFconsists ~~GOODWILL~~of $6.0 million related to the Holzworth acquisition.

	Holzworth		Microlab		CommAgility			Total
Balance as of December 31, 2019	$	-	$	1,351	$	8,718		$	10,069
Holzworth acquisition		6,000		-		-			6,000
Goodwill impairment		-		-		(4,742	)		(4,742	)
Foreign currency translation		-		-		185			185
Balance as of December 31, 2020	$	6,000	$	1,351	$	4,161		$	11,512
Foreign currency translation		-		-		(53	)		(53	)
Balance as of December 31, 2021	$	6,000	$	1,351	$	4,108		$	11,459

Intangible assets consist of the following (in thousands):

SCHEDULE OF INTANGIBLE ASSETS

	December 31, 2021
	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			~~Impairment~~Net Carrying Amount			~~Foreign Exchange Translation~~		~~Net Carrying Amount~~
Customer relationships	$	52,~~075~~310	$	(31,~~554~~123	)	$	-1,187		$	~~124~~	$	~~1,645~~
Patents		615		(626	)		-			27		16
Proprietary technology		1,550		(452	)		1,098
Proprietary technology		1,550		(297	)		-			-		1,253
Holzworth tradename		400		(97	)		303
Non-compete agreements		1,107		(1,150	)		-			43		-
Total	$	4,260	$	(1,672	)	$	2,588
Holzworth tradename		400		(64	)		-			-		336
CommAgility tradename		629		-			(258	)		40		411
Total	$	9,376	$	(5,691	)	$	(258	)	$	234	$	3,661

	December 31, 2020
	December 31, 2021
	Gross Carrying Amount		Accumulated Amortization			~~Impairment~~Net Carrying Amount		~~Foreign Exchange Translation~~		~~Net Carrying Amount~~
Customer relationships	$	52,~~075~~310	$	(~~2,564~~738	)	$	-1,572	$	~~121~~	$	~~2,632~~
Patents		615		(491	)		-		26		150
Proprietary technology		1,550		(297	)		1,253
Proprietary technology		1,550		(142	)		-		-		1,408
Holzworth tradename		400		(64	)		336
Non-compete agreements		1,107		(1,150	)		-		43		-
Total	$	4,258	$	(1,099	)	$	3,161
Holzworth tradename		400		(31	)		-		-		369
CommAgility tradename		629		-			-		54		683
Total	$	9,376	$	(4,378	)	$	-	$	244	$	5,242

Amortization of acquired intangible assets was $~~1.3~~573,000 ~~million~~ for each of the twelve months periods ended December 31, ~~2021~~2022 and ~~2020. In the fourth quarter of~~ 2021~~, the Company recorded a $258,000 impairment related to the CommAgility tradename~~. Amortization of proprietary ~~technology~~ technology is included in costs of revenues in the Consolidated Statements of Operations and Comprehensive Income/(Loss). Amortization of all other acquired intangible assets is included in general and administrative expenses.

The estimated future amortization expense related to intangible assets is as follows as of December 31, ~~2021~~2022 (in thousands):

2022	$	664
2023	$	573
2023		573
2024		573
2025		573
2026		220
Thereafter		647
2027		188
Total	$	3,250
Thereafter		461
Total	$	2,588

5446

NOTE 89 - PROPERTY, PLANT AND EQUIPMENT

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

	2021		2020
	2022		2021
Machinery & computer equipment/software	$	95,~~399~~153	$	94,~~085~~957
Furniture & fixtures		~~484~~419		~~483~~413
Leasehold improvements		1,~~406~~348		1,~~358~~165
Gross property, plant and equipment		116,~~289~~920		106,~~926~~535
Less: Accumulated depreciation		96,~~757~~453		96,~~102~~066
Net property, plant and equipment	$	~~1,532~~467	$	~~1,824~~469

Depreciation expense of $~~772~~400,000 and $~~884~~340,000 was recorded for the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively.

NOTE 910 - OTHER ASSETS

Other assets consist of the following as of December 31 (in thousands):

SCHEDULE OF OTHER ASSETS

	2021		2020
	2022		2021
Product demo assets	$	~~202~~139	$	~~187~~188
Deferred costs		123		82
Security deposit		13		63
Security deposit		63		63
Other		33		33
Debt issuance costs - Revolver		25		127
Total	$	185	$	284
Income tax receivable		-		65
Other		35		37
Total	$	448	$	561

Product demo assets are net of accumulated amortization expense of $~~459~~502,000 and $397,000 as of December 31, ~~2021~~2022 and ~~2020~~2021, respectively. Amortization expense related to demo assets was $4917,000 and $84,000 in ~~2021~~2022 and ~~2020~~2021, respectively.

55NOTE 11 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

NOTE 10 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

	2021		2020
	2022		2021
Holzworth earnout (Year 1 and Year 2)	$	~~2,942~~-	$	32,~~423~~942
Goods received not invoiced		~~1,057~~148		~~458~~281
Payroll and related benefits		~~718~~193		~~864~~427
Accrued bonus		~~590~~625		~~123~~485
Accrued commissions		~~531~~461		~~605~~439
Accrued professional fees		~~524~~795		~~331~~456
Return reserve		319		212
Sales and use tax		180		177
Sales and use and VAT tax		277		315
Holzworth deferred purchase price		-		250
Holzworth deferred purchase price		250		950
Warranty reserve		76		61
Warranty reserve		78		140
Other		215		318
Harris arbitration liability		-		116
Total	$	2,693	$	5,836
Other		572		460
Total	$	7,858	$	7,997

~~NOTE 11 - ACCOUNTING FOR STOCK BASED COMPENSATION~~47

~~The~~NOTE ~~Company~~12 ~~follows the provisions of ASC 718 Compensation~~-~~Stock~~ ~~Compensation.~~ACCOUNTING ~~The~~FOR ~~Company’s~~STOCK ~~results~~BASED for the years ended December 31, 2021 and December 31, 2020 include stock based compensation expense totaling $316,000 and $474,000, respectively. Such amounts have been included in the Consolidated Statement of Operations and Comprehensive Income/(Loss) within general and administrative expenses.COMPENSATION

The Company follows the provisions of ASC 718 Compensation-Stock Compensation. The Company’s results for the years ended December 31, 2022 and December 31, 2021 include stock based compensation expense totaling $1,018,000 and $474,000, respectively. Such amounts have been included in the Consolidated Statement of Operations and Comprehensive Income/(Loss) within general and administrative expenses.

