WIRELESS TELECOM GROUP INC (Form: 10-Q, Received: 11/14/2013 09:15:06)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

	For the quarterly period ended September 30, 2013

£	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		(I.R.S. Employer
of Incorporation or Organization)		Identification No.)
25 Eastmans Road Parsippany, New Jersey		07054
(Address of Principal Executive Offices)		(Zip Code)

(973) 386-9696

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 S No £

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

Large accelerated filer £

Accelerated filer £

Non-accelerated filer £

Smaller reporting company S

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

Number of shares of Common Stock outstanding as of November 8, 2013: 24,033,231

WIRELESS TELECOM GROUP, INC.

Table of Contents

PART I. FINANCIAL INFORMATION			Page(s)

	Item 1 — Consolidated Financial Statements:

		Condensed Balance Sheets as of September 30, 2013 (unaudited) and December 31, 2012	3

		Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2013 (unaudited) and 2012 (unaudited)	4

		Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2013 (unaudited) and 2012 (unaudited)	5

		Condensed Statement of Shareholders’ Equity for the Nine Months Ended September 30, 2013 (unaudited)	6

		Notes to Interim Condensed Financial Statements (unaudited)	7

	Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

	Item 3 — Quantitative and Qualitative Disclosures About Market Risk		24

	Item 4 — Controls and Procedures		24

PART II. OTHER INFORMATION

	Item 1 — Legal Proceedings		25

	Item 1A — Risk Factors		25

	Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		25

	Item 3 — Defaults upon Senior Securities		25

	Item 4 — Mine Safety Disclosures		25

	Item 5 — Other Information		25

	Item 6 — Exhibits		25

Signatures			26

Exhibit Index			27

PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements

WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2013			2012
	(unaudited)
- ASSETS -
CURRENT ASSETS:
Cash and cash equivalents	$	14,169,905		$	12,969,513
Accounts receivable - net of allowance for doubtful accounts of $60,527 and $57,333 for 2013 and 2012, respectively		5,992,224			5,676,015
Inventories		8,817,034			8,289,635
Deferred income taxes - current		1,306,795			1,127,553
Prepaid expenses and other current assets		468,868			588,726
Asset held for sale		—			3,179,002
TOTAL CURRENT ASSETS		30,754,826			31,830,444
PROPERTY, PLANT AND EQUIPMENT - NET		1,554,588			1,266,692
OTHER ASSETS:
Goodwill		1,351,392			1,351,392
Deferred income taxes - non-current		6,820,785			6,084,042
Other assets		695,295			697,054
TOTAL OTHER ASSETS		8,867,472			8,132,488
TOTAL ASSETS	$	41,176,886		$	41,229,624

- LIABILITIES AND SHAREHOLDERS’ EQUITY -
CURRENT LIABILITIES:
Accounts payable	$	911,081		$	1,258,426
Accrued expenses and other current liabilities		1,397,145			1,426,788
Equipment lease payable - current		120,103			—
Mortgage payable		—			2,629,215
TOTAL CURRENT LIABILITIES		2,428,329			5,314,429

LONG TERM LIABILITIES:
Equipment lease payable		89,322			—

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, 29,232,557 and 29,012,557 shares issued, 24,033,231 and 23,987,972 shares outstanding, respectively		292,326			290,126
Additional paid-in-capital		38,703,935			38,226,921
Retained earnings		9,351,996			6,857,820
Treasury stock at cost, 5,199,326 and 5,024,585 shares, respectively		(9,689,022	)		(9,459,672	)
TOTAL SHAREHOLDERS’ EQUITY		38,659,235			35,915,195
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	41,176,886		$	41,229,624

See accompanying notes

WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2013			2012			2013			2012

NET SALES	$	8,790,954		$	7,385,241		$	24,292,829		$	21,379,106

COST OF SALES		4,555,655			3,685,575			12,656,839			10,734,537

GROSS PROFIT		4,235,299			3,699,666			11,635,990			10,644,569

OPERATING EXPENSES
Research and development		719,552			671,503			1,958,856			1,890,772
Sales and marketing		1,182,446			1,115,850			3,523,770			3,348,264
General and administrative		1,761,527			1,139,444			4,619,934			3,472,239
TOTAL OPERATING EXPENSES		3,663,525			2,926,797			10,102,560			8,711,275

OPERATING INCOME		571,774			772,869			1,533,430			1,933,294

OTHER (INCOME) EXPENSE
Interest expense - net		16,093			50,164			114,425			151,611
Other (income) - net		(176,629	)		(3,007	)		(490,218	)		(135,049	)
TOTAL OTHER (INCOME) EXPENSE		(160,536	)		47,157			(375,793	)		16,562

NET INCOME BEFORE INCOME TAXES		732,310			725,712			1,909,223			1,916,732

(BENEFIT) FROM INCOME TAXES		(357,681	)		(129,094	)		(584,953	)		(249,387	)

NET INCOME	$	1,089,991		$	854,806		$	2,494,176		$	2,166,119

INCOME PER COMMON SHARE:

BASIC	$	0.05		$	0.04		$	0.10		$	0.09

DILUTED	$	0.04		$	0.03		$	0.10		$	0.09

See accompanying notes

WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

	For the Nine Months Ended September 30,
	2013			2012

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,494,176		$	2,166,119
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization		247,762			257,993
Stock compensation expense		479,214			218,464
Realized gain on sale of non-marketable security		(161,500	)		—
Realized gain on sale of building		(188,403	)		—
Deferred income taxes		(915,985	)		(536,836	)
Allowance for doubtful accounts		3,194			(64,383	)
Changes in assets and liabilities:
Accounts receivable		(319,403	)		(225,246	)
Inventories		(527,399	)		(832,713	)
Prepaid expenses and other assets		120,617			(178,319	)
Accounts payable, accrued expenses and other current liabilities		(346,206	)		499,841
Net cash provided by operating activities		886,067			1,304,920

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(352,747	)		(293,781	)
Proceeds from sale of non-marketable security		162,500			—
Proceeds from sale of building		3,393,919			—
Net cash provided by (used for) investing activities		3,203,672			(293,781	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments of mortgage note		(2,629,215	)		(54,749	)
Repayments of equipment lease payable		(30,782	)		—
Repurchase of treasury stock - 174,741 and 480,661 shares, respectively		(229,350	)		(583,016	)
Net cash (used for) financing activities		(2,889,347	)		(637,765	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		1,200,392			373,374

Cash and cash equivalents, at beginning of period		12,969,513			12,089,782

CASH AND CASH EQUIVALENTS, AT END OF PERIOD	$	14,169,905		$	12,463,156

SUPPLEMENTAL INFORMATION:
Cash paid during the period for:
Taxes	$	257,194		$	123,146

Interest	$	115,103		$	151,902

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital expenditures	$	(240,206	)	$	—

Equipment lease payable	$	240,206		$	—

See accompanying notes

WIRELESS TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(unaudited)

	Common Stock		Additional Paid In Capital			Retained Earnings		Treasury Stock			Total Shareholders’ Equity
Balances at December 31, 2012	$	290,126	$	38,226,921		$	6,857,820	$	(9,459,672	)	$	35,915,195

Net income		—		—			2,494,176		—			2,494,176
Stock issued under equity compensation plan		2,200		(2,200	)		—		—			—
Stock compensation expense		—		479,214			—		—			479,214
Repurchase of treasury stock		—		—			—		(229,350	)		(229,350	)

Balances at September 30, 2013	$	292,326	$	38,703,935		$	9,351,996	$	(9,689,022	)	$	38,659,235

See accompanying notes

WIRELESS TELECOM GROUP, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND POLICIES

The condensed consolidated balance sheets as of September 30, 2013, the condensed consolidated statements of operations for the three and nine-month periods ended September 30, 2013 and 2012, the condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2013 and 2012, and the condensed consolidated statement of shareholders’ equity for the nine-month period ended September 30, 2013 have been prepared by the Company without audit. The condensed consolidated financial statements include the accounts of Wireless Telecom Group, Inc., which operates one of its product lines under the trade name Noisecom, Inc. (“Noisecom”), and its wholly-owned subsidiaries Boonton Electronics Corporation (“Boonton”), Microlab/FXR (“Microlab”), WTG Foreign Sales Corporation and NC Mahwah, Inc., collectively the “Company”. All intercompany transactions and balances have been eliminated in consolidation.

In the opinion of management, the accompanying condensed consolidated financial statements referred to above contain all necessary adjustments, consisting of normal accruals and recurring entries, which are necessary to present fairly the Company’s results for the interim periods being presented.

