SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K/A
(Amendment No. 1)

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

OR

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                     

Commission file number 1-11916

WIRELESS TELECOM GROUP, INC.
(Exact name of registrant as specified in its charter)


New Jersey 22-2582295
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
25 Eastmans Road,
Parsippany, New Jersey
07054
(Address of principal executive offices) (Zip Code)
(201) 261-8797
(Registrant's Telephone Number, Including Area Code)

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


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

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

none
(Title of Class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X]

The aggregate market value of Wireless Telecom Group, Inc. Common Stock, $.01 par value, held by non-affiliates computed by reference to the closing price as reported by AMEX on March 24, 2005: $44,281,874

Number of shares of Wireless Telecom Group, Inc. Common Stock, $.01 par value, outstanding as of March 24, 2005: 17,461,301

    




DOCUMENTS INCORPORATED BY REFERENCE


Part IV - Certain exhibits listed in response to Item 15(a)(3) Prior filings made by the Company under the Securities Act of 1933 and the Securities Exchange Act of 1934.



TABLE OF CONTENTS

PART I


    Page
Item 1. Business   4  
Item 2. Properties   8  
Item 3. Legal Proceedings   9  
Item 4. Submission of Matters to a Vote of Security Holders   9  
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   10  
Item 6. Selected Financial Data   11  
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations   12  
Item 7A. Quantitative and Qualitative Disclosures About Market Risk   16  
Item 8. Financial Statements and Supplementary Data   16  
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   16  
Item 9A. Controls and Procedures   16  
Item 9B. Other Information   16  
PART III
Item 10. Directors and Executive Officers of the Registrant   17  
Item 11. Executive Compensation   18  
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   26  
Item 13. Certain Relationships and Related Transactions   27  
Item 14. Principal Accountant Fees and Services   28  
PART IV
Item 15. Exhibits and Financial Statement Schedules   29  
Signatures   32  

2




EXPLANATORY NOTE

The purpose of this Amendment No. 1 on Form 10-K/A to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004 is to include the information required by Part III of Form 10-K, to include additional disclosure regarding the Company's results of operations for the periods set forth herein and to refile, in electronic format, its charter and bylaws as exhibits. The Company's financial statements and the results of operations for the periods set forth herein have not been amended, modified, restated or otherwise affected in any manner. The specific Items that have been amended are as follows:

PART II


Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations      
PART III
Item 10. Directors and Executive Officers of the Registrant.
Item 11. Executive Compensation.      
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.      
Item 13. Certain Relationships and Related Transactions.      
Item 14. Principal Accountant Fees and Services.      
PART IV
Item 15. Exhibits and Financial Statement Schedules.      

No other Items included in the Company's original Form 10-K have been affected by this amendment. The Company has included all of the Items in this amendment for the convenience of the reader.

3




PART I

Item 1.    Business

Wireless Telecom Group, Inc., a New Jersey corporation (the "Company"), develops, manufactures and markets a wide variety of electronic noise sources, passive microwave components and electronic testing and measuring instruments including power meters, voltmeters and modulation meters. The Company's products have historically been primarily used to test the performance and capability of cellular/PCS and satellite communications systems, and to measure the power of RF and microwave systems. Other applications include radio, radar, wireless local area network (WLAN), digital television and high-speed digital design. The Company's current operations are conducted through the Company d/b/a Noise Com, Inc. ("Noise Com") and its wholly owned subsidiaries Boonton Electronics Corporation ("Boonton") and Microlab/FXR ("Microlab"). The corporate website address is www.wtt.bz.

On December 21, 2001, the Company acquired Microlab/FXR, a private entity, for the net purchase price of $3,800,000 in cash. The acquisition of Microlab/FXR was recorded under the purchase method of accounting for financial statement purposes. Microlab/FXR's Balance Sheets are included in the Consolidated Balance Sheets at December 31, 2004 and 2003. Microlab/FXR's results of operations and cash flows for 2004, 2003 and 2002 are included in the Consolidated Statements of Operations and Cash Flows, and Management's Discussion and Analysis of Operations.

Microlab/FXR designs and manufactures high-power, passive microwave components for the wireless infrastructure market and for other commercial, aerospace and military markets. The Company's products are used in microwave systems, Universal Mobile Telecommunications Systems (UMTS), Personal Communications Service (PCS) and cellular communications base stations, television transmitters, avionic systems and medical electronics. Microlab/FXR is one of the leaders in serving the needs of the in-building distributed antenna system market, which facilitates seamless wireless coverage throughout the insides of buildings and building complexes.

On July 7, 2000, a newly formed, wholly-owned subsidiary of the Company, WTT Acquisition Corp., merged with and into Boonton, a public entity. Each share of Boonton common stock was converted into .79 shares of the Company's common stock with aggregated consideration totaling 1,885,713 shares of Wireless common stock. The merger was accounted for as a pooling of interests and accordingly, all periods prior to the merger were restated to include the results of operations, financial position and cash flows of Boonton.

Market

Since the Company's incorporation in the State of New Jersey in 1985, it has been primarily engaged in supplying noise source products and electronic testing and measurement instruments to various customers. Approximately 75% of the Company's sales in fiscal 2004 were derived from commercial applications. The remaining sales (approximately 25%) were comprised of sales made to the United States Government (particularly the armed forces) and prime defense contractors.

Products

Noise source products are primarily used as a method of testing to determine if sophisticated communications systems are capable of receiving the information being transmitted. The widest application for the Company's noise source products are as a reference standard in test instruments which measure unwanted noise and interference in devices and components utilized in a variety of communications equipment.

This is accomplished by comparing a noise source with known characteristics to the unwanted noise found in the communications system being tested. By generating a random noise signal, in combination with a live transmission signal, a noise generator simulates real world signals and allows the manufacturer to determine if its product is performing to specifications. Noise source testing is often more cost-efficient, faster and more accurate than alternative conventional methods using signal generators.

4




Coupled with other electronic devices, noise generators are also an effective means of jamming, blocking and disturbing enemy radar and other communications, as well as insulating and protecting friendly communications. In the jamming mode, the Company's noise source products block out or disrupt unwanted radar and radio transmissions generally without being detected.

The Company's noise source products are used in radar systems as part of built-in test equipment to continuously monitor the radar receiver and in satellite communications where the use of back-up receivers are becoming more common as the demand for communication availability and reliability is increasing. Testing by the Company's noise source products assures that the back-up receiver is always functional and ready should the communication using the first receiver fail. The Company's noise source products can test satellite communication receivers for video, telephone and data communications.

The Company also offers a line of broadband test equipment serving the Cable Television and Cable Modem industries. Test instruments from the broadband product line are measurement solutions for CATV equipment, Data-Over-Cable ("DOCSIS") and Digital TV.

The Company's noise source products range from relatively simple items with no control mechanisms or auxiliary components to complex, automated components containing computerized or microprocessor based controls.

The Company, through its Boonton Electronics subsidiary, designs and produces electronic testing and measuring instruments including power meters, voltmeters, capacitance meters, audio and modulation meters and VXI products. These products measure the power of RF and microwave systems used by the military and commercial sectors. Further, the Company's products are also used to test terrestrial and satellite communications, radar, telemetry and personal communication products. Recent models are microprocessor controlled and are often used in computerized automatic testing systems. Certain power meter products are designed for measuring signals based on wideband modulation formats, allowing a variety of measurements to be made, including maximum power, peak power, average power and minimum power.

The Company, through its Microlab/FXR subsidiary, designs and manufactures high-power, passive microwave components for the wireless infrastructure market and for other commercial, aerospace and military markets. The Company's products are used in microwave systems, UMTS, PCS and cellular communications base stations, television transmitters, avionic systems and medical electronics. These types of products serve the needs of the in-building distributed antenna systems market, which facilitates seamless wireless coverage throughout the insides of buildings and building complexes.

The Company's products come in various sizes, styles and models with varying degrees of capabilities and 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 operating from an external site, in the factory or in the field. Prices of products range from approximately $100 to $75,000 per unit, with most sales occurring between $2,000 and $10,000 per unit.

The Company's products have extended useful lives and the Company provides for its noise and power products, recalibration services to ensure their accuracy, for a fee, to its domestic and international customers, and also calibrates test equipment manufactured by others. Such services accounted for approximately 4% of fiscal 2004 sales.