Incentive Compensation Plan

In 2012, the Company’s Board of Directors and shareholders approved the 2012 Incentive Compensation Plan (the “Initial 2012 Plan”), which provides for the grant of equity, including restricted stock awards, restricted stock units, non-qualified stock options and incentive stock options in compliance with the Internal Revenue Code of 1986, as amended, to employees, officers, directors, consultants and advisors of the Company who are expected to contribute to the Company’s future growth and success. When originally approved, the Initial 2012 Plan provided for the grant of awards relating to 2 million shares of common stock, plus those shares subject to awards previously issued under the Company’s 2000 Stock Option Plan that expire, are canceled or are terminated after adoption of the Initial 2012 Plan without having been exercised in full and would have been available for subsequent grants under the 2000 Stock Option Plan. In June 2014, the Company’s shareholders approved the Amended and Restated 2012 Incentive Compensation Plan (the “2012 Plan”) allowing for an additional 1.6 million shares of the Company’s common stock to be available for future grants under the 2012 Plan. The 2012 Plan provides that if awards are forfeited, expire or otherwise terminate without issuance of the shares underlying the awards, or if the award does not result in issuance of all or part of the shares underlying the award, the unissued shares are again available for awards under the 2012 Plan. As of December 31, 2021, there are no shares available for issuance under the 2012 Plan.

In the second quarter of 2021, the Company’s Board of Directors and shareholders approved the 2021 Long Term Incentive Plan (the “2021 Incentive Plan”), which provides for the grant of equity-based and cash incentives, including stock awards, stock unit awards, performance unit awards, non-qualified stock options, incentive stock options and cash awards, including dividend equivalent rights to employees, officers, directors or other service providers of the Company who are expected to contribute to the Company’s future growth and success. The 2021 Incentive Plan provides for the grant of awards relating to 1.5 million shares of common stock. As of December 31, ~~2021~~2022, there are ~~892~~378,~~500~~125 shares available for grant under the 2021 Incentive Plan.

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

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

	2021			2020
	2022			2021
Service based restricted stock awards	$	~~154~~815		$	~~117~~154
Service based restricted stock units		~~240~~254			~~205~~240
Performance based stock options		~~(89~~-	)		99(89	)
Service based stock options		11(51	)		5311
	$	~~316~~1,018		$	~~474~~316

During the twelve months ended December 31, 2022 the Company reversed $52,000 in share-based compensation expense related to unvested stock options that were forfeited and $144,000 in share-based compensation related to unvested restricted stock awards that were forfeited for employees exiting the Company.

As of December 31, 2022, there were no unrecognized compensation costs related to unvested stock options, $205,000 of unrecognized compensation costs related to unvested restricted stock awards which are expected to be recognized over 1 year and $66,000 of unrecognized compensation costs related to unvested restricted stock units which are expected to be recognized over 7 months.

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

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

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

Restricted Common Stock Awards

A summary of the status of the Company’s non-vested restricted common stock, as granted under the Company’s approved equity compensation plans, as of December 31, ~~2021~~2022 and ~~2020~~2021, and changes during the twelve months ended December 31, ~~2021~~2022 and ~~2020~~2021, are presented below:

SCHEDULE OF ~~NONVESTED~~NON-VESTED RESTRICTED STOCK ~~AWARDS~~UNITS ACTIVITY

	2021					2020
	2022					2021
Non-vested Restricted Shares	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Non-vested as of January 1		~~200~~357,~~670~~336		$	1.5284		~~262~~200,~~540~~670		$	1.6352
Granted		~~255~~370,000		$	1.9895		50255,000		$	1.2098
Vested and issued		(98167,~~334~~086	)	$	1.6185		(9598,~~203~~334	)	$	1.6661
Forfeited		-(163,750	)	$	-1.70		~~(16,667~~-	)	$	~~1.56~~-
Non-vested as of December 31		~~357~~396,~~336~~500		$	12.8400		~~200~~357,~~670~~336		$	1.5284

57On January 6, 2022, the Compensation Committee of the Board of Directors approved the grant of restricted common stock awards to named executive officers Tim Whelan, Mike Kandell, Dan Monopoli and Alfred Rodriguez of 125,000, 75,000, 50,000 and 50,000 shares, respectively, which vest in equal annual installments over two years. If an executive’s service with the Company terminates before the restricted awards are fully vested, then the shares that are not then fully vested are forfeited and immediately returned to the Company. The grant date value per share was $2.11.

On June 16, 2022 and July 5, 2022, two employees were granted restricted stock in the amounts of 20,000 and 50,000, respectively. Both grants had a vesting term of two years and grant date per share value of $1.28 and $1.26, respectively. Both grants were forfeited prior to vesting as both employees exited the Company. The shares are included in grants and forfeitures in the table above and the compensation cost was reversed.

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

~~The following table summarizes the restricted common stock awards granted during the years ended December 31, 2021 and 2020 under the Company’s approved equity compensation plans:~~49

The following table summarizes the restricted common stock awards granted during the years ended December 31, 2022 and 2021 under the Company’s approved equity compensation plans:

		Number of Shares		Fair Market Value per Granted Share	Vesting
	Number of Shares		Fair Market Value per Granted Share		Vesting
2022
1/7/22 – Service grant – Employee		300,000	$	2.11	Annual vesting through January 2024
6/16/22 – Service grant – Employee		20,000	$	1.28	Annual vesting through June 2024
7/8/22 – Service grant – Employee		50,000	$	1.26	Annual vesting through July 2024
2021
10/12/21 – Service grant - Employee		55,000	$	2.03	Annual vesting through October 2023
10/18/21 – Service grant - Employee		105,000	$	1.96	Annual vesting through October 2023
10/28/21 – Service grant - Employee		75,000	$	2.12	Annual vesting through October 2023
12/6/21 – Service grant - Employee		20,000	$	1.76	Annual vesting through December 2023
2020
8/4/20 – Service grant - Employee		50,000	$	1.20	Annual vesting through August 2024

Restricted Stock Units:

In fiscal ~~2021~~2022 and fiscal ~~2020~~2021, the Company granted Restricted Stock Units (“RSU”) to each of our board members. Each RSU represents the Company’s obligation to issue one share of the Company’s common stock subject to the RSU award agreement and the 2021 Inventive Plan and 2012 Plan, respectively. The RSUs vest on the day before the first anniversary of the grant date or, if earlier, the effective date of a separation of service due to death or disability, provided the board member has rendered continuous service to the Company as a member of the board of directors from grant date to vesting date. Once vested, the RSU will be settled by delivery of shares to the board member no later than 30 days following: 1) the third anniversary of the grant date, 2) separation from service following, or coincident with, a vesting date, or 3) a change in control.