The accounting policies followed by the Company are set forth in Note 1 to the Company’s financial statements included in its annual report on Form 10-K for the year ended December 31, 2012. Specific reference is made to that report since certain information and footnote disclosures normally included in financial statements in accordance with accounting principles generally accepted in the United States of America (US GAAP) have been condensed or omitted from this report.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (including inventory valuation, accounts receivable valuation, valuation of deferred tax assets and estimated fair values of stock options) and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of net sales and expenses during the reporting period. Actual results could differ from those estimates.

The results of operations for the three and nine-month periods ended September 30, 2013 and 2012 are not necessarily indicative of the results to be expected for the full year.

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

The Company maintains significant cash investments primarily with two financial institutions, which at times may exceed federally insured limits. The Company performs periodic evaluations of the relative credit rating of these institutions as part of its investment strategy.

Concentrations of credit risk with respect to accounts receivable are limited due to the Company’s large customer base. At September 30, 2013 and December 31, 2012, primarily all of the Company’s receivables pertain to the telecommunications industry.

The carrying amounts of cash and cash equivalents, trade receivables, other current assets and accounts payable approximate fair value due to the short-term nature of these instruments.

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of bank and money market accounts.

Management has evaluated subsequent events for disclosure and/or recognition in the condensed consolidated financial statements through the date the financial statements were available to be issued.

WIRELESS TELECOM GROUP, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

In February 2013, the FASB issued ASU No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” Under ASU 2013-02, an entity is required to provide information about the amounts reclassified out of Accumulated Other Comprehensive Income (“AOCI”) by component. In addition, an entity is required to present, either on the face of the financial statements or in the notes, significant amounts reclassified out of AOCI by the respective line items of net income, but only if the amount reclassified is required to be reclassified in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. ASU 2013-02 does not change the current requirements for reporting net income or other comprehensive income in the financial statements. ASU 2013-02 was effective for the Company beginning January 1, 2013. The adoption of this ASU did not have a material impact on its condensed consolidated financial statements

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying condensed consolidated financial statements.

NOTE 3 – 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 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 future years to obtain benefit from the reversal of net deductible temporary differences and from utilization of net operating losses and tax credit carryforwards. The Company has recorded a valuation allowance due to the uncertainty related to the realization of certain deferred tax assets existing at September 30, 2013. A majority of the valuation allowance, or $7,012,134, relates to the Company’s foreign net operating loss carryforward which is unlikely to be realized in future periods. The balance of the valuation allowance, or $1,220,353, relates to the Company’s domestic net operating loss carryforward, which is evaluated for realization on a quarterly basis, as well as other timing differences. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed. As a result of the Company’s evaluation of future estimated taxable income, management increased its net deferred tax asset by $484,907 and $915,985 for the three and nine-months ended September 30, 2013, respectively.

The deferred income tax assets and (liabilities) are summarized as follows:

	September 30,			December 31,
Net deferred tax asset:	2013			2012
Uniform capitalization of inventory costs for tax purposes	$	237,817		$	221,155
Reserves on inventories – including demo inventory		526,368			499,001
Allowance for doubtful accounts		24,211			22,933
Accruals		210,000			195,149
Tax effect of goodwill		(406,996	)		(321,636	)
Book depreciation over tax		(221,689	)		(49,618	)
Net operating loss carryforward		15,990,356			16,556,713
		16,360,067			17,123,697
Valuation allowance for deferred tax assets		(8,232,487	)		(9,912,102	)
	$	8,127,580		$	7,211,595

The Company analyzes its deferred tax asset on a quarterly basis and adjusts the deferred tax asset valuation allowance based on its rolling five-year projection of estimated taxable income, taking into consideration any limitations that may exist on its use of its net operating loss carryforwards.

WIRELESS TELECOM GROUP, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 3 – INCOME TAXES (Continued)

Under ASC 740, the Company must recognize the tax benefit from an uncertain position 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 tax benefits recognized in the financial statements attributable to such position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon the ultimate resolution of the position.

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Current:
Federal	$	5,658		$	6,632		$	35,014		$	44,251
State		121,568			81,111			296,018			243,198
Deferred:
Federal		(407,322	)		(192,985	)		(769,427	)		(477,784	)
State		(77,585	)		(23,852	)		(146,558	)		(59,052	)
	$	(357,681	)	$	(129,094	)	$	(584,953	)	$	(249,387	)

The Company has analyzed its filing positions in all of the Federal and state jurisdictions where it is required to file income tax returns. As of September 30, 2013 and December 31, 2012, the Company has identified its Federal tax return and its state tax return in New Jersey as “major” tax jurisdictions, as defined, 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 condensed consolidated financial statements.

The State of New Jersey conducted a field examination of one of the Company’s subsidiary tax returns for the years 2009 through 2012 which was completed in October 2013. Based on the examination, the State of New Jersey did not propose any significant adjustments to the Company’s tax positions.

NOTE 4 - INCOME PER COMMON SHARE

Basic earnings per share is calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are calculated by using the weighted average number of shares of common stock outstanding and, when dilutive, potential shares from stock options and warrants to purchase common stock, using the treasury stock method.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Weighted average common shares outstanding		23,979,970		24,233,260		23,902,547		24,322,647
Potentially dilutive stock options		625,269		406,569		538,666		375,069
Weighted average common shares outstanding, assuming dilution		24,605,239		24,639,829		24,441,213		24,697,716

Common stock options are included in the diluted earnings per share calculation when the various option exercise prices are less than their relative average market price during the periods presented in this quarterly report. The weighted average number of options not included in diluted earnings per share, because the effects are anti-dilutive, was 2,466,731 and 1,855,430 for the three-months ended September 30, 2013 and 2012, respectively. For the nine-months ended September 30, 2013 and 2012, the weighted average number of options not included in diluted earnings per share was 2,554,580 and 1,923,938, respectively.

WIRELESS TELECOM GROUP, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 5 – INVENTORIES

Inventory carrying value is net of inventory reserves of $690,413 and $621,996 at September 30, 2013 and December 31, 2012, respectively.

Inventories consist of:	September 30,		December 31,
	2013		2012
Raw materials	$	5,228,805	$	5,186,555
Work-in-process		902,282		390,188
Finished goods		2,685,947		2,712,892
	$	8,817,034	$	8,289,635

NOTE 6 - 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 not amortized but rather is reviewed for impairment at least annually, or more frequently if a triggering event occurs. Management first makes a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test described below. If, based on the qualitative assessment, the estimated fair value is well in excess of its carrying amount, management will not perform any quantitative assessment. If, however, the conclusion is that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, management then performs a two-step goodwill impairment test. Under the first step, the fair value of the reporting unit is compared with its carrying value, and, if an indication of goodwill impairment exists for the reporting unit, the Company must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill as determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation.

The residual fair value after this allocation is the implied fair value of the reporting unit’s goodwill. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed.

The Company’s goodwill balance of $1,351,392 at September 30, 2013 and December 31, 2012 relates to one of the Company’s reporting units, Microlab. Management’s qualitative assessment performed in the fourth quarter of 2012 did not indicate any impairment of Microlab’s goodwill as its fair value is estimated to be well in excess of its carrying value.

NOTE 7 - ACCOUNTING FOR STOCK BASED COMPENSATION

The Company follows the provisions of ASC 718, “Share-Based Payment.” The Company’s results for the three and nine-month periods ended September 30, 2013 include share-based compensation expense totaling $316,081 and $479,214, respectively. Results for the three and nine-month periods ended September 30, 2012 include share-based compensation expense of $90,899 and $218,464, respectively. Such amounts have been included in the Condensed Consolidated Statements of Operations within operating expenses.

On June 13, 2012, our shareholders approved the Company’s 2012 Incentive Compensation Plan (the “2012 Plan”). The 2012 Plan replaced the Company’s Amended and Restated 2000 Stock Option Plan, as amended (the “Prior Plan”), under which no additional grants will be made. Under the 2012 Plan, the total number of shares of the Company’s common stock reserved and available for issuance under the 2012 Plan at any time is 2,000,000 shares, plus any shares subject to awards that have been issued under the Prior Plan that expire, are cancelled or are terminated after June 13, 2012 without having been exercised in full and would have become available for subsequent grants under the Prior Plan. As of September 30, 2013, there were 691,304 shares available for issuance under the 2012 Plan. The 2012 Plan provides for the grant of Restricted Stock Awards, 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.

WIRELESS TELECOM GROUP, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 7 - ACCOUNTING FOR STOCK BASED COMPENSATION (Continued)

All service-based options granted have ten-year terms and, from the date of grant, vest annually and become fully exercisable after a maximum of five years. Performance-based options granted have ten-year terms and vest and become fully exercisable when determinable performance targets are achieved. Performance targets are agreed to, and approved by, the Company’s board of directors.