Marketing and Sales

As of March 25, 2005, the Company's in-house marketing and sales force consisted of fourteen individuals. The Company promotes the sale of its products to customers and manufacturers' representatives through its product literature, publication of articles, presentations at technical conferences, direct mailings, trade advertisements and trade show exhibitions. The Company believes that extensive advertising is a major factor in generating in-house sales.

The Company's products are sold globally through its in-house sales people and by over eighty non-exclusive manufacturers' representatives. Generally, manufacturers' representatives do not stock

5




inventories of the Company's products. Manufacturers' representatives accounted for an aggregate of 72% and 62% of the Company's sales for the years ended December 31, 2004 and 2003, respectively. For the year ended December 31, 2004, one representative accounted for more that 10% of total sales. In 2003, no representative accounted for more than 10% of total sales. The Company does not believe that, although there can be no assurance, the loss of any or all of its representatives would have a material adverse affect on its business.

The Company's relationship with its representatives is usually governed by written contracts that either run for one-year renewable periods terminable by either party on 60 days prior notice or have indefinite lives terminable by either party on 60 days prior notice. The contracts generally provide for exclusive territorial and product representation and prohibit the handling of competing products. The Company continually reviews and assesses the performance of its representatives and makes changes from time to time based on such assessments.

The Company believes that educating its existing and potential customers as to the advantages and applications of its products is a vital factor in its continued success as is its commitment to rapid product introductions and timely revisions to existing products. Management believes that its products offer state-of-the-art performance combined with outstanding customer and technical support. The Company has always placed great emphasis on designing its products to be user-friendly.

Customers

Since its inception in 1985, the Company has sold its products to more than 3,000 customers. The Company currently sells the majority of its products to various commercial users in the communications industry. Other sales are made to large defense contractors, which incorporate the Company's products into their products for sale to the U.S. and foreign governments, multi-national concerns and Fortune 500 companies. In fiscal 2004, approximately 75% of sales were derived from commercial applications. The remaining sales were comprised of government and military applications.

For fiscal 2004, the Company's largest customer accounted for approximately 7% of total sales. The Company's largest customers vary from year to year. Accordingly, while the complete loss of any large customer or substantial reduction of sales to such customers could have a material adverse effect on the Company, the Company has experienced shifts in sales patterns with such large companies in the past without any material adverse effect. There can be no assurance, however, that the Company will not experience future shifts in sales patterns not having a material adverse effect on its business.

Export sales for fiscal 2004 were $7,151,000, or approximately 32% of total sales. These sales were made predominantly to customers in Europe ($3,714,000 or 17% of total sales) and Asia ($2,742,000 or 12% of total sales). In February 1996, the Company established a Foreign Sales Corporation (FSC). The Company receives a federal tax deduction for a portion of its export profits. As a result of foreign trade agreements entered into by the U.S. government, the use of a FSC has been curtailed as of December 31, 2002, and as such, the tax benefits generated by such an entity have been eliminated. The Company, nevertheless, will continue to service its overseas customers.

Research and Development

The Company currently maintains an engineering staff (nineteen individuals as of March 25, 2005) whose duties include the improvement of existing products, modification of products to meet customer needs and the engineering, research and development of new products and applications. Expenses for research and development involve engineering for improvements and development of new products for commercial markets. Such expenditures include the cost of engineering services and engineering support personnel and were approximately $1,946,000 and $2,046,000 for the years ended December 31, 2004 and 2003, respectively.

Competition

The Company competes against many companies, which utilize similar technology to that of the Company, some of which are larger and have substantially greater resources and expertise in financial,

6




technical and marketing areas than the Company. Some of these companies are Agilent Technologies (formerly Hewlett-Packard), IFR, Rhode and Schwarz, Micronetics, Anritsu, Aerial Facilities, M/A Com and Kathrein. The Company competes by having a niche in several product areas where it capitalizes on its expertise in manufacturing products with unique specifications.

The Company designs its products with special attention to making them user-friendly, and constantly re-evaluates its products for the purpose of enhancing and improving them. The Company believes that these efforts, along with its willingness to adapt its products to the particular needs of its customers and its intensive efforts in customer and technical support, are factors that add to the competitiveness of its products.

Backlog

The Company's backlog of firm orders was approximately $5,000,000 at December 31, 2004, compared to approximately $3,900,000 at December 31, 2003. It is anticipated that the majority of the backlog orders will be filled during the current year. The stated backlog is not necessarily indicative of Company sales for any future period nor is a backlog any assurance that the Company will realize a profit from the orders.

Inventory, Supplies and Manufacturing

The Company purchases components, devices and subassemblies from a wide variety of sources. For example, its noise source diodes, a key component in all of its noise source products, are made by third parties in accordance with the Company's designs and specifications. The Company's inventory policy stresses maintaining substantial raw materials in order to lessen its dependency on third party suppliers and to improve its capacity to facilitate production. However, shortages or delays of supplies may, in the future, have a material adverse impact on the Company's operations. No third party supplier accounted for more than 10% of the Company's total inventory purchases for fiscal 2004.

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

The Company primarily produces its products by final and some intermediate assembly, calibration and testing. Testing of products is generally accomplished at the end of the manufacturing process and is performed in-house as are all quality control processes. The Company utilizes modern equipment for the design, engineering, manufacture, assembly and testing of its products.

Warranty and Service

The Company 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. Repairs that are necessitated by misuse of such products or are required outside the warranty period are not covered by the Company's warranty.

In cases of defective products, the customer typically returns them to the Company's facility. The Company's service personnel replace or repair the defective items and ship them back to the customer. Generally, all servicing is done at the Company's plants, and the Company charges its customers a fee for those service items that are not covered by warranty. Noise Com and Microlab/FXR usually do not offer their customers any formal written service contracts. Boonton Electronics offers its customers formal written service contracts for a fee.

Product Liability Coverage

The testing of electronic communications equipment and the accurate transmission of information entail a risk of product liability by customers and others. Claims may be asserted against the Company by end-users of any of the Company's products. The Company has maintained product liability

7




insurance coverage since August 1991. To date, the Company has not received or encountered any formal claims for liability due to a defective or malfunctioning device made by it. However, it is possible that the Company may be subject to such claims in the future and corresponding litigation should one or more of its products fail to perform or meet certain minimum specifications.

Intellectual Property

Proprietary information and know-how are important to the Company's commercial success. The trademark "Boonton" was registered in the United States Patent and Trademark Office. 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-competition 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.

Environmental Protection

The New Jersey Department of Environmental Protection (the "NJDEP") had conducted an investigation in 1982 concerning disposal at a facility in New Jersey previously leased by the Company's Boonton operations. Involved were certain materials formerly used by Boonton's manufacturing operations at that site and the possible effect of such disposal on the aquifer underlying the property. The disposal practices and the use of the materials in question were discontinued in 1978. The Company has cooperated with the NJDEP investigation and has been diligently pursuing the matter in an attempt to resolve it as rapidly as NJDEP operating procedures permit. The above referenced activities were conducted by Boonton prior to the acquisition of that entity in 2000.

The Company and the NJDEP have agreed upon a plan to correct ground water contamination at the site, located in the township of Parsippany-Troy Hills, pursuant to which wells have been installed by the Company. The plan contemplates that the wells will be operated and that soil and water samples will be taken and analyzed until such time, which the Company is unable to predict, that contamination levels are satisfactory to the NJDEP. Expenditures incurred by the Company during the year ended December 31, 2004 in connection with the site amounted to approximately $13,000. The Company estimates that expenditures in this regard, including the costs of operating the wells and taking and analyzing soil and water samples, will amount to approximately $12,000 per annum until the NJDEP determines that testing is complete.

Employees

As of March 25, 2005, the Company had 106 full-time employees, including its officers, 62 of whom are engaged in manufacturing and repair services, 11 in administration and financial control, 19 in engineering and research and development, and 14 in marketing and sales.

None of its employees are covered by a collective bargaining agreement or are represented by a labor union. The Company considers its relationship with its employees to be satisfactory.

The design and manufacture of the Company's products require substantial technical capabilities in many disparate disciplines, from mechanics and computer science to electronics and mathematics. While the Company believes that the capability and experience of its technical employees compares favorably with other similar manufacturers, there can be no assurance that it can retain existing employees or attract and hire the highly capable technical employees it may need in the future on terms deemed favorable to the Company.