A summary of the status of the Company’s non-vested restricted stock units, as granted under the Company’s approved equity compensation plans, as of December 31, ~~2021~~2022 and ~~2020~~2021, and changes during the twelve months ended December 31, ~~2021~~2022 and ~~2020~~2021, are presented below:

	2021					2020
	2022					2021
Non-vested Restricted Stock Units	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Non-vested as of January 1		~~161~~150,~~507~~000		$	12.2170		~~147~~161,~~917~~507		$	1.5621
Granted		~~154~~125,~~400~~000		$	21.6853		~~161~~154,~~507~~400		$	12.2168
Vested and issued		(~~165~~150,~~907~~000	)	$	12.2370		(~~147~~165,~~917~~907	)	$	1.5623
Forfeited		-			-		-			-
Non-vested as of December 31		~~150~~125,000		$	21.7053		~~161~~150,~~507~~000		$	12.2170

5850

The following table summarizes the restricted common stock units granted during the years ended December 31, ~~2021~~2022 and ~~2020~~2021 under the Company’s approved equity compensation plans:

		Number of Shares		Fair Market Value per Granted Share	Vesting
	Number of Shares		Fair Market Value per Granted Share		Vesting
2022
8/8/2022 – Service grant – Board of Directors		125,000	$	1.53	August 8, 2023
2021
4/1/2021 - Service grant – Board of Directors		4,400	$	1.85	Annual board meeting – June 2021
8/2/2021 – Service grant – Board of Directors		150,000	$	2.70	August 2, 2022
2020
6/4/2020 - Service grant – Board of Directors		150,000	$	1.18	Annual board meeting – June 2021
12/28/2020 – Service grant – Board of Directors		11,507	$	1.66	Annual board meeting – June 2021

Performance-Based Stock Option Awards

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

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

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

Consolidated annualized gross revenues $55.0 million – 25% vesting Consolidated annualized gross revenues $61.5 million – 50% vesting Consolidated annualized gross revenues $69.0 million – 75% vesting Consolidated annualized gross revenues $77.5 million – 100% vesting

Consolidated annualized gross revenues $61.5 million – 50% vesting

Consolidated annualized gross revenues $69.0 million – 75% vesting

Consolidated annualized gross revenues $77.5 million – 100% vesting

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

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

5951

A summary of performance-based stock option activity, and related information for the years ended December 31, ~~2021~~2022 and December 31, ~~2020~~2021 follows:

SCHEDULE OF STOCK OPTION ACTIVITY

	2021					2020
	2022					2021
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding as of January 1		1,205,000		$	1.52		~~105~~1,205,000		$	1.6152
Granted		-			-		~~1,120,000~~-		$	~~1.50~~-
Exercised		-			-		~~(20,000~~-	)	$	~~0.78~~-
Forfeited		-(425,000	)	$	-1.52		-			-
Expired		-			-		-			-
Outstanding as of December 31		1780,~~205,~~000		$	1.5246		1,205,000		$	1.52
Exercisable at December 31		-			-		-			-

No performance-based stock options were granted in 2022 or 2021.

As of December 31, 2022, none of the performance-based stock options outstanding were exercisable as the performance conditions were not met. The aggregate intrinsic value of performance-based stock options outstanding that were “in the money” (exercise price was lower than market price) as of December 31, 2021 was $257,000 and the weighted average remaining life was 7 years.

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

AsThe range of ~~December~~exercise ~~31,~~prices ~~2020, none~~ of ~~the~~outstanding performance-based ~~stock~~ options ~~outstanding~~at ~~were~~December ~~exercisable~~31, as2022 ~~the~~is ~~performance~~$1.12 ~~metrics~~to ~~were not met~~$1. ~~The~~83 ~~aggregate~~with ~~intrinsic~~a ~~value~~weighted ofaverage ~~performance-based stock options outstanding that were “in the money” (~~exercise ~~price was~~ ~~lower than market~~ price) as of ~~December 31, 2020 was~~ $~~325,000~~1.46 ~~and~~per ~~the weighted average remaining life was 7~~share.~~7 years.~~

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

Service-Based Stock Option Awards

A summary of service-based stock option activity and related information for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 follows:

SCHEDULE OF STOCK OPTION ACTIVITY

	2021					2020
	2022					2021
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding as of January 1		1,~~925~~785,000		$	1.52		1,~~950~~925,000		$	1.52
Granted		-			-		-			-
Exercised		(140,000	)	$	01.8341		-(140,000	)	$	-0.83
Forfeited		-(140,000	)	$	-1.62		~~(6,250~~-	)	$	~~1.66~~-
Expired		-			-		~~(18,750~~-	)	$	~~1.66~~-
Outstanding as of December 31		1,~~785~~505,000		$	1.5253		1,~~925~~785,000		$	1.52
Exercisable at December 31		1,~~785~~505,000		$	1.53		1,~~736~~785,~~250~~000		$	1.5153

6052

No service-based stock options were granted in 2022 or 2021.

The aggregate intrinsic value of exercisable and non-exercisable service-based stock options outstanding that were “in the money” (exercise price was lower than the market price) as of December 31, 2021 was $408,000 and the weighted average remaining contractual life was 4.0 years.

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

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

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

~~The~~NOTE ~~following~~13 ~~table~~- ~~presents~~SEGMENT ~~the~~AND ~~assumptions~~RELATED ~~used to estimate the fair value of stock option awards granted during the twelve months ended December 31, 2021 and 2020:~~INFORMATION

~~SCHEDULE~~As a OFresult ~~ESTIMATE~~of ~~FAIR~~the ~~VALUE~~Microlab ~~ASSUMPTIONS~~and ~~STOCK~~CommAgility ~~OPTION~~divestitures ~~AWARDS~~and ~~GRANTED~~the reclassification of their results of operations to discontinued operations in accordance with ASC 205-20, the Company’s results from continuing operations are considered one segment.