Under the Company’s 2012 Plan, options may be granted to purchase shares of the Company’s common stock exercisable at prices equal to or above the fair market value on the date of the grant.

The following table summarizes the restricted common stock awards granted to certain officers and directors of the Company during the nine-months ended September 30, 2012 under the 2012 Plan:

	Number of Shares		Price per
Individuals	Granted		Granted Share		Vesting Date
Chief Executive Officer		50,000	$	1.15	June 13, 2012	(vested upon grant)
		26,957	$	1.15	March 20, 2013
V.P. of Sales and Marketing		21,739	$	1.15	March 20, 2013
Board of Directors		80,000	$	1.15	June 13, 2012	(vested upon grant)
		80,000	$	1.15	June 13, 2013
		258,696

On August 19, 2013, upon the unanimous recommendation of the Compensation Committee, the Board of Directors approved the grant of performance-based restricted stock awards to certain employees of the Company, including its officers. Accordingly, the Company entered into restricted stock agreements pursuant to which certain employees of the Company were awarded, collectively, up to 100,000 shares of the Company’s common stock at $1.77 per share, which represents the closing price of the Company’s common stock as reported on the NYSE MKT on August 19, 2013, the date of grant.

Under the terms of the restricted stock agreements, the awards will fully vest and become exercisable on the date on which the Board shall have determined that specific financial milestones have been met, provided the employee remains in the employ of the Company at such time; provided, however, upon a Change in Control (as defined in the stock option agreements and the 2012 Plan), the restricted stock shall automatically vest as permitted by the 2012 Plan. For the performance-based restricted stock awarded in 2013, the Company’s Board of Directors adopted specific revenue and earnings performance targets as vesting conditions. As of September 30, 2013, the Company has not incurred expense relating to these performance-based stock awards as it is more likely than not that the performance targets will not be achieved.

The following table summarizes the restricted common stock awards granted to certain directors, officers and employees of the Company during the nine-months ended September 30, 2013 under the 2012 Plan:

	Number of Shares		Price per
Individuals	Granted		Granted Share		Vesting Date
Chief Executive Officer		42,000	$	1.77	Performance based
Chief Financial Officer		11,000	$	1.77	Performance based
V.P. of Sales and Marketing		26,000	$	1.77	Performance based
Various Other Employees		21,000	$	1.77	Performance based
Board of Directors		120,000	$	1.51	Next Annual Meeting	(Expected June 2014)
		220,000

WIRELESS TELECOM GROUP, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 7 - ACCOUNTING FOR STOCK BASED COMPENSATION (Continued)

During the nine-months ended September 30, 2013, the Company repurchased 13,479 shares of restricted common stock from its Chief Executive Officer and 10,870 shares of restricted common stock from its V.P. of Sales and Marketing for $36,279, or $1.49 per share, During the nine-months ended September 30, 2012, the Company repurchased 23,334 shares of restricted common stock from its Chief Executive Officer for $26,834, or $1.15 per share. In accordance with the terms of the 2012 Plan, the Compensation Committee of the Board of Directors authorized the Company to repurchase, upon vesting of the restricted stock, that certain number of shares necessary to allow such grantees to satisfy their personal tax liability associated with the vesting of such shares.

A summary of the status of the Company’s non-vested restricted common stock, as granted under the Company’s approved stock compensation plan, as of September 30, 2013, and changes during the nine-months ended September 30, 2013 are presented below:

				Weighted Average
				Grant Date
Non-vested Shares	Number of Shares			Fair Value
Non-vested at January 1, 2013		128,696		$	1.15
Granted		220,000		$	1.63
Vested		(128,696	)	$	1.15
Non-vested at September 30, 2013		220,000		$	1.63

As of September 30, 2013, the unearned compensation related to Company granted restricted common stock is $312,900 of which $135,900 will be amortized on a straight-line basis through the date of the Company’s next annual shareholders meeting to be held in 2014, the vesting date. The remaining balance of $177,000 will begin to be amortized when certain performance conditions are determined to be probable.

On August 19, 2013, upon the unanimous recommendation of the Compensation Committee, the Board of Directors approved the grant of performance-based stock options to certain employees of the Company, including its officers. Accordingly, the Company entered into stock option agreements pursuant to which certain employees of the Company were awarded options to purchase, collectively, up to 950,000 shares of the Company’s common stock at an exercise price of $1.77 per share, which represents the closing price of the Company’s common stock as reported on the NYSE MKT on August 19, 2013, the date of grant.

Under the terms of the stock option agreements the options will fully vest and become exercisable on the date on which the Board shall have determined that specific financial milestones have been met, provided the employee remains in the employ of the Company at such time; provided, however, upon a Change in Control (as defined in the stock option agreements and the 2012 Plan), the options shall automatically accelerate and become fully exercisable as permitted by the 2012 Plan. For the performance-based stock options awarded in 2013, the Company’s Board of Directors adopted specific revenue and earnings performance targets as vesting conditions. As of September 30, 2013, the Company has not incurred expense relating to these performance-based stock options as it is more likely than not that the performance targets will not be achieved.

A summary of performance-based stock option activity, and related information for the nine-months ended September 30, 2013 follows:

			Weighted Average
	Options		Exercise Price
Outstanding, January 1, 2013		1,300,000	$	0.93
Granted		950,000	$	1.77
Exercised		—		—
Forfeited		—		—
Canceled/Expired		—		—
Outstanding, September 30, 2013		2,250,000	$	1.28

Options exercisable:
September 30, 2013		—		—

WIRELESS TELECOM GROUP, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 7 - ACCOUNTING FOR STOCK BASED COMPENSATION (Continued)

The aggregate intrinsic value of performance-based stock options outstanding as of September 30, 2013 and December 31, 2012 was $1,671,250 and $416,150, respectively. The aggregate intrinsic value of performance-based stock options exercisable as of September 30, 2013 was $0.

The per share fair-value of performance-based options granted during the three and nine-month periods ended September 30, 2013 was $0.91.

A summary of service-based stock option activity, and related information for the nine-months ended September 30, 2013 follows:

				Weighted Average
	Options			Exercise Price
Outstanding, January 1, 2013		862,000		$	2.61
Granted		—			—
Exercised		—			—
Forfeited		—			—
Canceled/Expired		(20,000	)	$	1.95
Outstanding, September 30, 2013		842,000		$	2.63

Options exercisable:
September 30, 2013		842,000		$	2.63

The Company’s service-based stock options are fully amortized. The Company began amortizing its performance-based options at the end of 2011. For the three-months ended September 30, 2013 and 2012, the Company recorded compensation expense in the amount of $270,781 and $49,232, respectively. For the nine-months ended September 30, 2013 and 2012, the Company recorded compensation expense in the amount of $369,246 and $147,697, respectively. Through June 30, 2013, the unamortized amount was expensed on a straight-line basis through December 31, 2015, the expected implicit service period at that time. However, during the three-months ended September 30, 2013, management re-evaluated the date the respective performance conditions will likely be met. As a result, the Company has accelerated the expensing of such options through December 31, 2013, the revised implicit service date. The impact of the accelerated expense on net income for the three and nine-months ended September 30, 2013 was $221,548 or $0.01 per basic and diluted share. The unamortized balance of this tranche of options was $221,548 at September 30, 2013.

Unearned compensation in the amount of $867,683 relating to performance-based stock options granted in 2013 will not be recognized until management considers the respective performance conditions to be achievable.

The following summarizes the components of share-based compensation expense by equity type for the three and nine-months ended September 30:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Performance-Based Stock Options	$	270,781	$	49,232	$	369,246	$	147,697
Restricted Common Stock		45,300		41,667		109,968		70,767
Total Share-Based Compensation Expense	$	316,081	$	90,899	$	479,214	$	218,464

Stock-based compensation for the three and nine-months ended 2013 and 2012 is included in general and administrative expenses in the accompanying condensed consolidated statement of operations.

WIRELESS TELECOM GROUP, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 8 – SEGMENT INFORMATION

The Company, in accordance with ASC 280, “Disclosures about Segments of an Enterprise and Related Information”, has disclosed the following segment information:

The operating businesses of the Company are segregated into two reportable segments, test and measurement and network solutions. The test and measurement segment is comprised primarily of the Company’s operations and the operations of its subsidiary, Boonton. The network solutions segment is comprised primarily of the operations of the Company’s subsidiary, Microlab.