Item 2.    Properties

In September 2002, the Company relocated its corporate headquarters and noise generation operations to the 45,700 square foot facility occupied by its Boonton Electronics subsidiary in Hanover Township, Parsippany, New Jersey. The term of this lease agreement is for ten years

8




beginning on October 1, 2001 and ending September 30, 2011. The lease also contains an option to terminate effective September 30, 2006. The lease of the Company's previous headquarters in Paramus, New Jersey was terminated on favorable terms.

The Company leased a 23,100 square foot facility located in Livingston, New Jersey, which was occupied by Microlab/FXR. The original term of the lease was for ten years commencing on March 4, 1996. During the year 2003, the Company exercised an option to cancel the lease as of the last day of February 2004. Additionally, the Company agreed to a separate three-month lease extension through May 31, 2004 and another two-month lease extension through July 31, 2004. As of July 2004, Microlab/FXR relocated its operations to the Hanover Township, Parsippany facility.

The Company also owns a 44,000 square foot facility located in Mahwah, New Jersey. In November 2000, the Company entered into a lease agreement with an unrelated third party for the entire facility. The triple net lease runs through August 1, 2013 and the tenant has an option to purchase the property up through August 1, 2012 during the lease term.

Item 3.    Legal Proceedings

Reference is made to the discussion in Item 1 above regarding an investigation by the NJDEP concerning certain discontinued practices of the Company and their effect on the soil and ground water at a certain facility formerly occupied by the Company. No administrative or judicial proceedings have been commenced in connection with such investigation. The owner of the Parsippany-Troy Hills facility has notified the Company, that if the investigation proves to interfere with the sale of the property, it 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 doubtful that the owner would prevail on any claim due to the fact that such a claim would be barred by the statute of limitations. There are no material legal proceedings known to the Company.

Item 4.    Submission of Matters to a Vote of Security Holders

Not applicable.

9




PART II

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

The Common Stock of the Company has traded on the American Stock Exchange under the name Wireless Telecom Group, Inc. (Symbol: WTT) since September 12, 1994. The following table sets forth the high and low sales prices of the Company's Common Stock for the periods indicated as reported on the American Stock Exchange.


2004 Fiscal Year High Low
1st Quarter $ 3.85   $ 2.70  
2nd Quarter   3.33     2.75  
3rd Quarter   2.92     2.30  
4th Quarter   3.15     2.32  

2003 Fiscal Year
1st Quarter $ 2.07   $ 1.63  
2nd Quarter   2.51     1.93  
3rd Quarter   2.83     2.12  
4th Quarter   3.25     2.23  

On March 24, 2005, the closing price of the Common stock of the Company as reported was $2.57. On March 24, 2005, the Company had 654 stockholders of record.

In May 2001, the Company reinstated a dividend policy. The table below details quarterly dividends declared for the past two years.


  Quarterly Dividends Per Share
  1st 2nd 3rd 4th
2004 $ .03   $ .03   $ .03   $ .03  
2003 $ .02   $ .02   $ .02   $ .03  

On March 18, 2005, the Company declared a cash dividend of $.03 per share. It is the Company's present intention to maintain a quarterly dividend policy.

10




Item 6.   Selected Financial Data

The selected financial data presented below as of December 31, 2004, 2003, 2002, 2001 and 2000 was derived from the Company's financial statements after restatement for the merger with Boonton Electronics Corporation. The Selected Statement of Operations Data and the Selected Per Share Data for 2004, 2003 and 2002 includes the results of Microlab/FXR. The Selected Balance Sheet Data for 2004, 2003, 2002 and 2001 also includes the balances of Microlab/FXR. The information set forth below is qualified in its entirety by reference to, and should be read in conjunction with the financial statements and related notes contained elsewhere in this Form 10-K.


  2004 2003 2002 2001 2000
Selected Statement of
Operations Data:
Net sales $ 22,105,207   $ 19,724,240   $ 20,747,707   $ 19,041,838   $ 18,450,518  
Income from continuing operations before income taxes   2,620,877     2,575,577     2,590,768     3,279,271     3,362,702  
Provision for income taxes   289,400     812,582     823,150     2,062,000     1,231,462  
Net income from continuing operations   2,331,477     1,762,995     1,767,618     1,217,271     2,131,240  
Selected Per Share Data:
Net income from continuing operations per common share — diluted $ .13   $ .10   $ .10   $ .07   $ .11  
Shares used in computation of earnings per share — diluted   17,578,185     17,113,472     17,340,264     18,046,498     19,724,188  
Cash dividends per common share $ .12   $ .09   $ .08   $ .04   $ .00  
Selected Balance Sheet Data:
Working capital $ 23,559,525   $ 23,971,858   $ 23,510,803   $ 23,318,264   $ 27,553,331  
Total assets   35,406,868     33,624,211     32,215,596     32,905,258     37,656,273  
Total liabilities   5,928,036     5,404,159     4,328,638     4,798,158     5,273,235  
Shareholders' equity   29,478,832     28,220,052     27,886,958     28,107,100     32,383,038  

11




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

Introduction

Wireless Telecom Group, Inc., and its operating subsidiaries, Boonton Electronics Corporation and Microlab/FXR (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. 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), digital television and high-speed digital design.

The financial information presented herein includes: (i) Condensed Consolidated Balance Sheets as of December 31, 2004 and as of December 31, 2003 (ii) Condensed Consolidated Statements of Operations for the three years ended December 31, 2004, 2003 and 2002 (iii) Condensed Consolidated Statement of Changes in Shareholders' Equity for the three years ended December 31, 2004, 2003 and 2002 (iv) Condensed Consolidated Statements of Cash Flows for the three years ended December 31, 2004, 2003 and 2002.

Forward-Looking Statements

The statements contained in this Annual Report on Form 10-K that are not historical facts, including, without limitation, the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations," are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as "believes," "expects," "intends," "plans," "may," "will," "should," "anticipates" or "continues" or the negative thereof of other variations thereon or comparable terminology, or by discussions of strategy that 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, continued ability to maintain positive cash flow from results of operations, continued evaluation of goodwill for impairment and the Company's development and production of competitive technologies in our market sector, 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. The Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments.

The following discussion and analysis provides information to which the Company's management believes is relevant to an assessment and understanding of the Company's results of operations and financial condition. This information is presented after restatement for the merger with Boonton and the acquisition of Microlab/FXR on December 21, 2001. Microlab/FXR's Balance Sheets are included in the Condensed Consolidated Balance Sheets at December 31, 2004 and 2003. Microlab/FXR's results of operations and cash flows for the years ended December 31, 2004, 2003 and 2002 are included in the Condensed Consolidated Statements of Operations and Cash Flows, and Management's Discussion and Analysis of Operations. This discussion should be read in conjunction with the financial statements and notes thereto included elsewhere herein.

Critical Accounting Policies

Management's discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these

12




financial statements requires the Company to make estimates and judgments that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses for each period. The following represents a summary of the Company's critical accounting policies, defined as those policies that the Company believes are: (a) the most important to the portrayal of our financial condition and results of operations, and (b) that require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. Estimates and assumptions are made by management to assess the overall likelihood that an accounting estimate or assumption may require adjustment. Management assumptions have been reasonably accurate in the past, and future estimates or assumptions are likely to be calculated on the same basis.

Allowances for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. A key consideration in estimating the allowance for doubtful accounts has been, and will continue to be, our customer's payment history and aging of its accounts receivable balance. For example, based upon our receivable balances, for every additional 1% increase needed in our reserve, we will have to increase our allowance by approximately $32,000 and record a similar charge to operations.

Income Taxes

As part of the process of preparing the consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. The process incorporates an assessment of the current tax exposure together with temporary differences resulting from different treatment of transactions for tax and financial statement purposes. Such differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheet. The recovery of deferred tax assets from future taxable income must be assessed and, to the extent that recovery is not likely, the Company establishes a valuation allowance. Increases in valuation allowances result in the recording of additional tax expense. Further, if the ultimate tax liability differs from the periodic tax provision reflected in the consolidated statements of operations, additional tax expense may be recorded. Our deferred tax asset at December 31, 2004, aggregates approximately $1,085,000. We must continue to be profitable in order to be able to utilize this asset in future periods.