	Number of Options		Option Term (in years)		Exercise Price		Risk Free Interest Rate			Expected Volatility			Fair Value at Grant Date		Expected Dividend Yield
2021
None
2020
4/7/2020 – Performance grant - Employees		970,000		10	$	1.50		0.48	%		50.85	%	$	0.86	$	0.00
8/4/2020 – Performance grant - Employees		150,000		10	$	1.20		0.19	%		52.06	%	$	1.20	$	0.00

NOTE 14 - RETIREMENT PLAN

~~NOTE~~The 12Company -has ~~SEGMENT~~a ~~AND~~401(k) ~~RELATED~~profit ~~INFORMATION~~sharing plan covering all eligible U.S. employees. Company contributions to the plan for the years ended December 31, 2022 and 2021 amounted to $187,000 and $88,000, respectively.

InNOTE ~~June~~15 ~~2020,~~- asINCOME aTAXES result of certain internal reorganizations completed over the prior six to nine months, the Company concluded it operates as one reportable segment in accordance with ASC 280 Segment Reporting. Prior to June 2020 the Company operated as three reportable segments. In June 2020 we determined that the Chief Operating Decision Maker (“CODM”) as defined in ASC 280 evaluates operating results and makes decisions on how to allocate resources at the consolidated level. Although the CODM reviews key performance indicators including bookings, shipments and gross profit at a product group level, this information by itself is not sufficient enough to make operating decisions. Rather, operating decisions are made based on review of consolidated profitability metrics rather than the individual results of each product group.

NOTE 13 - RETIREMENT PLAN

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

NOTE 14 - INCOME TAXES

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

	2022			2021
	Years Ended December 31,
	2022			2021
Current:
Federal	$	(301	)	$	(619	)
Current Federal	$	(301	)	$	(619	)
State		(24	)		108
Current State		(24	)		108
Deferred:
Federal		(430	)		(35	)
Deferred Federal		(430	)		(35	)
State		24			(8	)
Deferred State		24			(8	)
Total	$	(731	)	$	(554	)

	2021			2020
	Years Ended December 31,
	2021			2020
Current:
Federal	$	-		$	-
State		108			73
Foreign		(764	)		(1,060	)
Deferred:
Federal		215			182
State		(94	)		129
Foreign		(138	)		(133	)
Total	$	(673	)	$	(809	)

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

	2021			2020
	2022			2021
	Years Ended December 31,
	2021			2020
	2022			2021
	% of Pre Tax Earnings			% of Pre Tax Earnings
Statutory federal income tax rate		(21.0	)%		(21.0	)%
State income tax net of federal tax benefit		220.59			(67.60	)
Foreign rate difference		19.9			7.7
Change in valuation allowance		(0.9	)		-
Change in valuation allowance		(24.3	)		9.4
Gain on extinguishment of PPP Loan		-			(34.5	)
Goodwill Impairment		-			7.7
Permanent differences		(0.2	)		3.7
Gain on extinguishment of PPP Loan		(52.0	)		-
Other		(1.7	)		0.3
Permanent differences		(2.5	)		0.8
Total		(22.9	)%		(44.5	)%
Research and development incentive		(75.3	)		(8.1	)
Other		9.3			1.1
Total		(81.4	)%		(9.0	)%

In ~~2021~~2022, ~~the~~there ~~difference~~were ~~between~~no ~~the~~material ~~statutory and effective tax rate is due primarily to permanent~~ differences between ~~U.S. GAAP book income and taxable income including research and development deductions in~~ the ~~United~~statutory ~~Kingdom,~~rate ~~the gain on extinguishment of the PPP Loan~~ and a ~~reduction in~~ the ~~state~~effective ~~net~~tax ~~operating loss valuation allowance~~rate. In ~~2020~~2021, the difference between the statutory and effective tax rate is due primarily to the ~~goodwill~~gain ~~impairment charge for the CommAgility reporting unit, the loss~~ on ~~contingent~~extinguishment ~~consideration~~of ~~related to~~ the ~~Holzworth~~Payroll ~~earnout,~~Protection ~~the~~Program ~~increase in state net operating loss valuation allocation and the research and development deductions in the United Kingdom~~loan.

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

	2020			2020
	2022			2021
	Years Ended December 31,
	2020			2020
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	113,~~185~~921		$	113,~~888~~830
Inventory		~~460~~328			~~509~~363
Research and development credit		~~648~~1,010			648
Stock compensation		~~280~~423			~~335~~280
Lease liability		~~357~~163			~~512~~357
Other		329			266
Goodwill and intangible assets		306			388
Gross deferred tax assets		13,259			14,158
Other		150			185
Less valuation allowance		(7,139	)		(7,668	)
Gross deferred tax assets		6,301			6,051
Total deferred tax asset	$	6,120		$	6,490
Less valuation allowance		(3,166	)		(3,153	)
Total deferred tax asset	$	3,135		$	2,898
Deferred tax liabilities:
Goodwill and intangible assets		(134	)		(368	)
Fixed assets		(99	)		(144	)
Fixed assets		(293	)		(300	)
Right of use asset		(123	)		(347	)
Right of use asset		(341	)		(498	)
Total deferred tax liability	$	(222	)	$	(491	)
Total deferred tax liability	$	(768	)	$	(1,166	)
Net deferred tax asset	$	2,913		$	2,407
Net deferred tax asset	$	5,352		$	5,324

The Company ~~has~~recognized ~~domestic~~a ~~federal and state~~ net ~~operating~~taxable ~~loss~~gain ~~carryforwards~~in asconnection ofwith ~~December~~the ~~31,~~Microlab ~~2021 of approximately $15.0 million~~ and ~~$41.3 million,~~CommAgility ~~respectively,~~divestitures which ~~begin~~resulted ~~to expire~~ in ~~2029.~~utilization ~~$689,000~~of a portion of ~~the~~our federal ~~net~~and ~~operating~~NJ ~~loss~~state ~~carryforward have no expiration. The Company also has foreign~~ net operating loss carryforwards ~~at December 31, 2021 of approximately $15~~.~~7 million for German trade tax purposes, which has no expiration.~~

~~Realization~~The ~~of the~~ Company’s ~~deferred~~has ~~tax~~domestic ~~assets~~federal isand ~~dependent~~state ~~upon the Company generating sufficient taxable income in the appropriate tax jurisdictions in future years to obtain benefit from the reversal of~~ net ~~deductible~~operating ~~temporary~~loss ~~differences~~carryforwards ~~and~~as ~~from utilization~~ of ~~net operating~~December ~~losses.~~31, ~~The~~2022 ~~Company’s valuation allowances~~ of approximately $75.12 million and $733.7 3 million ~~at December 31~~, ~~2021 and 2020,~~ respectively, ~~are~~ ~~associated~~which ~~with~~begin the Company’s foreign net operating loss carryforward from an inactive foreign entity, state net operating loss carryforward and a state research and development credit. The amount of deferred tax assets considered realizable is subject to ~~adjustment~~ expire in ~~future periods if estimates of future taxable income are changed~~2029. As$689,000 of ~~December 31, 2021, management believes that it is more likely than not that~~ the ~~Company will fully realize the benefits of its deferred tax assets associated with its domestic~~ federal net operating loss carryforward have no expiration.