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

Financial information by reportable segment for the three and nine-months ended September 30, 2013 and 2012:

	Three Months Ended September 30,						Nine Months Ended September 30,

	2013			2012			2013			2012
Net sales by segment:
Test and measurement	$	2,519,184		$	4,297,887		$	8,273,080		$	11,745,402
Network solutions		6,271,770			3,087,354			16,019,749			9,633,704
Total consolidated net sales and net sales of reportable segments	$	8,790,954		$	7,385,241		$	24,292,829		$	21,379,106

Segment income:
Test and measurement	$	125,540		$	976,914		$	660,712		$	2,124,823
Network solutions		1,782,916			597,871			4,094,938			2,157,285
Income from reportable segments		1,908,456			1,574,785			4,755,650			4,282,108

Other unallocated amounts:
Corporate expenses		(1,336,682	)		(801,916	)		(3,222,220	)		(2,348,814	)
Interest and other income - net		160,536			(47,157	)		375,793			(16,562	)
Consolidated income before income tax (benefit)	$	732,310		$	725,712		$	1,909,223		$	1,916,732

Depreciation and amortization by segment:
Test and measurement	$	48,366		$	70,114		$	161,142		$	206,979
Network solutions		31,196			18,378			86,620			51,014
Total depreciation and amortization for reportable segments	$	79,562		$	88,492		$	247,762		$	257,993

Capital expenditures by segment:
Test and measurement	$	85,048		$	58,296		$	218,427		$	167,199
Network solutions		82,105			17,077			134,320			126,582
Total consolidated capital expenditures by reportable segment	$	167,153		$	75,373		$	352,747		$	293,781

WIRELESS TELECOM GROUP, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 8 – SEGMENT INFORMATION (Continued)

Financial information by reportable segment as of September 30, 2013 and December 31, 2012:

	2013		2012
Total assets by segment:
Test and measurement	$	8,621,496	$	12,104,700
Network solutions		10,252,469		8,864,541
Total assets for reportable segments		18,873,965		20,969,241

Corporate assets, principally cash and cash equivalents and deferred and current taxes		22,302,921		20,260,383

Total consolidated assets	$	41,176,886	$	41,229,624

Net consolidated sales by region were as follows:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

Sales by region	2013		2012		2013		2012
Americas	$	6,645,495	$	5,589,376	$	19,149,306	$	16,011,211
Europe, Middle East, Africa (EMEA)		986,834		1,360,022		2,990,043		3,495,931
Asia Pacific (APAC)		1,158,625		435,843		2,153,480		1,871,964
Total Sales	$	8,790,954	$	7,385,241	$	24,292,829	$	21,379,106

Net sales 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 three-months ended September 30, 2013 and 2012, sales in the United States amounted to $6,169,718 and $5,227,114, respectively. For the nine-months ended September 30, 2013 and 2012, sales in the United States amounted to $17,820,068 and $14,849,766, respectively. For the three and nine-months ended September 30, 2013 and 2012, shipments to the EMEA region were not significantly concentrated in one country. Shipments to the APAC region were largely concentrated in China. For the three-months ended September 30, 2013 and 2012, sales in China amounted to $869,298 and $211,429, respectively. For the nine-months ended September 30, 2013 and 2012, sales in China amounted to $1,319,804 and $1,057,909, respectively.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Warranties:

The Company typically provides one-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. Historically, warranty expense within the Company has been minimal.

Leases:

The Company has a building lease agreement with its current landlord to remain at its principal corporate headquarters in Hanover Township, Parsippany, New Jersey through September 30, 2014. The current minimum monthly base rent payment is approximately $29,000.

WIRELESS TELECOM GROUP, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)

Environmental Contingencies:

Following an investigation by the New Jersey Department of Environmental Protection (NJDEP) in 1982, of the waste disposal practices at a certain site formerly leased by Boonton, the Company put a ground water management plan into effect as approved by the NJDEP. Costs associated with this site are charged directly to income as incurred. The owner of this site has previously notified the Company that if the NJDEP investigation proves to have interfered with a sale of the property, the owner may seek to hold the Company liable for any resulting damages. Since May 1983, the owner has been on notice of this problem and has failed to institute any legal proceedings with respect thereto. While this does not bar the owner from instituting a suit, it is the opinion of the Company’s legal counsel that it is unlikely that the owner would prevail on any claim.

The Company is diligently pursuing efforts to satisfy the requirements of the original plan and receive a new determination from the NJDEP. Overall data from testing performed in March 2013 indicates the continuation of a decreasing concentration trend at the site. The overall decrease supports the absence of a continuing source impacting ground water. The Company believes that its current practice and plan of groundwater testing will continue until an official notification from the NJDEP is obtained and the Company is released from further obligations. While management anticipates that the expenditures in connection with this site will not be substantial in future years, the Company could be subject to significant future liabilities and may incur significant future expenditures if further contaminants from Boonton’s testing are identified and the NJDEP requires additional remediation activities.

Management is unable to estimate future remediation costs, if any, at this time. The Company will continue to be liable under the plan, in all future years, until such time as the NJDEP releases it from all obligations applicable thereto.

Line of Credit:

The Company maintains a line of credit with its investment bank. The credit facility provides borrowing availability of up to 100% of the Company’s money market account balance and 99% of the Company’s short-term investment securities (U.S. Treasury bills) and, under the terms and conditions of the loan agreement, the facility is fully secured by our money fund account and short-term investment holdings held with the bank. Advances under the facility will bear interest at a variable rate equal to the London InterBank Offered Rate (“LIBOR”) in effect at time of borrowing. Additionally, under the terms and conditions of the loan agreement, there is no annual fee and any amount outstanding under the loan facility may be paid at any time in whole or in part without penalty. As of September 30, 2013, the Company had no borrowings outstanding under the facility and approximately $4,500,000 of borrowing availability. The Company has no current plans to borrow from this credit facility as it believes its present cash balances will adequately meet near-term working capital requirements.

Risks and Uncertainties:

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.

WIRELESS TELECOM GROUP, INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 10 - SALE OF BUILDING

On August 1, 2013, the Company closed on the sale of a property previously owned by the Company and located in Mahwah, New Jersey (the “Mahwah Building”) and repaid the existing mortgage loan payable on the building with the proceeds of the sale. As part of the terms of the sale, the Company was required to place $350,000 in escrow until certain conditions are met, as determined by the State of New Jersey. The terms of the mortgage loan relating to the Mahwah Building required monthly payments of $23,750 applied to both principal and interest at the annual rate of 7.45%. As a result of the sale and the repayment of the mortgage loan, the Company recognized a gain of $188,403 and is no longer obligated to make any loan payments.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

Wireless Telecom Group, Inc., and its operating subsidiaries, (collectively, the “Company”), develop, manufacture and market a wide variety of electronic noise sources, electronic testing and measuring instruments including power meters, voltmeters and modulation meters and high-power passive microwave components for wireless products. The Company’s products have historically been primarily used to test the performance and capability of cellular/PCS and satellite communication systems and to measure the power of RF and microwave systems. Other applications include radio, radar, wireless local area network (WLAN) and digital television.

The operating businesses of the Company are segregated into two reportable segments: (1) test and measurement and (2) network solutions. The test and measurement segment is comprised primarily of the Company’s operations and the operations of its subsidiary, Boonton. The network solutions segment is comprised primarily of the operations of the Company’s subsidiary, Microlab. Additional financial information on the Company’s reportable segments as of September 30, 2013 and December 31, 2012, as well as for the three and nine-months ended September 30, 2013 and 2012 is included in Note 8 to the Company’s condensed consolidated financial statements.

The financial information presented herein includes:

(i) Condensed Consolidated Balance Sheets as of September 30, 2013 (unaudited) and as of December 31, 2012 (ii) Condensed Consolidated Statements of Operations for the three and nine-month periods ended September 30, 2013 (unaudited) and 2012 (unaudited) (iii) Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2013 (unaudited) and 2012 (unaudited) and (iv) Condensed Consolidated Statement of Shareholders’ Equity for the nine-month period ended September 30, 2013 (unaudited).

FORWARD LOOKING STATEMENTS

The statements contained in this Quarterly Report on Form 10-Q 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 or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. These statements are based on the Company’s current expectations of future events and are subject to a number of risks and uncertainties that may cause the Company’s actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, the ability of our management to successfully implement our business plan and strategy, product demand and development of competitive technologies in our market sector, the impact of competitive products and pricing, the loss of any significant customers, our abilities to protect our property rights, the effects of adoption of newly announced accounting standards, the effects of economic conditions and trade, legal and other economic risks, among others. 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. These risks and uncertainties are disclosed from time to time in the Company’s filings with the Securities and Exchange Commission, the Company’s press releases and in oral statements made by or with the approval of authorized personnel. You should also consider carefully the statements under other sections of this Report and our Annual Report on Form 10-K for the year ended December 31, 2012, which address additional risks that could cause our actual results to differ from those set forth in any forward-looking statements. The Company’s forward-looking statements speak only as of the date of this Report. The Company undertakes no obligation to publically update or review any forward-looking statements whether as a result of new information, future developments or otherwise.