Valuation of Long-Lived Assets

The Company assesses the potential impairment of long-lived tangible and intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Long-lived assets, other than goodwill, are reviewed for impairment not less than annually and whenever events or changes in circumstances indicate that the carrying value of any such asset may be impaired. The Company's management evaluates the recoverability of such assets by estimating future cash flows. If the sum of the undiscounted cash flows, expected to result from the use of the assets and their eventual disposition, is less than the carrying amount of the assets, management will recognize an impairment loss to the extent of the excess of the carrying amount of the assets over the discounted cash flow.

SFAS No. 142 requires that the Company perform an assessment of whether there is an indication that goodwill is impaired on an annual basis unless events or circumstances warrant a more frequent assessment. The impairment assessment involves, among other things, an estimation of the fair value of the reporting unit based on the discounted cash flow methodology. Significant assumptions used in our analysis include annual revenue growth rate from 8% to 13% and a discount rate of approximately 18%. If the assessment indicates that the fair value is less than the carrying value, then the goodwill would be subject to an impairment loss adjustment.

If the impairment review of goodwill, intangible assets, and other long-lived assets differ significantly from actual results, it could have a material adverse effect on the Company's results of operations and financial condition.

13




Results of Operations Year Ended December 31, 2004 Compared to 2003

Net sales for the year ended December 31, 2004 were $22,105,207 as compared to $19,724,240 for the year ended 2003, an increase of $2,380,967 or 12.1%. This increase was primarily the result of increased sales activity in 2004 of the Company's peak power meter instruments - mainly due to upgrades to on-hand inventory, which primarily consisted of improved screen displays utilizing liquid crystal displays "LCD" in place of the cathode ray tube "CRT" screen displays. Additionally, increased sales for certain existing and potential customers, in part, were due to the company's continuous efforts to publicize the advantages and many applications of our products on a commercial basis. We anticipate that these product upgrades will continue to result in increased sales in future years, although there can be no assurance that this will be the case. These product upgrades had no effect on our valuation of existing inventory or the calculation of our reserve for obsolescence.

The Company's gross profit on net sales for the year ended December 31, 2004 was $11,783,291 or 53.3% as compared to $10,259,362 or 52.0% as reported in the previous year. Gross profit margins are higher in 2004 than in 2003 primarily due to higher sales volume, the result of increased demand for the Company's products, and lower manufacturing labor and direct overhead costs. Additionally, the Company completed its consolidation in the third quarter of 2004, thus lowering duplicate overhead costs. Prices have remained relatively stable along with modest increases in manufacturing labor costs. The Company can experience variations in gross profit based upon the mix of product sales as well as variations due to revenue volume and economies of scale. The Company continues to rigidly monitor costs associated with material acquisition, manufacturing and production.

Operating expenses for the year ended December 31, 2004 were $9,461,819 or 42.8% of net sales as compared to $8,125,284 or 41.2% of net sales for the year ended December 31, 2003. For the year ended December 31, 2004 as compared to the prior year, operating expenses increased in dollars by $1,336,535. The increases in amount and percentage are primarily due to a one-time payout to the Company's former CEO, increased efforts in sales and marketing in 2004 including the addition of sales personnel, and an increased marketing campaign.

Interest income increased by $39,119 for the year ended December 31, 2004. This increase was primarily due to increased returns on short-term investments in 2004. Other income decreased by $184,140 for the year ended December 31, 2004. This decrease was primarily due to realized losses in a working capital management account, classified as cash equivalents due to the fact that they were highly liquid and readily convertible to cash, and intended to be liquidated by the Company on a short-term basis.

Net income was $2,331,477 or $.13 per share on a diluted basis, for the year ended December 31, 2004 as compared to $1,762,995 or $.10 per share on a diluted basis, for the year ended December 31, 2003, an increase of $568,482 or 32.2%.

Results of Operations Year Ended December 31, 2003 Compared to 2002

Net sales for the year ended December 31, 2003 were $19,724,240 as compared to $20,747,707 for 2002, a decrease of $1,023,467 or 4.9%. This decrease was primarily due to a slight reduction in demand for the Company's passive microwave components by two foreign customers, one of which temporarily reduced its technology spending and the other no longer purchases microwave components from the company.

The Company's gross profit on net sales for the year ended December 31, 2003 was $10,259,362 or 52.0% as compared to $10,466,842 or 50.4% as reported in the previous year. Gross profit margins are higher in 2003 than in 2002 primarily due to higher gross margins at Noise Com and Boonton. Historically, Noise Com and Boonton have reported higher gross margins due to the nature of their products, active RF and microwave instrumentation, compared to passive devices, which are more competitive in pricing. Management expects these margins to continue in current operations. The Company can experience variations in gross profit based upon the mix of product sales as well as variations due to revenue volume and economies of scale. The Company continues to rigidly monitor costs associated with material acquisition, manufacturing and production.

14




Operating expenses for the year ended December 31, 2003 were $8,125,284 or 41.2% of net sales as compared to $7,678,996 or 37.0% of net sales for the year ended December 31, 2002. For the year ended December 31, 2003 as compared to the prior year, operating expenses increased in dollars by $446,288. The increases in amount and percentage are primarily due to increased efforts in sales and marketing in 2003 including the addition of sales personnel and an increased marketing campaign. The increase was also due to focused spending on the research and development of new products.

Interest income increased by $170,250 for the year ended December 31, 2003. The increase was primarily due to increased returns on short-term investments in 2003. Other income increased by $465,611 for the year ended December 31, 2003. This increase was primarily due to declining interest rates on short-term investments in 2002 and a one-time write down in 2002 of an investment in a non-affiliated company.

Net income was $1,762,995 or $.10 per share on a diluted basis, for the year ended December 31, 2003 as compared to $1,767,618 or $.10 per share on a diluted basis, for the year ended December 31, 2002.

Liquidity and Capital Resources

The Company's working capital has decreased by $412,333 to $23,559,525 at December 31, 2004, from $23,971,858 at December 31, 2003. at December 31, 2004, the Company had a current ratio of 9.6 to 1, and a ratio of debt to net worth of .20 to 1. at December 31, 2003, the Company had a current ratio of 11.9 to 1, and a ratio of debt to net worth of .19 to 1.

Net cash provided from operations has allowed the Company to meet its liquidity requirements, research and development activities and capital expenditures. Operating activities provided $2,281,169 in cash for the year ending December 31, 2004 compared to $2,661,582 and $3,093,762 in cash flows for the years ending December 31, 2003 and 2002, respectively. For 2004, cash provided by operations was primarily due to net income, a decrease in prepaid expenses and other current assets, an increase in income taxes payable, an increase in accounts payable and accrued expenses, and a non-cash adjustment for depreciation and amortization, partially offset by an increase in inventories and a non-cash adjustment for deferred income tax benefit. For 2003, cash provided by operations was primarily due to net income, an increase in income taxes payable, an increase in accounts payable and accrued expenses, and a non-cash adjustment for depreciation and amortization, partially offset by an increase in inventories. For 2002, cash provided by operations was primarily due to net income, a decrease in inventories, a non-cash adjustment for depreciation and amortization and a non-cash adjustment for the write-down on an investment, partially offset by a decrease in accounts payable and accrued expenses and an increase in accounts receivable.

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 is aware of a potential event that might impact its liquidity in 2005, relating to the lease of the space it occupies in Hanover Township, Parsippany, New Jersey. The ten-year lease, which expires in 2011, provides for the Company, at its option, to terminate the lease on September 30, 2006. The exercise of this option requires a one-year advance notice and the payment of $205,500. At this time, the Company does not expect to exercise this option or have to pay this amount.

Net cash used for investing activities for 2004 amounted to $1,650,092 compared to $451,695 and $686,775 for the years ending December 31, 2003 and 2002, respectively. For the year ended December 31, 2004, the primary use of cash was for capital expenditures and for costs associated with a potential acquisition. In 2003 and 2002, the primary use of cash was for capital expenditures.

Net cash used for financing activities was $1,113,026, $1,467,302 and $2,022,447 for the years ending December 31, 2004, 2003 and 2002, respectively. In 2004, the primary use of this cash was for the payment of dividends. In 2003 and 2002, the primary uses of this cash were for the payment of dividends and for the acquisition of treasury stock. Cash outlays were partially offset by proceeds from the exercise of stock options in 2004, 2003 and 2002.

15




For details of dividends paid in the years ended December 31, 2004 and 2003, refer to Item 5. It is the Company's present intention to maintain a quarterly dividend policy.