Realization of the Company’s deferred tax assets is dependent upon the Company generating sufficient taxable income on a federal and N.J. basis in future years to obtain benefit from the reversal of net deductible temporary differences and from utilization of net operating losses. The Company’s valuation allowances of approximately $3.2 million as of December 31, 2022 and 2021, are associated with the Company’s state net operating loss carryforward and a state research and development credit. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed. As of December 31, 2022, management believes that it is more likely than not that the Company will fully realize the benefits of its deferred tax assets associated with its domestic federal net operating loss carryforward.

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

~~The Company has elected to record taxes related to the global intangible low-taxed income as a period cost.~~54

63NOTE 16 - COMMITMENTS AND CONTINGENCIES

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Warranties

Risks and Uncertainties

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

~~The~~As ~~Company~~a ~~has~~result ~~been~~of ~~and~~the ~~continues~~Microlab todivestiture, bethe ~~unable~~Company tofiled ~~accurately~~a ~~predict~~General ~~the~~Information ~~full~~Notice ~~impact~~with ~~that~~ the ~~COVID-19~~New ~~Pandemic~~Jersey ~~will~~Department ~~have~~of onEnvironmental Protection (“NJDEP”) for our ~~results of~~corporate ~~operations,~~headquarters ~~financial~~in ~~condition~~Parsippany, ~~liquidity~~N.J. ~~and~~in ~~cash~~accordance ~~flows~~with ~~due~~the toNew ~~numerous~~Jersey ~~uncertainties,~~Industrial ~~including~~Site Recovery Act (“ISRA”). Additionally, the ~~duration~~Company ~~and~~engaged ~~severity~~a ofLicensed ~~the~~Site Remediation Professional (“LSRP”) to ~~pandemic,~~perform ~~the~~a ~~nature~~Preliminary Assessment (“PA”) and ~~length~~Site ofInvestigation ~~actions~~(“SI”) ~~taken~~in byaccordance ~~governments,~~with ~~businesses~~the ~~and~~provisions ~~individuals~~of toISRA. In ~~contain~~accordance orwith ~~mitigate~~ISRA, ~~its~~in ~~impact~~February 2022, the ~~severity and~~Company ~~duration~~posted ofa ~~the~~$100,000 ~~economic~~letter ~~impact~~of ~~caused~~credit bywith the ~~pandemic,~~NJDEP. ~~the~~The ~~uncertainty~~PA ~~surrounding~~identified ~~possible~~several ~~treatments~~areas requiring ~~and~~further ~~rollout~~environmental ofinvestigation ~~vaccines, along~~which ~~with~~were ~~the~~addressed ~~effectiveness~~as part of ~~our~~the ~~response~~SI report.

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

General operating risks

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

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

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

~~NOTE 16 – SUBSEQUENT EVENTS~~55

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

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

At closing the Company received approximately $23.9 million, net of certain holdback amounts placed in escrow accounts, of which $4.2 was used to repay our outstanding Term Loan Facility with Muzinich BDC, approximately $700,000 was used to repay our outstanding revolver balance related to the Bank of America Credit Agreement, and $486,000 was used to pay our advisors. The Company will pay approximately $455,000 in certain transaction bonuses resulting in $18.0 million in cash to the balance sheet. The Company terminated the Term Loan Facility with Muzinich BDC and the Revolver with Bank of America N.A. as of the Transaction close date. Additionally, concurrent with the closing, the Company entered into a sublease with RF Industries, Ltd for approximately one-half of the square footage of our corporate headquarters in Parsippany, NJ.

After close of the Transaction the Company is comprised of the RBS and T&M product groups. We believe the Transaction allows us to prepare for the next stage of transformation with a stronger concentration of revenues in specialized 5G software and services for 5G private networks and test and measurement applications for the satellite communications, semiconductor and aerospace and defense industries. Furthermore, with the repayment of the Muzinich term loan and Bank of America Credit Agreement, we have strengthened our balance sheet and increased our liquidity allowing us flexibility to invest in our higher margin product groups.

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

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

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

SCHEDULE OF PRO FORMA

	Year ended December 31
	2021			2020
(Unaudited)
Net Revenues	$	31,489		$	24,081
Gross Profit		17,411			13,094
Gross Profit Margin		55	%		54	%
Net (loss)		(900	)		(10,661	)
Loss per share - Basic		(0.04	)		(0.49	)
Loss per share - Diluted	$	(0.04	)	$	(0.49	)
Current Assets	$	32,074		$	34,364
Total Assets		53,939			58,714
Total Liabilites	$	9,796		$	13,222

Grant of Restricted Share Awards to Named Executive Officers

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

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

None.

Item 9A. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

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

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

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

As of December 31, ~~2021~~2022, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, ~~2021~~2022.

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

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

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

6656

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required under this item is set forth under “Director Nominees and Executive Officers of the Company”, “Code of Business Conduct and Ethics” and “Corporate Governance Guidelines and Committees of the Board of Directors” in the ~~2022~~2023 Proxy Statement and is incorporated herein by reference.

Item 11. Executive Compensation

The information required under this item is set forth under “Executive Compensation”, “Compensation for the Named Executive Officers in ~~2021~~2022 and ~~2020~~2021”, “Director Compensation for ~~2021~~2022” and “Certain Relationships and Related Transactions” in the ~~2022~~2023 Proxy Statement and is incorporated herein by reference.

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

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

The information about security ownership of certain beneficial owners and management is set forth under “Security Ownership of Certain Beneficial Owners” in the ~~2022~~2023 Proxy Statement and is incorporated herein by reference.