CRITICAL ACCOUNTING POLICIES

Management’s discussion and analysis of the financial condition and results of operations are based upon the Company’s condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses for each period.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

On a regular basis, management evaluates its assumptions, judgments and estimates. Management believes that there have been no material changes to the items that the Company disclosed as its significant accounting policies and estimates under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Company’s December 31, 2012 Form 10-K.

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 its 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.

Share-Based Compensation

The Company follows the provisions of Accounting Standards Codification (ASC) 718, “Share-Based Payment”. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. For any performance-based or service-based options granted, the Company takes into consideration guidance under ASC 718 and SEC Staff Accounting Bulletin No. 107 (SAB 107) when reviewing and updating 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 weekly price observations over an observation period of three years. 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 estimated forfeiture rate included in the option valuation is based on our past history of forfeitures. Due to the limited amount of forfeitures in the past, the Company’s estimated forfeiture rate has been zero.

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.

Revenue Recognition

Revenue from product shipments, including shipping and handling fees, is recognized once delivery has occurred provided that persuasive evidence of an arrangement exists, the price is fixed or determinable, and collectability is reasonably assured. Delivery is considered to have occurred when title and risk of loss have transferred to the customer. Sales to international distributors are recognized in the same manner. If title does not pass until the product reaches the customer’s delivery site, then recognition of revenue is deferred until that time. There are no formal sales incentives offered to any of the Company’s customers. Volume discounts may be offered from time to time to customers purchasing large quantities on a per transaction basis. There are no material special post shipment obligations or acceptance provisions that exist with any sales arrangements.

Valuation of Inventory

Raw material inventories are stated at the lower of cost (first-in, first-out method) or market. Finished goods and work-in-process are valued at average cost of production, which includes material, labor and manufacturing expenses.

Allowance 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, its customers’ payment history and aging of its accounts receivable balance. If the financial condition of any of its customers were to decline, additional allowances might be required.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Income Taxes

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.

Uncertain Tax Positions

Based on a review of tax positions for all open years and contingencies as set out in the Company’s notes to the condensed consolidated financial statements, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740 during the periods ended September 30, 2013 and 2012, 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 twelve months.

RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our interim condensed consolidated financial statements and the notes to those statements included in Part I, Item I of this Quarterly Report on Form 10-Q and in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2012.

For the nine-months ended September 30, 2013 as compared to the corresponding period of the previous year, net consolidated sales increased to approximately $24,293,000 from approximately $21,379,000, an increase of approximately $2,914,000 or 13.6%. For the three-months ended September 30, 2013 as compared to the corresponding period of the previous year, net consolidated sales increased to approximately $8,791,000 from approximately $7,385,000, an increase of approximately $1,406,000 or 19.0%. These increases were primarily the result of ongoing demand for the Company’s network solutions products, particularly for use in distributed antenna systems (“DAS”). The Company continues to experience strong order activity in its network solutions segment due to commercial infrastructure development in support of the expansion and upgrades to DAS.

Net sales of the Company’s network solutions products for the nine-months ended September 30, 2013 were approximately $16,020,000 as compared to approximately $9,634,000 for the nine-months ended September 30, 2012, an increase of approximately $6,386,000 or 66.3%. Net sales of the Company’s network solutions products for the three-months ended September 30, 2013 were approximately $6,272,000 as compared to approximately $3,087,000 for the three-months ended September 30, 2012, an increase of approximately $3,185,000 or 103.2%. Net sales of network solutions products accounted for approximately 66% and 45% of net consolidated sales for the nine-month periods ended September 30, 2013 and 2012, respectively.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Net sales of network solutions products accounted for approximately 71% and 42% of net consolidated sales for the three-month periods ended September 30, 2013 and 2012, respectively. The increase in sales for the three and nine-months ended September 30, 2013 for our network solutions segment was primarily due to the Company’s ongoing participation in DAS deployments through supply of its passive microwave components.

Net sales of the Company’s test and measurement products for the nine-months ended September 30, 2013 were approximately $8,273,000 as compared to approximately $11,745,000 for the nine-months ended September 30, 2012, a decrease of approximately $3,472,000 or 29.6%. Net sales of the Company’s test and measurement products for the three-months ended September 30, 2013 were approximately $2,519,000 as compared to approximately $4,298,000 for the three-months ended September 30, 2012, a decrease of approximately $1,779,000 or 41.2%. Net sales of test and measurement products accounted for approximately 34% and 55% of net consolidated sales for the nine-months periods ended September 30, 2013 and 2012, respectively. Net sales of test and measurement products accounted for approximately 29% and 58% of net consolidated sales for the three-months ended September 30, 2013 and 2012, respectively. The decrease in sales for our test and measurement segment was primarily due to decreased volume in peak power meter orders as a result of the Company’s completion of a large government contract in 2012 and decreased order flow from prime defense contractors due to sequestration.

Gross profit on net consolidated sales for the nine-months ended September 30, 2013 was approximately $11,636,000 or 47.9% as compared to approximately $10,645,000 or 49.8% of net consolidated sales for the nine-months ended September 30, 2012. Gross profit on net consolidated sales for the three-months ended September 30, 2013 was approximately $4,235,000 or 48.2% as compared to approximately $3,700,000 or 50.1% of net consolidated sales for the three-months ended September 30, 2012.

Gross profit margins are lower for the three and nine-months ended September 30, 2013 as compared to the same periods of the previous year primarily due to a shift in segment revenue contribution and mix of product sold. The test and measurement segment typically provides for higher gross margins than the network solutions segment. Therefore, the decline in test and measurement sales, as a percentage of consolidated sales, resulted in a decrease in overall consolidated gross margins. Furthermore, test and measurement gross margins were slightly lower due to reduced sales volumes during the three and nine-month periods ended September 30, 2013. As a result, the overall blended gross profit margins declined by approximately 2% for both periods ended September 30, 2013. Additionally, during the three-months ended September 30, 2012, the Company received payment on an insurance claim in the amount of approximately $104,000 positively affecting gross profit margins for the periods ended 2012.

The Company’s products consist of several models with varying degrees of capabilities which can be customized to meet particular customer requirements. They may be incorporated directly into the electronic equipment concerned or may be stand alone components or devices that are connected to, or used in conjunction with, such equipment from an external site, in the factory or in the field. Prices of products range from approximately $100 to $100,000 per unit, with most sales occurring between approximately $2,000 and $35,000 per unit. The Company can experience variations in gross profit based upon the mix of these products sold as well as variations due to revenue volume and economies of scale. The Company will continue to rigidly monitor costs associated with material acquisition, manufacturing and production.

Consolidated operating expenses for the nine-months ended September 30, 2013 were approximately $10,103,000 or 42% of net consolidated sales as compared to approximately $8,711,000 or 41% of net consolidated sales for the nine-months ended September 30, 2012. Consolidated operating expenses were higher for the nine-months ended September 30, 2013 due to an increase in consolidated general and administrative expenses of approximately $1,148,000, an increase in consolidated sales and marketing expenses of approximately $176,000 and an increase in consolidated research and development expenses of approximately $68,000. Consolidated operating expenses for the three-months ended September 30, 2013 were approximately $3,664,000 or 42% of net consolidated sales as compared to approximately $2,927,000 or 40% of net consolidated sales for the three-months ended September 30, 2012. Consolidated operating expenses were higher for the three-months ended September 30, 2013 due to an increase in consolidated general and administrative expenses of approximately $622,000, an increase in consolidated sales and marketing expenses of approximately $67,000 and an increase in consolidated research and development expenses of approximately $48,000.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

The increase in consolidated general and administrative expenses for the three and nine-months ended September 30, 2013 was primarily due to an increase in corporate legal and consulting fees of approximately $215,000 and $572,000, respectively, in connection with the Company’s pursuit of strategic opportunities and an increase in non-cash stock based compensation charges of approximately $225,000 and $261,000, respectively, due to the acceleration of amortization related to performance-based stock options and amortization of outstanding restricted common stock. For the three and nine-months ended September 30, 2013, consolidated research and development expenses increased primarily due to an increase in salaries in our network solutions segment of approximately $69,000 and $209,000, respectively, partially offset by a decrease in salaries in our test and measurement segment of approximately $14,000 and $101,000, respectively. The Company hired new engineering personnel in May 2012 and March 2013 in support of its growing network solutions segment.

Consolidated sales and marketing expenses increased for the three and nine-months ended September 30, 2013 primarily due to higher non-employee sales commissions in our network solutions segment of approximately $147,000 and $364,000, respectively, and higher salaries expense of approximately $99,000 and $276,000, respectively, due to the hiring of sales and marketing personnel in support of our network solution segment, partially offset by lower non-employee sales commissions in our test and measurement segment of approximately $126,000 and $264,000, respectively.