Table of Contractual Obligations


    Payments Due by Period
  Total Less than
1 Year
1-3 Years 4-5 Years More than
5 Years
Long-Term Debt $ 3,088,880   $ 43,485   $ 97,448   $ 113,301   $ 2,834,646  
Operating Lease   3,061,900     418,917     875,917     929,233     837,833  
Equipment Lease   212,908     53,113     104,496     55,299      
  $ 6,363,688   $ 515,515   $ 1,077,861   $ 1,097,833   $ 3,672,479  

The Company believes that its financial resources from working capital provided by operations are adequate to meet its current needs.

Inflation and Seasonality

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

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 8.   Financial Statements and Supplementary Data

The response to this item is submitted in a separate section of this report.

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

Not Applicable.

Item 9A.  Controls and Procedures

Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Exchange Act) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Item 9B.   Other Information

Not Applicable.

16




PART III

Item 10.    Directors and Executive Officers of the Registrant

Directors and Executive Officers

Set forth below are the names, ages and descriptions of the backgrounds, as of April 27, 2005, of each of the directors and executive officers of the Company.


Name Age Position
Karabet "Gary" Simonyan (1)(2)(3)   69   Chairman of the Board and Interim Chief Executive Officer
Paul Genova (1)   49   President and Chief Financial Officer
Henry L. Bachman (1)(4)   75   Director
John Wilchek (1)(3)(4)   64   Director
Michael Manza (1)(2)(4)   69   Director
Andrew Scelba (1)(2)(3)   73   Director
(1) Director Nominee
(2) Member of Nominating and Governance Committee
(3) Member of Compensation Committee
(4) Member of Audit Committee

Karabet "Gary" Simonyan became a director of the Company in March 2002, the non-executive Chairman of the Board of the Company in March 2004 and interim Chief Executive Officer of the Company in July 2004. Mr. Simonyan founded the Company in 1985. From 1985 until his official retirement from the Company in 1997, Mr. Simonyan served the Company in several capacities, including as Chairman of the Board, Chief Executive Officer and President and as a director. From 1978 until he joined the Company, he worked for Micronetics, Inc., a manufacturer of electronic products, in several capacities, including President. From 1977 through 1978, he served as President of Laser Management Associates, an electronics consulting firm, which he founded. Mr. Simonyan has a Bachelor of Science degree in Applied Physics and has undertaken graduate studies in electrical engineering and in business administration.

Paul Genova has served as the Company's Chief Financial Officer since September 2003 and since March 2004 has served as the Company's President and as a director of the Company. From 1994 to February 2002, Mr. Genova served as Chief Financial Officer of Wilson Logistics, Inc., a supply chain management and industrial services provider, which is a wholly owned subsidiary of Wilson Logistics Holdings, AB Sweden. From 1985 to 1994, Mr. Genova worked with Deloitte & Touche as a Senior Audit Manager, working with various global manufacturing companies. Mr. Genova earned his New York CPA certificate in 1983 and has a Bachelor of Science degree in Accounting from Manhattan College.

Henry L. Bachman became a director of the Company in January 1999 and has a career of over 50 years in the electronics industry. From 1951 to 1996, Mr. Bachman served as Vice President of Hazeltine, a subsidiary of Marconi Aerospace Systems Inc., Advanced Systems Division, on a full-time basis and currently provides consulting services to them on a part-time basis. Mr. Bachman was President of The Institute of Electrical and Electronics Engineers (IEEE). Mr. Bachman has a Bachelor's degree and MS degree from Polytechnic University and completed the Advanced Management Program at Harvard Sloan School of Management.

John Wilchek became a director of the Company in May 1993. He was the founder, President, CEO and Chairman of Zenith Knitting Mills until his retirement in 1991.

Michael Manza became a director of the Company in June 2002. From 1988 until his retirement in 1999, Mr. Manza was a Partner at M.J. Meehan & Co. and served on its Management Committee. From 1979 to 1988, Mr. Manza worked for L.F. Rothschild Unterberg Towbin as a Partner and

17




Managing Director. From 1952 until 1979, Mr. Manza worked for Josephthal & Co. in several capacities, and served as Partner and Manager from 1966 until 1979. Mr. Manza received his Bachelors degree in Business from New York University and his Masters degree in Finance from The New York Institute of Finance.

Andrew Scelba became a director of the Company in January 2003. In 1980, Mr. Scelba established ANR advertising, a technical agency specializing in electronic and telecommunication accounts, servicing both national and international accounts. In 1990, the name was changed to SSD&W and subsequently SGW. Mr. Scelba served as President and later Chairman of the Board. In 2000, Mr. Scelba retired, but continued to consult for the agency. Mr. Scelba has a Bachelor of Science degree in Advertising and a MBA in Marketing from Fairleigh Dickenson University.

Code of Ethics

The Company's board of directors has adopted a Code of Business Conduct and Ethics (the "Code") that outlines the principles of legal and ethical business conduct under which the Company does business. The Code, which is applicable to all directors, employees and officers of the Company, is available at the Company's website at www.wtt.bz. Any substantive amendment or waiver of the Code may be made only by the Company's board of directors or a committee of the board, and will be promptly disclosed to the Company's shareholders on our website. In addition, disclosure of any waiver of the Code will also be made by the filing of a Current Report on Form 8-K with the Securities and Exchange Commission (the "SEC").

Audit Committee Financial Expert

The members of the Audit Committee during the year ended December 31, 2004 were Messrs. Henry L. Bachman, Michael Manza and John Wilchek. The Company's board of directors has determined that each member of the Audit Committee currently meets the independence criteria set forth in the applicable rules of the American Stock Exchange and the SEC for audit committee membership. The board has also determined that all members of the Audit Committee possess the level of financial literacy required by applicable American Stock Exchange and SEC rules. The Company's board of directors has determined that Henry L. Bachman is qualified as an "audit committee financial expert" as defined by the SEC.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's executive officers, directors and persons who beneficially own more than 10% of a registered class of the Company's equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of the Company's common stock and other equity securities of the Company. Such executive officers, directors and greater than 10% beneficial owners are required by regulation to furnish the Company with copies of all Section 16(a) forms filed by such reporting persons with the SEC.

Based solely upon the Company's review of such forms furnished to the Company and written representations from certain reporting persons, the Company believes that its executive officers, directors and greater than 10% shareholders have complied with all applicable filing requirements during the year ended December 31, 2004.

Item 11.    Executive Compensation

The following table sets forth, for the years ended December 31, 2004, 2003 and 2002, the annual and long-term compensation for the Company's Chief Executive Officer and its most highly compensated executive officers whose annual compensation exceeded $100,000 for the fiscal year ended December 31, 2004 (the "Named Executive Officers").

18




Summary Compensation Table


    Annual Compensation Long Term
Compensation
Awards
Securities
Underlying
Options
     
Name and Principal Position Year Salary Bonus Other All other
Compensation
                                 
Karabet Simonyan (1)                                
Interim CEO, Non- 2004         $ 10,250 (2)       $ 7,348 (3)  
Executive Chairman 2003                    
  2002                    
                                 
Terence McCoy (4)                                
Former CEO 2004 $ 48,461             50,000   $ 47,193 (5)  
  2003                    
  2002                    
                                 
Edward J. Garcia (6)                                
Former Chairman of the Board,  CEO and President 2004 $ 43,490               $ 686,777 (7)  
  2003 $ 199,116               $ 9,276 (7)  
  2002 $ 202,208   $ 50,000           $ 8,953 (7)  
                                 
Bent Hessen-Schmidt (8)                                
Former Executive Vice
President of Marketing
2004 $ 176,460               $ 3,250 (9)  
  2003 $ 150,463   $ 1,000           $ 3,000 (9)  
  2002 $ 78,365             75,000   $ 2,750 (9)  
                                 