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

The information required under this item is set forth under “Certain Relationships and Related Transactions” and “Corporate Governance Guidelines and Committees of the Board of Directors” in the ~~2022~~2023 Proxy Statement and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information required under this item is set forth under “Fees Paid to Principal Accountants” and “Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors” in the ~~2022~~2023 Proxy Statement and is incorporated herein by reference.

6757

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)	(1)	Report of Independent Registered Public Accounting Firm	27
		Consolidated Balance Sheets as of December 31, 2021 and 2020
		Consolidated Balance Sheets as of December 31, 2022 and 2021	29
		Consolidated Statements of Operations and Comprehensive Loss for the Two Years ended December 31, 2021
		Consolidated Statements of Operations and Comprehensive Loss for the Two Years ended December 31, 2022	30
		Consolidated Statements of Changes in Shareholders’ Equity for the Two Years ended December 31, 2021
		Consolidated Statements of Changes in Shareholders’ Equity for the Two Years ended December 31, 2022	31
		Consolidated Statements of Cash Flows for the Two Years ended December 31, 2021
		Consolidated Statements of Cash Flows for the Two Years ended December 31, 2022	32
		Notes to Consolidated Financial Statements	33
	(2)	All other schedules have been omitted because the required information is included in the financial statements or notes thereto or because they are not required.
	(3)	Exhibits

	3.1	Restated Certificate of Incorporation of Wireless Telecom Group, Inc. (incorporated herein by reference to Exhibit 3.1 to Wireless Telecom Group Inc.’s Annual Report on Form 10-K/A filed on April 22, 2005, Commission File No. 1-11916)
	3.2	Amended and Restated By-laws (incorporated herein by reference to Exhibit 3.1 to Wireless Telecom Group, Inc.’s Current Report on Form 8-K, filed on July 1, 2016, Commission File No. 011-11916)
	10.1*	2012 Incentive Compensation Plan of Wireless Telecom Group, Inc. (incorporated herein by reference to Annex A to the Definitive Proxy Statement of Wireless Telecom Group, Inc., filed with the SEC on April 30, 2012)
	10.2*	Form of Restricted Stock Award Agreement under 2012 Incentive Compensation Plan (incorporated herein by reference Exhibit 10.11 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on April 1, 2013, Commission file No. 1-11916)
	10.3*	Form of Stock Option Agreement under the Wireless Telecom Group Inc.’s 2012 Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Quarterly Report on Form 10-Q, filed on November 14, 2013, Commission File No. 1-11916)

(3)

Exhibits

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

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

	4.1	Description of securities

	10.1	Securities Purchase Agreement dated as of December 4, 2022 by and among Wireless Telecom Group, Inc., Wireless Telecommunications Group, LTD, E-Space Acquisitions LLC and eSpace Inc., as guarantor (incorporated by reference to Exhibit 10.1 to our Form 8-K filed with SEC on December 5, 2022, Commission File No. 001-11916)

	10.2	Membership Interest Purchase Agreement dated as of December 16, 2021 by and among RF Industries Ltd., Wireless Telecom Group, Inc. and Microlab/FXR LLC (incorporated by reference to Exhibit 10.1 to our Form 8-K filed with the SEC on December 20, 2021, Commission File No. 001-11916)

	10.3*	Amended and Restated Executive Employment Agreement by and between Wireless Telecom Group, Inc. and Timothy Whelan dated January 31, 2022 (incorporated by reference to Exhibit 10.43 to our Current Report on Form 10-K filed with the SEC on March 17, 2022, Commission File No. 001-11916)

	10.4 *	Amended Employment Letter Agreement, dated January 31, 2022, between Wireless Telecom Group, Inc. and Michael Kandell (incorporated by reference to Exhibit 10.44 to our Current Report on Form 10-K filed with the SEC on March 17, 2022, Commission File No. 001-11916)

	10.5*	Amended Employment Letter Agreement, dated January 31, 2022, between Wireless Telecom Group, Inc. and Daniel Monopoli (incorporated by reference to Exhibit 10.45 to our Current Report on Form 10-K filed with the SEC on March 17, 2022, Commission File No. 001-11916)

	10.6*	Amended Employment Letter Agreement, dated January 31, 2022, between Wireless Telecom Group, Inc. and Alfred Rodriguez (incorporated by reference to Exhibit 10.46 to our Current Report on Form 10-K filed with the SEC on March 17, 2022, Commission File No. 001-11916)

	10.7	Sublease Agreement dated as of December 16, 2021, by and between Boonton Electronics Corp. and RF Industries Ltd. (incorporated by reference to Exhibit 10.6 to our Current Report on Form 10-Q filed with the SEC on May 11, 2022, Commission File No. 001-11916)

	10.8*	2012 Incentive Compensation Plan of Wireless Telecom Group, Inc. (incorporated herein by reference to Annex A to the Definitive Proxy Statement of Wireless Telecom Group, Inc., filed with the SEC on April 30, 2012)

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

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

	10.4*	Amended and Restated 2012 Incentive Compensation Plan of Wireless Telecom Group, Inc. (incorporated herein by reference to Appendix A to Wireless Telecom Group Inc.’s Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 30, 2014)
	10.6	Fifth Amendment to Lease Agreement, dated May 1, 2015 and retroactively effective as of April 1, 2015, by and between Icon Keystone NJP III Owner Pool 4 NJ, LLC and Boonton Electronics Corporation (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on May 12, 2015, Commission File No. 001-11916)
	10.7*	Executive Employment Agreement, dated June 30, 2016, between Wireless Telecom Group, Inc. and Timothy Whelan (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on July 7, 2016, Commission File No. 001-11916)
	10.8*	Employment Letter Agreement, dated December 1, 2016, between Wireless Telecom Group, Inc. and Michael Kandell (incorporated herein by reference to Exhibit 10.12 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 20, 2017, Commission File No. 001-11916)
	10.9	Settlement Agreement and Site Release, dated December 16, 2016, by and among Wireless Telecom Group, Inc., Boonton Electronics Corp., WTT Acquisition Corp., Century Indemnity Company, as successor to Insurance Company of North America and Federal Insurance Company (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on December 22, 2016, Commission File No. 001-11916)
	10.10	Share Purchase Agreement, dated February 17, 2017, by and among Wireless Telecom Group, Inc., Wireless Telecommunications, Ltd., Edward De Salis Young, Paul Moakes, Simon Pack and Martin Hollinshead (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 21, 2017, Commission File No. 001-11916)
	10.11	Registration Rights Agreement, dated February 17, 2017, by and among Wireless Telecom Group, Inc., Edward De Salis Young, Paul Moakes, Simon Pack and Martin Hollinshead (incorporated herein by reference to Exhibit 10.2 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 21, 2017, Commission File No. 001-11916)
	10.12	Lock Up Agreement, dated February 17, 2017, by and among Wireless Telecom Group, Inc., Edward De Salis Young, Paul Moakes, Simon Pack and Martin Hollinshead (incorporated herein by reference to Exhibit 10.3 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 21, 2017, Commission File No. 001-11916)