Interest expense, net of interest income derived from the Company’s cash investment account, decreased by approximately $34,000 and $37,000 for the three and nine-months ended September 2013, respectively, as compared to the corresponding periods of the previous year. The decrease in interest expense is due to the repayment of the mortgage loan during the three-months ended September 30, 2013. Substantially all of the Company’s cash is invested in money market funds.

Other income, net of other non-operating expense, increased by approximately $174,000 and $355,000 for the three and nine-months ended September 30, 2013, respectively, as compared to the corresponding periods of the previous year. The increase in other income was primarily due to a net realized gain on the sale of the Mahwah Building of approximately $188,000 for the three and nine-months ended September 30, 2013 and the recording of a realized gain of approximately $162,000 on the sale of an investment security during the nine-months ended September 30, 2013.

For the nine-months ended September 30, 2013 and 2012, the Company realized a tax benefit of approximately $585,000 and $249,000, respectively. For the three-months ended September 30, 2013 and 2012, the Company realized a tax benefit of approximately $358,000 and $129,000, respectively. For all periods, the tax benefit was primarily due to a decrease in the Company’s deferred tax asset valuation allowance, partially offset by a provision for state income taxes. The Company analyzes its deferred tax asset on a quarterly basis and adjusts the deferred tax asset valuation allowance based on its rolling five year projection of estimated taxable income.

For the nine-months ended September 30, 2013, the Company realized net income of approximately $2,494,000 or $0.10 income per share on a basic and diluted basis, as compared to net income of approximately $2,166,000 or $0.09 income per share on a basic and diluted basis for the corresponding period of the previous year, an increase of approximately $328,000 or $0.01 per diluted share. For the three-months ended September 30, 2013, the Company realized net income of approximately $1,090,000 or $0.05 income per share on a basic basis or $0.04 income per share on a diluted basis, as compared to net income of approximately $855,000 or $0.04 income per share on a basic basis or $0.03 income per share on a diluted basis for the corresponding period of the previous year, an increase of approximately $235,000, or $0.01 per basic and diluted share. The increases were primarily due to the analysis discussed above.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s working capital has increased by approximately $1,810,000 to approximately $28,326,000 at September 30, 2013, from approximately $26,516,000 at December 31, 2012. At September 30, 2013 and December 31, 2012, the Company had a current ratio of 12.7 to 1 and 6.0 to 1, respectively.

The Company had cash and cash equivalents of approximately $14,170,000 at September 30, 2013, compared to approximately $12,970,000 at December 31, 2012. During the nine-months ended September 30, 2013, the Company repurchased 174,741 shares of its outstanding common stock at a cost of approximately $229,000. The Company believes its current level of cash and cash equivalents is sufficient to fund the current operating, investing and financing activities.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

The Company expects to realize tax benefits in future periods due to the available net operating loss carryforwards resulting from the disposition of a former wholly-owned subsidiary in 2010. Accordingly, future taxable income is expected to be offset by the utilization of operating loss carryforwards and as a result, will increase the Company’s liquidity as cash needed to pay Federal income taxes will be substantially reduced. A majority of the valuation allowance, or $7,012,134, relates to the Company’s foreign net operating loss carryforward which is unlikely to be realized in future periods. The balance of the valuation allowance, or $1,220,353, relates to the Company’s domestic net operating loss carryforward, which is evaluated for realization on a quarterly basis, as well as other timing differences.

The Company realized cash from operating activities of approximately $886,000 for the nine-month period ending September 30, 2013. The primary source of this cash was due to net income from operations for the nine-month period and a decrease in prepaid expenses and other assets, partially offset by an increase in inventory, a decrease in accounts payable, accrued expenses and other current liabilities and an increase in accounts receivable.

The Company realized cash from operating activities of approximately $1,305,000 for the nine-month period ending September 30, 2012. The primary source of this cash was due to net income from operations for the nine-month period, as well as an increase in accounts payable, accrued expenses and other current liabilities, partially offset by an increase in inventory, an increase in accounts receivable and an increase in prepaid expenses and other assets.

The Company has historically been able to turn over its accounts receivable approximately every two months. This average collection period has been sufficient to provide the working capital and liquidity necessary to operate the Company.

The Company’s inventory has increased by approximately $527,000 to approximately $8,817,000 at September 30, 2013, from approximately $8,290,000 at December 31, 2012. The Company has increased its inventory levels in order to meet strong demand for the Company’s network solutions products, as evidenced by its increasing sales order backlog.

On August 1, 2013, the Company closed on the sale of the Mahwah Building. Additionally, the Company repaid the existing mortgage payable on the building with the proceeds of the sale. As part of the terms of the sale, the Company was required to place $350,000 in escrow until certain conditions are met, as determined by the State of New Jersey. The terms of the mortgage required monthly payments of $23,750 applied to both principal and interest at the annual rate of 7.45%.

Net cash provided by investing activities for the nine-months ended September 30, 2013 was approximately $3,204,000. The source of this cash was due to proceeds from the sale of the Mahwah Building and proceeds from the sale of a non-marketable security, offset by capital expenditures. Net cash used for investing activities for the nine-months ended September 30, 2012 was approximately $294,000. The use of these funds was for capital expenditures.

Cash used for financing activities for the nine-months ended September 30, 2013 was approximately $2,889,000. The use of these funds was for the final payment on a mortgage note, the acquisition of treasury stock and periodic payments on a capital lease. Cash used for financing activities for the nine-months ended September 30, 2012 was approximately $638,000. The use of these funds was for the acquisition of treasury stock and periodic payments on a mortgage note.

The Company maintains a line of credit with its investment bank. The credit facility provides borrowing availability of up to 100% of the Company’s money market account balance and 99% of the Company’s short-term investment securities (U.S. Treasury bills) and, under the terms and conditions of the loan agreement, the facility is fully secured by our money fund account and short-term investment holdings held with the bank. Advances under the facility will bear interest at a variable rate equal to the London InterBank Offered Rate (“LIBOR”) in effect at time of borrowing. Additionally, there is no annual fee and any amount outstanding under the loan facility may be paid at any time in whole or in part without penalty. As of September 30, 2013, the Company had no borrowings outstanding under the facility and approximately $4,500,000 of borrowing availability.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

The Company actively pursues strategic opportunities including potential acquisitions, mergers, divestitures or other activities which may require the Company to use part or all of its cash reserves, enter into credit arrangements or issue shares of its common stock. Such activities may affect the Company’s liquidity in future periods.

On August 1, 2013, the Company was awarded a contract with the Federal Aviation Administration to supply RF Peak Power Meters in support of the Common Route Surveillance Radar (“CARSR”) installations. The total order value of the product to be sold under the contract is approximately $1,100,000 and a considerable portion of the order is expected to be realized over fiscal years 2013 and 2014.

The Company believes that its financial resources from working capital are adequate to meet its current needs. However, should current global economic conditions deteriorate, additional working capital funding may be required which may be difficult to obtain due to restrictive credit markets.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements.

INFLATION AND SEASONALITY

The Company does not anticipate that inflation will significantly impact its business or its results of operations nor does it believe that its business is seasonal.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4 - 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, as amended. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be included in our Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, relating to Wireless Telecom Group, Inc., including our consolidated subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared. 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) Changes in Internal Controls over Financial Reporting

In connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Securities Act of 1934, as amended, there was no change identified in our internal control over financial reporting that occurred as of the end of the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None.

Item 1A. RISK FACTORS

Not applicable.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The Company did not repurchase shares under its stock repurchase program during the quarter ended September 30, 2013. The maximum number of shares that may yet be repurchased under the plan is 1,222,098.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS

Exhibit No.		Description

10.1		Form of Stock Option Agreement under the Company’s 2012 Incentive Compensation Plan

31.1		Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (Principal Executive Officer)

31.2		Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (Principal Financial Officer)

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (Principal Executive Officer)

32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (Principal Financial Officer)

101		The following financial statements from Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, filed on November 14, 2013, formatted in Extensible Business Reporting Language (XBRL): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of operations, (iii) condensed consolidated statements of cash flows, (iv) condensed consolidated statement of shareholders’ equity, and (v) the notes to interim condensed consolidated financial statements. (1)

(1)	As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

SIGNATURES

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

	WIRELESS TELECOM GROUP, INC.
	(Registrant)

Date: November 14, 2013	/S/ Paul Genova
	Paul Genova
	Chief Executive Officer

Date: November 14, 2013	/S/ Robert Censullo
	Robert Censullo
	Chief Financial Officer

EXHIBIT LIST

Exhibit No.		Description

10.1		Form of Stock Option Agreement under the Company’s 2012 Incentive Compensation Plan

31.1		Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (Principal Executive Officer)

31.2		Certification Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (Principal Financial Officer)

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (Principal Executive Officer)

32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (Principal Financial Officer)

101		The following financial statements from Wireless Telecom Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, filed on November 14, 2013, formatted in Extensible Business Reporting Language (XBRL): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of operations, (iii) condensed consolidated statements of cash flows, (iv) condensed consolidated statement of shareholders’ equity, and (v) the notes to interim condensed consolidated financial statements. (1)

(1)	As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

Exhibit 10.1

STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (this “ Agreement ”) is made effective this ____ day of ______________, ________ (the “ Date of Grant ”) by and between Wireless Telecom Group, Inc. , a New Jersey corporation (the “ Company ”), and ________________ (the “ Grantee ”).