Paul Genova (10)                                
President and CFO 2004 $ 170,100             80,000   $ 7,595 (11)  
  2003 $ 39,083   $ 1,000-         50,000   $ 153 (11)  
  2002                    
(1) Mr. Simonyan became non-executive Chairman of the Board in March 2004 (upon the resignation of Edward J. Garcia as an executive officer and director of the Company and the termination of his employment with the Company in March 2004) and interim Chief Executive Officer of the Company in July 2004 (upon the mutual termination of Terence McCoy's employment as Chief Executive Officer of the Company and his departure from the Company's board of directors in July 2004).
(2) Represents the amount of compensation received by Mr. Simonyan in 2004 for his service as interim Chief Executive Officer. Mr. Simonyan does not receive a salary for his service as interim Chief Executive Officer, but rather receives nominal compensation for such services at the discretion of the Company's board of directors.
(3) Represents the amount of premiums paid for Mr. Simonyan's health insurance in 2004.
(4) Terence McCoy served as the Company's Chief Executive Officer from April 2004 to July 2004.
(5) Includes: (a) cash payments of approximately $46,154 in the aggregate to Mr. McCoy upon the mutual termination of Mr. McCoy's employment with the Company in July 2004; (b) the total estimated value of the use of an automobile of $904; and (c) the premium paid on group term life insurance and accidental death and dismemberment insurance for Mr. McCoy.
(6) Edward J. Garcia served as the Company's Chairman of the Board, Chief Executive Officer and President from January 1999 to March 2004. From time to time following the termination of Mr. Garcia's employment with the Company, Mr. Garcia has acted as a consultant to the Company on a project basis for fees ranging from $80 to $120 per hour.
(7) Includes: (a) a lump-sum cash payment of $685,000 to Mr. Garcia upon Mr. Garcia's resignation as an executive officer and director of the Company and the termination of his employment with the Company in March 2004; (b) the total

19




estimated value of the use of an automobile of $1,056, $1,783 and $1,710 for fiscal years ended December 31, 2004, 2003 and 2002, respectively; (c) the total premiums paid on group term life insurance and accidental death and dismemberment insurance and the matching contribution of the Wireless Telecom Group, Inc. 401(k) Profit Sharing Plan in 2004, 2003 and 2002; and (d) premiums paid on split dollar life insurance for Mr. Garcia in 2003 and 2002.
(8) Mr. Hessen-Schmidt served as the Company's Executive Vice President of Marketing from June 2002 to November 2004.
(9) Includes the matching contribution of the Wireless Telecom Group, Inc. 401(k) Profit Sharing Plan in 2004, 2003 and 2002 for Mr. Hessen-Schmidt.
(10) Mr. Genova has served as Chief Financial Officer of the Company since September 2003 and has served as the Company's President since March 2004.
(11) Includes the total estimated value of the use of an automobile of $3,535 in 2004, the premium paid on group term life insurance and accidental death and dismemberment insurance in 2004 and 2003, and the matching contribution of the Wireless Telecom Group, Inc. 401(k) Profit Sharing Plan in 2004 for Mr. Genova.

Option Grants In Fiscal Year 2004


Name Number of
Securities
Underlying
Option/SARs
in Fiscal
Granted (#)
Percent of
Total
Options
Granted to
Employees
Year 2004 (1)
Exercise
of Base
Price
($/Sh)
Expiration
Date
Potential Realizable
Value At Assumed
Annual Rates of
Stock Price
Appreciation for
Option Term
5%($) 10%($)
Terence McCoy                                    
Former CEO   50,000     38.5 $ 2.99     5/21/2014-   $ 94,020   $ 238,265  
Paul Genova                                    
President and CFO   30,000     23.0 $ 2.99     5/21/2014   $ 56,412   $ 142,959  
    50,000     38.5 $ 2.75     10/22/2014   $ 86,473   $ 219,140  
(1) Based upon a total of 130,000 options granted to all employees and consultants during fiscal year 2004.

Aggregated Option Exercises In Fiscal Year 2004
And Option Values At December 31, 2004


Name Shares
Acquired
on
Exercise
Number of Securities Underlying
Unexercised Options At Fiscal Year End
Value of Securities
Underlying Unexercised
In-the-Money Options At
Fiscal Year End (2)
Value
Realized (1)
Exercisable Unexercisable Exercisable Unexercisable
Edward J. Garcia                                    
Former Chairman of the Board, CEO and President   100,000   $ 143,490     360,000     60,000   $ 81,225   $ 8,600  
Karabet Simonyan                                    
Interim CEO, Non-
Executive Chairman
  40,000   $ 29,360         40,000       $ 27,760  
Paul Genova                                    
President and CFO           12,500     117,500   $ 5,875   $ 22,125  
Bent Hessen-Schmidt                                    
Former Executive Vice President of Marketing   37,500   $ 32,250                  
(1) Based on the aggregate value realized upon the date of exercise.
(2) Based upon the closing market price of the Company's common stock ($2.84 per share) on December 31, 2004 as reported on the American Stock Exchange minus the exercise price of the in-the-money option, multiplied by the number of shares to which the in-the-money option relates.

20




Employment Contracts, Termination of Employment and Change-in-Control Arrangements

Garcia Employment Agreement

Edward J. Garcia served as the Company's Chairman of the Board, Chief Executive Officer and President from January 1999 to March 2004. The Company and Mr. Garcia were parties to an employment agreement, dated August 1, 1999, as amended in January 2002 (the "Garcia Employment Agreement"). Under the terms of the Garcia Employment Agreement, Mr. Garcia was entitled to receive an annual base salary of $200,000 per year, and an annual bonus, the amount of which was determined by the Company's board of directors in their discretion. The Garcia Employment Agreement provided that, in the event of termination of Mr. Garcia for good reason, without cause, or in the case of Mr. Garcia's non-renewal, as such terms are defined therein, Mr. Garcia would be entitled to receive, among other things:

•  a lump-sum cash payment in an amount equal to three times his annual base salary;
•  benefits coverage for him and his dependents, at the same level and at the same cost as immediately prior to his termination, for a period of three years following termination of his employment with the Company;
•  an award or grant under each incentive plan of the Company (other than stock options or other equity plans) in which Mr. Garcia participated at the time of termination equal to the amount of award or grant that Mr. Garcia would have received had he continued to be employed by the Company for three additional years; and
•  the vesting of all stock options or restricted stock previously granted to Mr. Garcia that would vest or become non-forfeitable in the five-year period following termination of Mr. Garcia's employment with the Company.

The Garcia Employment Agreement also provided that if Mr. Garcia's employment was terminated by reason of disability, he would be entitled to receive, for three years after such termination, his annual base salary less any amounts received under a long term disability plan. If he was terminated by reason of his death, his legal representatives would receive the balance of any remuneration due him. The Garcia Employment Agreement had a term of three years from the date of execution with a renewal period of two years, such renewal to occur automatically unless either the Company or Mr. Garcia terminates the employment agreement upon six months written notice.

Upon Mr. Garcia's resignation as an executive officer and director of the Company and the termination of his employment with the Company in March 2004, Mr. Garcia received a lump-sum cash payment equal to $685,000 under the terms of the Garcia Employment Agreement, and the Garcia Employment Agreement was then terminated. From time to time following the termination of Mr. Garcia's employment with the Company, Mr. Garcia has acted as a consultant to the Company on a project basis for fees ranging from $80 to $120 per hour. There is no written consulting agreement or arrangement between Mr. Garcia and the Company.

McCoy Separation Agreement

Terence McCoy served as the Company's Chief Executive Officer and as a director of the Company from April 2004 to July 2004. In July 2004, Mr. McCoy's employment as an executive officer of the Company was mutually terminated and he departed from the Company's board of directors. In August 2004, the Company and Mr. McCoy entered into a separation agreement and release (the "McCoy Separation Agreement"), pursuant to which the parties agreed that Mr. McCoy would receive the following payments and benefits:

•  an amount equal to three months of his annual base salary (approximately $46,154), paid out over three months beginning August 2004 pursuant to the Company's normal payroll practices, less statutory and other usual or customary payroll deductions; and

21




•  benefits coverage for him and his dependents, at the same level and at the same charges as immediately prior to his termination, at his own expense for a period of up to 18 months following his termination from the Company, or until he becomes eligible for coverage in another group health insurance plan, whichever is sooner, in accordance with applicable federal law.

Under the terms of the McCoy Separation Agreement, Mr. McCoy agreed to keep confidential certain proprietary information relating to the Company and to release and discharge the Company and its affiliates, officers, directors and employees from and against any liabilities, including, without limitation, those arising in any way out of his employment with the Company or the termination of his employment with the Company.

Genova Severance Agreement

The Company and Paul Genova, the President and Chief Financial Officer have executed a severance agreement dated March 29, 2005 (the "Genova Severance Agreement"). The Genova Severance Agreement provides that if Mr. Genova's employment is terminated by the Company "without cause" or if Mr. Genova terminates his employment for "good reason," then Mr. Genova will be entitled to receive (1) at the sole discretion of the Company, either a lump-sum cash payment equal to 75% of his annual base compensation then in effect (which based on Mr. Genova's current annual base compensation, would be approximately $135,000), payable within 30 days after termination, and (2) the continuation of all benefits, to the extent permissible under the applicable benefits programs, in which he currently participates for a period of nine months following his termination. If Mr. Genova obtains subsequent employment during such nine-month period and if he receives benefits through such subsequent employment, the Company may terminate his continuing benefits.