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

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

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

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

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

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

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

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

	10.13	Voting Agreement, dated February 17, 2017, by and among Wireless Telecom Group, Inc., Edward De Salis Young, Paul Moakes, Simon Pack and Martin Hollinshead (incorporated herein by reference to Exhibit 10.4 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 21, 2017, Commission File No. 001-11916)
	10.14	Loan and Security Agreement, dated February 16, 2017, Wireless Telecom Group, Inc. Boonton Electronic Corporation, Microlab/FXR and Bank of America, N.A. (incorporated herein by reference to Exhibit 10.5 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 21, 2017, Commission File No. 001-11916)
	10.15	Amendment No. 1 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronic Corporation, Microlab/FXR and Bank of America, N.A. dated August 3, 2017 (incorporated herein by reference to Exhibit 10.6 to Wireless Telecom Group’s Quarterly Report on Form 10-Q filed on August 9, 2017, Commission File No. 001-11916)
	10.16*	Amendment to Executive Employment Agreement by and between Wireless Telecom Group, Inc. and Timothy Whelan dated June 9, 2017 (incorporated herein by reference to Exhibit 10.8 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 9, 2017, Commission File No. 001-11916)
	10.17*	Form of non-employee director Restricted Stock Unit grant agreement (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed August 8, 2018, Commission File No. 001-11916)
	10.18*	Form of Stock Option Agreement under the Wireless Telecom Group Inc.’s 2012 Incentive Compensation Plan for grants after February 11, 2019 (incorporated herein by reference to Exhibit 10.26 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2020, Commission File No. 001-11916)
	10.19*	Form of Restricted Stock Award Agreement under the Wireless Telecom Group Inc.’s 2012 Incentive Compensation Plan for grants after February 11, 2019 (incorporated herein by reference to Exhibit 10.27 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2020, Commission File No. 001-11916)
	10.20	Amendment No. 3 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronic Corporation, Microlab/FXR and Bank of America, N.A. dated February 26, 2019 (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group’s Quarterly Report on Form 10-Q filed on March 5, 2019, Commission File No. 001-11916)
	10.21	Amendment No. 4 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronic Corporation, Microlab/FXR and Bank of America, N.A. dated November 8, 2019 (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group’s Quarterly Report on Form 10-Q filed on November 14, 2019, Commission File No. 001-11916)
	10.22	Share Purchase Agreement, dated as of November 13, 2019, among Wireless Telecom Group Inc., Holzworth Instrumentation Inc., Jason Breitbarth, Joe Koebel and Leyla Bly, and Jason Breitbarth as the designated representative of Sellers (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on November 18, 2019, Commission File No. 001-11916)
	10.23	Form of Lock-up and Voting Agreement (incorporated herein by reference to Exhibit 99.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on November 18, 2019, Commission File No. 001-11916)
	10.24	First Amendment to Share Purchase Agreement, dated January 31, 2020, by and among Wireless Telecom Group, Inc. and Holzworth Instrumentation Inc., Jason Breitbarth, Joe Koebel and Leyla Bly (“Sellers”), and Jason Breitbarth as the designated representative of Sellers (incorporated herein by reference to Exhibit 10.2 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 3, 2020, Commission File No. 001-11916)

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

	10.20*	Amendment to Executive Employment Agreement by and between Wireless Telecom Group, Inc. and Timothy Whelan dated June 9, 2017 (incorporated herein by reference to Exhibit 10.8 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 9, 2017, Commission File No. 001-11916)

	10.21*	Form of non-employee director Restricted Stock Unit grant agreement (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed August 9, 2018, Commission File No. 001-11916)

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

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

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

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

	10.26	First Amendment to Share Purchase Agreement, dated January 31, 2020, by and among Wireless Telecom Group, Inc. and Holzworth Instrumentation Inc., Jason Breitbarth, Joe Koebel and Leyla Bly (“Sellers”), and Jason Breitbarth as the designated representative of Sellers (incorporated herein by reference to Exhibit 10.2 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 4, 2020, Commission File No. 001-11916)

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

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

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

	10.25	Credit Agreement, dated as of February 7, 2020, among Wireless Telecom Group, Inc., as the Borrower, and Certain Subsidiaries of the Borrower Identified Herein, as the Guarantors, and Muzinich BDC, Inc., as the Lender dated February 7, 2020. Schedules and exhibits omitted pursuant to Regulation S-K, Item 601(a)(5); will be furnished to the Securities and Exchange Commission upon request. (incorporated herein by reference to Exhibit 10.33 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2020, Commission File No. 001-11916)
	10.26	Amendment No. 5 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronics Corporation, Microlab/FXR LLC, Holzworth Instrumentation, Inc., CommAgility Limited, and Bank of America, N.A. dated February 7, 2020 (incorporated herein by reference to Exhibit 10.34 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2020, Commission File No. 001-11916)
	10.27	Warrant dated February 7, 2020, by Wireless Telecom Group, Inc. in favor of Muzinich BDC, Inc. (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on February 13, 2020, Commission File No. 001-11916)
	10.28	Bank of America Promissory Note in the principal amount of $2,044,935.00(incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on May 7, 2020, Commission File No. 001-11916)
	10.29	Amendment No. 6 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronics Corporation, Microlab/FXR LLC, Holzworth Instrumentation, Inc., CommAgility Limited, and Bank of America, N.A. dated May 4, 2020 (incorporated herein by reference to Exhibit 10.2 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on May 7, 2020, Commission File No. 001- 11916)
	10.30	First Amendment to Credit Agreement among Wireless Telecom Group, Inc., as the Borrower, and Certain Subsidiaries of the Borrower Identified Herein, as the Guarantors, and Muzinich BDC, Inc., as the Lender dated May 4, 2020 (incorporated herein by reference to Exhibit 10.3 to Wireless Telecom Group Inc.’s Current Report on Form 8-K, filed on May 7, 2020, Commission File No. 001-1916)
	10.31	Amendment No. 7 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., BoontonElectronics Corporation, Microlab/FXR LLC, Holzworth Instrumentation, Inc., CommAgility Limited, and Bank of America, N.A. dated February 25, 2021 (incorporated herein by reference to Exhibit 10.31 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2021, Commission File No. 001-11916)
	10.32	Second Amendment to Credit Agreement among Wireless Telecom Group, Inc., as the Borrower, and CertainSubsidiaries of the Borrower Identified Herein, as the Guarantors, and Muzinich BDC, Inc., as the Lender dated February 25, 2021 (incorporated herein by reference to Exhibit 10.32 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2021, Commission File No. 001-11916)
	10.33	Second Amendment to Share Purchase Agreement, dated February 19, 2021, by and among Wireless Telecom Group, Inc. and Holzworth Instrumentation Inc., Jason Breitbarth, Joe Koebel and Leyla Bly (“Sellers”), and Jason Breitbarth as the designated representative of Sellers (incorporated herein by reference to Exhibit 10.33 to Wireless Telecom Group, Inc.’s Annual Report on Form 10-K, filed on March 19, 2021, Commission File No. 001-11916)
	10.34*	Wireless Telecom Group, Inc. 2021 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 11, 2021, Commission File No. 001-11916)