WHEREAS , in contemplation of the Grantee’s service to the Company, the Company desires to grant to the Grantee an option to purchase shares of common stock of the Company (the “ Shares ”).

NOW, THEREFORE , the parties to this Agreement, intending to be legally bound hereby, agree as follows:

1. Grant of Option . Subject to the terms and conditions set forth in this Agreement, the Company hereby grants to the Grantee a stock option (the “Option” ) to purchase Shares at an exercise price of $________ per Share (the “ Exercise Price ”) in accordance with, and subject to, the 2012 Plan (as defined below). The Option shall become exercisable according to Paragraph 2 below. The Option hereby granted is an incentive stock option within the meaning of Section 422 of the Code. To the extent the Option fails to qualify as an incentive stock option because it exceeds the $100,000 limit of Section 422 of the Code it shall be a non-qualified stock option as provided in applicable Treasury regulations.

2. Exercisability of Option .

(a) General . The Option shall become exercisable in the manner provided below, if the Grantee is Employed by the Employer (as defined in Paragraph 9) on the applicable date. For this purpose, the term “Shares” refers to the number of shares of common stock of the Company (the “Company Stock” ) underlying the Option that vests in the manner described under Vest Type and Vesting Requirements. The term “ Vest Type ” describes how the Option covering the Shares vest. The term “ Full Vest Date ” [describes the date on which that portion of the option covering the shares set forth in the “Shares” column will be fully vested] [summarizes the] vesting requirements further described in Paragraph 2(b) below.

Shares

Vest Type

Full Vest Date

(b) Vesting Requirements . The Option shall vest [in accordance with the schedule set forth above. The exercisability of the Option is cumulative, but shall not exceed one hundred percent (100%) of the Shares subject to the Option. If the foregoing schedule would produce fractional Shares, the number of Shares for which the Option becomes exercisable shall be rounded down to the nearest whole Share] [in full on the date that the Board of Directors of the Company (the “ Board ”) shall determine that the Company has achieved the following milestones with respect to the same annual period: [insert applicable milestones]. The Company agrees that the Board shall act promptly following the completion of the audited financial statements with respect to each fiscal year to determine whether or not the milestones described above have been achieved.

(c) Adjustments to Price per Share and/or Number of Shares . If there is any change in the number or kind of shares of common stock of the Company Stock outstanding (i) by reason of a stock dividend, spin-off, recapitalization, stock split, or combination or exchange of shares; (ii) by reason of a merger, reorganization or consolidation; (iii) by reason of a reclassification or change in par value; or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Company Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reduced as a result of a spin-off or the Company’s payment of an extraordinary dividend or distribution, the price per share of the Option and/or the number of shares issuable upon exercise of the Option shall be appropriately adjusted by the Company to reflect any increase or decrease in the number of, or change in the kind or value of, issued shares of Company Stock to preclude, to the extent practicable, the enlargement or dilution of rights and benefits under the Option; provided, however, that any fractional shares resulting from such adjustment shall be rounded down to the nearest whole share.

[(d) Adjustments to Financial Performance Milestones . In addition to the foregoing, if there is any substantial reduction in the Company’s earning potential (i) by reason of a merger, reorganization or consolidation; (ii) by reason of a sale of one or more subsidiary; (iii) by reason of a sale of the assets, or a substantial portion of the assets, associated with one or more product lines; or (iv) by reason of any other extraordinary or unusual event, each of the financial performance milestones under this Option may be appropriately adjusted by the Committee (as defined below) to reflect such reduction in earning potential.] Furthermore, the Committee shall be entitled to make any other adjustments in accordance with the terms of the 2012 Plan when evaluating the Company’s achievement of the foregoing milestones, including adjustments for unusual or nonrecurring events and for items that are not under the control of management.

[(e)] Adjustments Binding; Section 162(m) . Any adjustments determined in accordance with this Section 2 shall be final, binding, and conclusive. If the Option is intended to qualify as “performance-based compensation” under Section 162(m) of the Code, such adjustment determinations shall be made within the time prescribed by, and otherwise in compliance with, Section 162(m) of the Code.

3. Term of Option .

(a) The Option shall have a term of ten (10) years from the Date of Grant and shall terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to the provisions of this Agreement.

(b) Unless a later termination date is provided for in a Company-sponsored plan, policy or arrangement, or any agreement to which the Company is a party (as provided in Paragraph 6 of this Agreement), the Option shall automatically terminate upon the happening of the first of the following events:

(i) The expiration of the 90-day period after the Grantee ceases to be Employed by the Employer, if the termination is for any reason other than Disability (as defined in Paragraph 9), death or Cause (as defined in Paragraph 9).

(ii) The expiration of the one (1) year period after the Grantee ceases to be Employed by the Employer on account of the Grantee’s Disability.

(iii) The expiration of the one (1) year period after the Grantee ceases to be Employed by the Employer, if the Grantee dies (x) while Employed by the Employer or (y) within 90 days after the Grantee ceases to be so employed or provide such services on account of a termination described in subparagraph (i) above.

(iv) The date on which the Grantee ceases to be Employed by the Employer on account of a termination by the Employer for Cause. In addition, notwithstanding the prior provisions of this Paragraph 3, if the Company determines that the Grantee has engaged in misconduct that constitutes Cause at any time while the Grantee is Employed by the Employer or after the Grantee’s termination of employment or service, the Option shall terminate as of the date on which such misconduct constituting Cause first occurred.

Notwithstanding the foregoing, in no event may the Option be exercised after the date that is immediately following the 10th anniversary of the Date of Grant. If the Option is not exercisable at the time the Grantee ceases to be Employed by the Employer it shall immediately terminate.

4. Exercise Procedures .

(a) Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or all of the exercisable Option by giving the Company written notice of intent to exercise in the manner provided in this Agreement, specifying the number of Shares as to which the Option is to be exercised. At such time as the Compensation Committee of the Board (the “ Committee ”) shall determine, the Grantee shall pay the exercise price (i) in cash, (ii) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, or (iii) by such other method as the Company may approve. The Company may impose from time to time such limitations as it deems appropriate on the use of Shares of the Company to exercise the Option.

(b) The obligation of the Company to deliver Shares upon exercise of the Option shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by the Company, including such actions as Company counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations. The Company may require that the Grantee (or other person exercising the Option after the Grantee’s death) represent that the Grantee is purchasing Shares for the Grantee’s own account and not with a view to or for sale in connection with any distribution of the Shares, or such other representation as the Company deems appropriate.

(c) All obligations of the Company under this Agreement shall be subject to the rights of the Company to withhold amounts required to be withheld for any taxes, if applicable. Subject to Committee approval, the Grantee may elect, in a form and manner prescribed by the Company, to satisfy any tax withholding obligation of the Employer with respect to the Option by having Shares withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities.

5. Restrictions on Exercise . Except as the Company may otherwise permit, only the Grantee may exercise the Option during the Grantee’s lifetime and, after the Grantee’s death, the Option shall be exercisable solely by the legal representatives of the Grantee, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this Agreement.

6. Termination of Employment, Disability, or Death .

(a) Except as provided below, an Option may only be exercised while the Grantee is Employed by the Employer. In the event that the Grantee ceases to be Employed by the Employer for any reason other than Disability, death, termination for Cause, or as set forth in subparagraph (e) below, any Option which is otherwise exercisable by the Grantee shall terminate unless exercised within 90 days after the date on which the Grantee ceases to be Employed by the Employer (or within such other period of time as may be specified by the Company), but in any event no later than the date of expiration of the Option term. Except as otherwise provided, any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be Employed by the Employer shall terminate as of such date.