Under the terms of the Genova Severance Agreement,

•  "cause" means the occurrence of any one or more of the following: (i) fraud, embezzlement and/or misappropriation of the Company's (or any successor's) funds; (ii) gross or willful misconduct by Mr. Genova in the performance of his duties; (iii) a material violation of the Company's (or any successor's) Code of Conduct; or (iv) a conviction by, or entry or a plea of guilty or nolo contendre in, a court of competent jurisdiction for any crime which constitutes a felony or act or moral turpitude in the jurisdiction involved; and
•  "good reason" means (i) the assignment to Mr. Genova of duties materially and adversely inconsistent with his position, title, duties, responsibilities or status with the Company as an officer of the Company, (ii) any removal of Mr. Genova from, or any failure to re-elect Mr. Genova as an officer of the Company, (iii) a reduction in Mr. Genova's salary, or (iv) relocation of Mr. Genova's principal place of employment to a place more than 30 miles from its current location, in each case without Mr. Genova's written consent.

Compensation of Directors

Directors who are not employees of the Company are compensated for their services according to a standard arrangement authorized by a resolution of the Company's board of directors. Such directors are paid a retainer of $2,000 for each meeting of the Company's board of directors attended by such director.

Director and Officer Liability

New Jersey's Business Corporation Act permits New Jersey corporations to include in their certificates of incorporation a provision eliminating or limiting the personal liability of directors and officers of the corporation for damages arising from certain breaches of fiduciary duty. The Company's certificate of incorporation, as amended, includes a provision eliminating the personal liability of directors and officers to the Company and its shareholders for damages to the maximum extent permitted by New Jersey law, including exculpation for acts of omissions in violation of directors' and

22




officers' fiduciary duties of care. Under current New Jersey law, liability is not eliminated in the case of a breach of a director's or officer's duty of loyalty (i.e., the duty to refrain from transactions involving improper conflicts of interest) to the Company or its shareholders, the failure to act in good faith, the knowing violation of law or the obtainment of an improper personal benefit. The Company's certificate of incorporation, as amended, does not have an effect on the availability of equitable remedies (such as an injunction or rescissions) for breach of fiduciary duty. However, as a practical matter, equitable remedies may not be available in particular circumstances. The Company also has in effect under a policy effective April 1, 2005 and expiring on April 1, 2006 insurance covering all of its directors and officers against certain liabilities and reimbursing the Company for obligations for which it incurs as a result of its indemnification of such directors, officers and employees.

Compensation Committee Interlocks and Insider Participation in Compensation Decisions

The members of the Compensation Committee are Messrs. Karabet Simonyan, Andrew Scelba and John Wilchek. Since July 2004, Mr. Simonyan has served as interim Chief Executive Officer of the Company. During 2004, none of our executive officers served as a director or member of a compensation committee (or other committee serving an equivalent function) of any other entity, whose executive officers served as a director or member of our Compensation Committee.

REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION

Compensation Philosophy

The Company strives to apply a uniform philosophy regarding compensation for all of its employees, including the members of its senior management. This philosophy is based upon the premise that the achievements of the Company result from the combined and coordinated efforts of all employees working toward common goals and objectives in a competitive, evolving market place.

The goals of the Company's compensation program are to align remuneration with business objectives and performance, and to enable the Company to retain and competitively reward executive officers who contribute to the long-term success of the Company. The Company attempts to pay its executive officers competitively in order that it will be able to retain the most capable people in the industry. Information with respect to levels of compensation being paid by comparable companies is obtained from various publications and surveys. In making executive compensation decisions, the Compensation Committee considered achievement of certain quantitative and qualitative criteria, some of which relate to the Company's performance and others of which relate to the performance of the individual employee. The Company's performance criteria are selected by the Compensation Committee. Awards to executive officers are based on achievement of company and individual performance criteria.

The Compensation Committee will evaluate the Company's compensation policies on an ongoing basis to determine whether they enable the Company to attract, retain and motivate key personnel. To meet these objectives, the Compensation Committee may from time to time increase salaries, award additional stock options or provide other short and long-term incentive compensation to executive officers.

Forms of Compensation

We provide our executive officers with a compensation package consisting of base salary and participation in benefit plans generally available to other employees. In setting total compensation, the Compensation Committee considers individual and company performance, as well as market information regarding compensation paid by other companies in our industry.

Base Salary .    Salaries for our executive officers are initially set based on negotiation with individual executive officers at the time of recruitment and with reference to salaries for comparable positions in the networking industry for individuals of similar education and background to the

23




executive officers being recruited. We also consider the individual's experience, reputation in his or her industry and expected contributions to the Company. Salaries are generally reviewed annually by the Compensation Committee and are subject to increases based on (i) the Compensation Committee's determination that the individual's level of contribution to the Company has increased since his or her salary had last been reviewed and (ii) increases in competitive pay levels.

Long-Term Incentives .    Longer-term incentives are provided through stock options, which reward executives and other employees through the growth in value of our stock. The Compensation Committee believes that employee equity ownership provides a major incentive for employees to build shareholder value and serves to align the interests of employees with those of the Company's shareholders. Grants of stock options to executive officers are based upon each officer's relative position, responsibilities and contributions to the Company, with primary weight given to the executive officers' relative rank and responsibilities. Initial stock option grants designed to recruit an executive officer to join the Company may be based on negotiations with the officer and with reference to historical option grants to existing officers. Stock options are granted at an exercise price equal to the market price of our common stock on the date of grant and will provide value to the executive officers only when the price of our common stock increases over the exercise price.

Employment and Severance Agreements .    As a matter of business philosophy, in general, the Company does not enter into employment agreements with its senior executive officers. They serve at the will of the Company's board of directors. This enables the Company to remove a senior executive officer prior to retirement whenever it is in the best interests of the Company, with full discretion on any severance package (excluding vested benefits). Similarly, the Company does not enter into severance agreements with senior executive officers when they are hired or promoted. If a senior executive officer is removed, the Compensation Committee will exercise its business judgment in approving an appropriate separation arrangement in light of all relevant circumstances including the individual's term of employment, past accomplishments and reasons for separation from the Company.

The only exceptions to this policy we have made recently are for Edward J. Garcia, who served as Chairman of the Board, Chief Executive Officer and President of the Company from January 1999 to March 2004, and most recently for Terence McCoy, who served as Chief Executive Officer of the Company from April 2004 to July 2004, and for Paul Genova, the Company's President and Chief Executive Officer. The Company and Mr. Garcia were parties to the Garcia Employment Agreement, a copy of which was filed with the SEC as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2001. The Company and Mr. McCoy are parties to the McCoy Separation Agreement. The Company and Mr. Genova are parties to the Genova Severance Agreement, a copy of which was filed with the SEC as an exhibit to the Company's Current Report on Form 8-K dated March 29, 2005.

Compliance with Internal Revenue Code Section 162(m) .    Section 162(m) of the Internal Revenue Code of 1986, as amended, restricts deductibility of executive compensation paid to our Chief Executive Officer and each of the four other most highly compensated executive officers holding office at the end of any year to the extent such compensation exceeds $1,000,000 for any of such officers in any year and does not qualify for an exception under Section 162(m) or related regulations. The Compensation Committee's policy is to qualify its executive compensation for deductibility under applicable tax laws to the extent practicable. Income related to stock options granted under the Company's 1995 and 2000 Stock Option Plans generally qualifies for an exemption from these restrictions imposed by Section 162(m). In the future, the Compensation Committee will continue to evaluate the advisability of qualifying its executive compensation for full deductibility.

2004 Compensation

Compensation for the individuals who served as Chief Executive Officer of the Company and other executive officers for fiscal 2004 was set according to the established compensation policy described above.