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

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

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

	21.1	List of subsidiaries

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

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

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

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

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

	100.1	The following financial statements from Wireless Telecom Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on March , 2023, formatted in Inline Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Loss, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statement of Changes in Shareholders’ Equity, and (v) the Notes to the Consolidated Financial Statements. As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Securities 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934

	10.35*	Form of Restricted Stock Award Agreement under Wireless Telecom Group, Inc. 2021 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.2 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 11, 2021, Commission File No. 001-11916)
	10.36*	Form of Stock Option Award Agreement under Wireless Telecom Group, Inc. 2021 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.3 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 11, 2021, Commission File No. 001-11916)
	10.37*	Form of Non-Employee Director Restricted Stock Unit Award Agreement under Wireless Telecom Group, Inc. 2021 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.4 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on August 11, 2021, Commission File No. 001-11916)
	10.38	Third Amendment to Credit Agreement and Limited Waiver by and between Wireless Telecom Group, Inc., the Borrower’s subsidiaries and Muzinich BDC, Inc. dated May 27, 2021 (incorporated herein by reference to Exhibit 10.1 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on November 10, 2021, Commission File No. 001-11916)
	10.39	Business Loan Agreement by and between Lloyds Bank PLC and CommAgility Limited dated May 27, 2021 (incorporated herein by reference to Exhibit 10.2 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on November 10, 2021, Commission File No. 001-11916)
	10.40	Deed of Priority by and between CommAgility Limited, Lloyds Bank PLC, Muzinich BDC, Inc. and Bank of America, N.A. dated June 17, 2021 (incorporated herein by reference to Exhibit 10.3 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on November 10, 2021, Commission File No. 001-11916)
	10.41	Fourth Amendment to the Credit Agreement by and between Wireless Telecom Group, Inc., the Borrower’s subsidiaries and Muzinich BDC, Inc. dated as of September 28, 2021 (incorporated herein by reference to Exhibit 10.4 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on November 10, 2021, Commission File No. 001-11916)
	10.42	Amendment No. 8 to Loan and Security Agreement by and among Wireless Telecom Group, Inc., Boonton Electronics Corp., Microlab/FXR LLC, Holzworth Instrumentation Inc., CommAgility Limited and Bank of America, N.A., dated September 28, 2021 (incorporated herein by reference to Exhibit 10.5 to Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q filed on November 10, 2021, Commission File No. 001-11916)
	10.43*	Amended and Restated Executive Employment Agreement by and between Wireless Telecom Group, Inc. and Timothy Whelan dated January 31, 2022
	10.44*	Amended Employment Letter Agreement, dated January 31, 2022, between Wireless Telecom Group, Inc. and Michael Kandell
	10.45*	Amended Employment Letter Agreement, dated January 31, 2022, between Wireless Telecom Group, Inc. and Daniel Monopoli
	10.46*	Amended Employment Letter Agreement, dated January 31, 2022, between Wireless Telecom Group, Inc. and Alfred Rodriguez
	21.1	List of subsidiaries
	23.1	Consent of Independent Registered Public Accounting Firm (PKF O’Connor Davies, LLP)
	31.1	Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
	32.1	Certification pursuant to 18 U.S.C. section 1350
	32.2	Certification pursuant to 18 U.S.C. section 1350
	100.1	The following financial statements from Wireless Telecom Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 17, 2022, formatted in Inline Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Loss, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statement of Changes in Shareholders’ Equity, and (v) the Notes to the Consolidated Financial Statements. As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Securities 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934

*	Denotes a management contract or compensatory plan or arrangement.

7261

S I G N A T U R E S

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WIRELESS TELECOM GROUP, INC.
Date: March 17, 2022	By:	/s/ Timothy Whelan
Date: March 23, 2023	By:	/s/ Timothy Whelan
		Timothy Whelan
		Chief Executive Officer

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

Name	Title	Date
/s/ Alan L. Bazaar	Chairman of the Board	March 17, 2022
/s/ Scott Gibson	Chairman of the Board	March 23, 2023
Alan L. Bazaar
Scott Gibson
/s/ Timothy Whelan	Chief Executive Officer	March 1723, ~~2022~~2023
Timothy Whelan
/s/ Michael Kandell	Chief Financial Officer	March 1723, ~~2022~~2023
Michael Kandell
/s/ Mitchell Herbets	Director	March 17, 2022
/s/ Michael Millegan	Director	March 23, 2023
Mitchell Herbets
/s/ Michael Millegan	Director	March 17, 2022
Michael Millegan
/s/ Allan D.L. Weinstein	Director	March 1723, ~~2022~~2023
Allan D.L. Weinstein
/s/ Jennifer Fritzsche	Director	March 1723, ~~2022~~2023
Jennifer Fritzsche
/s/ Scott Gibson	Director	March 17, 2022
/s/ Alan Bazaar	Director	March 23, 2023
Scott Gibson
Alan Bazaar

7362

Filing Compare · WIRELESS TELECOM GROUP INC