(b) In the event the Grantee ceases to be Employed by the Employer on account of a termination by the Employer for Cause, any Option held by the Grantee shall terminate as of the date on which the Grantee ceases to be Employed by the Employer or the date on which such Option would otherwise expire, if earlier. In addition, notwithstanding any other provisions of this Paragraph 6, if the Company determines that the Grantee has engaged in misconduct that constitutes Cause at any time while the Grantee is Employed by the Employer or after the Grantee’s termination of employment, any Option held by the Grantee shall terminate as of the date on which such misconduct constituting Cause first occurred, or the date on which such Option would otherwise expire, if earlier. Upon any exercise of an Option, the Company may withhold delivery of share certificates pending resolution of an inquiry that could lead to a finding resulting in a forfeiture.

(c) In the event the Grantee ceases to be Employed by the Employer because the Grantee is Disabled, any Option which is otherwise exercisable by the Grantee shall terminate unless exercised within one (1) year after the date on which the Grantee ceases to be Employed by the Employer (or within such other period of time as may be specified by the Company), but in any event no later than the date of expiration of the Option term. Except as otherwise provided, any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be Employed by the Employer shall terminate as of such date.

(d) If the Grantee dies while Employed by the Employer, all of the unexercised outstanding Options of the Grantee shall become immediately exercisable and remain exercisable for a period of one (1) year from his date of death, but in no event later than the date of expiration of the Option term. If the Grantee dies within 90 days after the date on which the Grantee ceases to be Employed by the Employer on account of a termination specified in subparagraph (a) above (or within such other period of time as may be specified by the Company), any Option that is otherwise exercisable by the Grantee shall terminate unless exercised within one (1) year after the date on which the Grantee ceases to be Employed by the Employer (or within such other period of time as may be specified), but in any event no later than the date of expiration of the Option term. Except as otherwise provided, any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be Employed by the Employer shall terminate as of such date.

(e) Notwithstanding anything herein to the contrary, to the extent that any Company-sponsored plan, policy or arrangement, or any agreement to which the Company is a party provides for a longer exercise period for the Grantee’s Options under applicable circumstances than the exercise period that is provided for in this Paragraph 6 under those circumstances, then the exercise period set forth in such plan, policy, arrangement or agreement applicable to such circumstances shall apply in lieu of the exercise period provided for in this Paragraph 6.

7. Consequences of a Change in Control .

(a) Notice and Acceleration . Upon a Change in Control (as defined in Paragraph 9), if any portion of the Option is outstanding, the Company shall provide the Grantee written notice of such Change in Control. Upon a Change in Control, the Grant shall automatically accelerate and become fully exercisable as permitted by Section 9 of the Wireless Telecom Group, Inc. 2012 Incentive Compensation Plan (the “ 2012 Plan ”).

(b) Assumption of Grant . Upon a Change in Control where the Company is not the surviving corporation (or survives only as a subsidiary of another corporation), unless otherwise determined, all outstanding Options that are not exercised shall be assumed by, or replaced with comparable options by, the surviving corporation (or a parent or subsidiary of the surviving corporation).

8. Requirements for Issuance or Transfer of Shares .

(a) Limitations on Issuance or Transfer of Shares . No Company Stock shall be issued or transferred in connection with the Option under this Agreement unless and until all legal requirements applicable to the issuance or transfer of such Company Stock have been complied with. This Grant made shall be conditioned on the Grantee’s undertaking in writing to comply with such restrictions on his or her subsequent disposition of such shares of Company Stock, and certificates representing such shares may include a legend to reflect any such restrictions. Certificates representing shares of Company Stock issued or transferred under this Agreement will be subject to such stop-transfer orders and other restrictions as may be required by, or appropriate under, applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon.

(b) Lock-Up Period . If so requested by the Company or any representative of the underwriters (the “ Managing Underwriter ”) in connection with any underwritten offering of securities of the Company under the Securities Act of 1933, as amended (the “Securities Act”), the Grantee (including any successor or assigns) shall not sell or otherwise transfer any shares or other securities of the Company during the 30-day period preceding and the 180-day period following the effective date of a registration statement of the Company filed under the Securities Act for such underwriting (or such shorter period as may be requested by the Managing Underwriter and agreed to by the Company) (the “ Market Standoff Period ”). The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

9. Definitions .

[“Board” shall mean the Board of Directors of the Company.]

[ (a) ] “ Cause ” shall have the meaning set forth in Section 2(f) of the 2012 Plan.

[ (b) ] “ Change in Control ” shall have the meaning set forth in Section 9(b) of the 2012 Plan.

[ (c) ] “ Code ” shall have the meaning set forth in Section 2(h) of the 2012 Plan.

[ (d) ] “ Disability ” shall mean the Grantee’s becoming disabled within the meaning of the Employer’s long-term disability plan applicable to the Grantee, as determined in the sole discretion of the Committee or its delegate.

[ (e) ] “ Employed by the Employer ” shall mean employment as an employee of the Employer (so that, for purposes of exercising Options, the Grantee shall not be considered to have terminated employment until the Grantee ceases to be an employee of the Employer).

[ (f) ] ” Employer ” shall mean the Company and its parent and subsidiary corporations or other entities, as determined by the Board.

[ (g) ] “ Fair Market Value ” per Share, or for the Company Stock, shall be determined as follows: (i) if the principal trading market for the Company Stock is a national securities, the last reported sale price thereof on the relevant date or, if there were no trades on that date, the latest preceding date upon which a sale was reported; or (ii) if the Company Stock is not principally traded on such exchange or market, the mean between the last reported “bid” and “asked” prices of Company Stock on the relevant date, as reported on Nasdaq or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable and as the Committee determines. If the Company Stock is not publicly traded or, if publicly traded, is not subject to reported transactions or “bid” or “asked” quotations as set forth above, the Fair Market Value per share shall be as determined by the Committee.

10. Administration . The Committee shall have the authority to interpret and construe the Option pursuant to the terms of this Agreement, and its decisions shall be conclusive as to any questions arising hereunder.

11. Amendment of Agreement . This Agreement may only be modified or amended in a writing signed by both parties.

12. Waiver . Either party’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted both parties herein are cumulative and shall not constitute a waiver of either party’s right to assert all other legal remedies available to it under the circumstances.

13. Further Assurances . The Grantee agrees upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement.

14. No Employment or Other Rights . The grant of the Option hereunder shall not confer upon the Grantee any right to be retained by, or to continue in, the employ of the Employer.

15. No Shareholder Rights . Neither the Grantee, nor any person entitled to exercise the Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and privileges of a shareholder with respect to the Shares subject to the Option, until certificates for Shares have been issued upon the exercise of the Option.

16. Assignment and Transfers . Except as the Committee may otherwise permit, the rights and interests of the Grantee under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, in the event of the death of the Grantee, by will or by the laws of descent and distribution. In the event of any attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company may terminate the Option by notice to the Grantee, and the Option and all rights hereunder shall thereupon become null and void. The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries and affiliates. This Agreement may be assigned by the Company without the Grantee’s consent.

17. Compliance with Law . The exercise of Options and the obligations of the Company to issue or transfer shares of Company Stock under the Grant shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. The

Company may revoke the Grant if it is contrary to law or modify the Grant to bring it into compliance with any valid and mandatory government regulation.

18. Applicable Law . The validity, construction, interpretation and effect of this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New Jersey, without giving effect to the conflicts of laws provisions thereof.

19. Notice . Any notice to the Company provided for in this Agreement shall be addressed to the Company in care of the Committee at 25 Eastmans Road, Parsippany, New Jersey 07054, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Employer, or to such other address as the Grantee may designate to the Employer in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

20. Headings . Paragraph headings are for reference only. In the event of a conflict between a title and the content of a Paragraph, the content of the Paragraph shall control.

21. Counterparts . This Agreement may be executed, including execution by facsimile signature, in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.

IN WITNESS WHEREOF , the Company has caused its duly authorized officer to execute this Agreement, and the Grantee has executed this Agreement, effective as of the Date of Grant.

	WIRELESS TELECOM GROUP, INC.

	By:

	Name:

	Title:

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of this Agreement. I hereby further agree that all the decisions and determinations of the Committee shall be final and binding.

	Grantee:

	Date:

	Address:

Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul Genova, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Wireless Telecom Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 14, 2013

	/s/ Paul Genova
	Paul Genova
	Chief Executive Officer
	(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert Censullo, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Wireless Telecom Group, Inc.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 14, 2013

	/s/ Robert Censullo
	Robert Censullo
	Chief Financial Officer
	(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Wireless Telecom Group, Inc. (the “Company”) on Form 10-Q for the quarter ending September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Periodic Report”), I, Paul Genova, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Periodic Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

	/s/ Paul Genova
	Paul Genova
	Chief Executive Officer
	November 14, 2013

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Wireless Telecom Group, Inc. (the “Company”) on Form 10-Q for the quarter ending September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Periodic Report”), I, Robert Censullo, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Periodic Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

	/s/ Robert Censullo
	Robert Censullo
	Chief Financial Officer
	November 14, 2013

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.