24




Edward J. Garcia

Mr. Garcia served as the Company's Chairman of the Board, Chief Executive Officer and President from January 1999 to March 2004. In the fiscal year ended December 31, 2004, Mr. Garcia received $43,490 in salary, $0 in bonuses and $1,777 in other compensation for his service as an executive officer of the Company. Upon Mr. Garcia's resignation as an executive officer and director of the Company and the termination of his employment with the Company in March 2004, Mr. Garcia received a lump-sum cash payment equal to $685,000 under the terms of the Garcia Employment Agreement, and the Garcia Employment Agreement was then terminated. We did not grant Mr. Garcia any stock options or any other type of equity-based compensation in 2004. Mr. Garcia's compensation for the 2004 fiscal year was based on qualitative managerial efforts and business ingenuity. From time to time following the termination of Mr. Garcia's employment with the Company, Mr. Garcia has acted as a consultant to the Company on a project basis for fees ranging from $80 to $120 per hour. There is no written consulting agreement or arrangement between Mr. Garcia and the Company.

Terence McCoy

Mr. McCoy served as the Company's Chief Executive Officer from April 2004 to July 2004. In the fiscal year ended December 31, 2004, Mr. McCoy received $48,461 in salary, $0 in bonuses and $1,039 in other compensation for his service as an executive officer of the Company. Based on our evaluation of his leadership performance and his potential to enhance long-term shareholder value and on our discussions about the appropriate size and terms of the incentive, we granted Mr. McCoy options to purchase 50,000 shares of the Company's common stock, at an exercise price of $2.99 per share. This was the only equity-based compensation granted to Mr. McCoy in 2004. In July 2004, the Company and Mr. McCoy mutually agreed to terminate Mr. McCoy's employment with the Company, and Mr. McCoy departed from the Company's board of directors. Pursuant to the McCoy Separation Agreement, Mr. McCoy received an amount equal to approximately $46,154, paid in three equal monthly installments beginning in August 2004. Mr. McCoy's compensation for the 2004 fiscal year was based on qualitative managerial efforts and business ingenuity.

Karabet Simonyan

Mr. Simonyan has been serving as the Company's interim Chief Executive Officer since the mutual termination of Mr. McCoy's employment with the Company in July 2004. In the fiscal year ended December 31, 2004, Mr. Simonyan received $10,250 in compensation for his services as interim Chief Executive Officer. Mr. Simonyan does not receive a salary for his service as interim Chief Executive Officer, but rather, the Compensation Committee (with Mr. Simonyan abstaining) determines at its discretion the amount of compensation Mr. Simonyan should receive from time to time for his service in that capacity based upon the nature, scope and level of Mr. Simonyan's responsibilities, his contributions to the Company's financial results, his effectiveness in leading the Company's efforts to increase customer value, productivity, cash flow and revenue growth, and the committee's judgment about whether each particular payment or award would provide an appropriate incentive and reward for performance that sustains and enhances long-term shareholder value. Our decision with respect to Mr. Simonyan's compensation for fiscal year 2004 for his service as interim Chief Executive Officer was made within this framework.

On March 22, 2005, with Mr. Simonyan abstaining, we recommended to the Company's board of directors that the board grant Mr. Simonyan incentive stock options to purchase 100,000 shares of the Company's common stock, at an exercise price of $2.57 per share, representing the closing price of the Company's common stock on that date as reported on the American Stock Exchange. Upon our recommendation, and after deliberation and consideration of factors deemed to be relevant under the circumstances, the Company's board of directors, with Mr. Simonyan abstaining, approved such grant on March 22, 2005. The options will vest over a period of three years from the date of grant, with one third vesting on the first, second and third anniversaries of the date of grant. We believed that this grant of incentive options to Mr. Simonyan was an appropriate incentive for his future contributions

25




to the Company and his commitment to remain on the Company's board of directors following the completion of the Company's proposed acquisition of Willtek Communications GmbH and to serve as non-executive Vice Chairman of the Board.

COMPENSATION COMMITTEE:
Karabet Simonyan
Andrew Scelba
John Wilchek
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth, as of April 20, 2005, the beneficial ownership of the Company's common stock by:

•  each person who is known to the Company to beneficially own 5% or more of the Company's outstanding common stock;
•  each of the Company's directors and executive officers; and
•  all of the Company's executive officers and directors as a group.

Except as otherwise set forth below, the address of each such person is c/o Wireless Telecom Group, Inc., 25 Eastmans Road, Parsippany, New Jersey, 07054. Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or warrants held by that person that are currently exercisable or will become exercisable within 60 days after April 20, 2005 are deemed to be outstanding; however, such shares are not deemed outstanding for purposes of computing the ownership percentage of any other person.


NAME (AND ADDRESS OF BENEFICIAL
OWNER OF MORE THAN 5%) (1)
SHARES
BENEFICIALLY
OWNED (2)
PERCENT
OF CLASS (3)
Beneficial Owners of 5% or More            
FMR Corp. (4)   1,019,900     5.8
82 Devonshire Street            
Boston, MA 02109            
Directors and Executive Officers            
John Wilchek (5)   112,000    
Henry Bachman (6)   81,000    
Karabet "Gary" Simonyan (7)   72,000    
Michael Manza (8)   40,000    
Andrew Scelba (9)   40,000    
Paul Genova (10)   18,500    
All executive officers and directors as a group (6 persons)   363,500     2.1
* Less than 1%.
(1) Except as otherwise set forth in the footnotes below, each named holder has, to the best of our knowledge, sole voting and investment power with respect to the shares indicated.
(2) Includes shares that may be acquired from us within 60 days from April 20, 2005 by any of the named persons upon exercise of any right.
(3) Based upon 17,473,551 shares of common stock outstanding as of April 20, 2005.
(4) Based on information set forth in Schedule 13-G/A, dated December 31, 2004, filed with the SEC on February 14, 2005.
(5) Ownership consists of 92,000 shares of common stock and 20,000 shares of common stock issuable upon the exercise of options exercisable within 60 days of April 20, 2005.

26




(6) Ownership includes 7,000 shares of common stock and 74,000 shares of common stock subject to options currently exercisable or exercisable within 60 days of April 20, 2005.
(7) Ownership includes 72,000 shares of common stock. Excludes 140,000 shares of common stock issuable upon the exercise of options not exercisable within 60 days of April 20, 2005.
(8) Ownership includes 40,000 shares of common stock. Excludes 40,000 shares of common stock issuable upon the exercise of options not exercisable within 60 days of April 20, 2005.
(9) Ownership includes 20,000 shares of common stock and 20,000 shares of common stock subject to options currently exercisable or exercisable within 60 days of April 20, 2005. Excludes 40,000 shares of common stock issuable upon the exercise of options not exercisable within 60 days of April 20, 2005.
(10) Ownership includes 18,500 shares of common stock subject to options currently exercisable or exercisable within 60 days of April 20, 2005. Excludes 111,500 shares of common stock issuable upon the exercise of options not exercisable within 60 days of April 20, 2005.

EQUITY COMPENSATION PLAN INFORMATION

The following table summarizes information, as of December 31, 2004, relating to equity compensation plans of the Company pursuant to which grants of options or other rights to acquire shares may be granted from time to time:


  (a) (b) (c)
Plan Category (1) Number of securities
to be issued upon
exercise of
outstanding options
Weighted average
exercise price of
outstanding options
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
Equity compensation plans approved by security holders   1,744,097   $ 2.52     939,993  
Equity compensation plans not approved by security holders   0     0     0  
Total   1,744,097   $ 2.52     939,993  
(1) These plans include the Company's 1995 and 2000 Stock Option Plans.

Item 13.    Certain Relationships and Related Transactions

In 2004 and 2003, the Company utilized the advertising service of SGW Integrated Marketing Communications. Mr. Andrew Scelba, a director of the Company, served as President and Chairman of the Board of SGW. He retired from this position in 2000 and currently performs consulting services on a limited basis. Total fees paid to SGW in 2004 and 2003 were approximately $49,000 and $59,000, respectively.

As a condition to the completion of the Company's proposed acquisition of Willtek Communications GmbH, Willtek's shareholders and the Company will enter into a shareholders' agreement at the closing of the acquisition. The shareholders' agreement will provide, among other things, that upon the closing of the acquisition, the Company's board of directors will appoint two designees of Investcorp Technology Ventures, L.P., the 80.9% shareholder of Willtek, to serve as members of the Company's board of directors until the next annual meeting of shareholders or until their respective successors are duly elected and qualified. Investcorp has designated Savio W. Tung and Hazem Ben-Gacem, each of whom is a partner of Investcorp, to be appointed to serve as directors on the Company's board commencing at the closing of the acquisition. The shareholders' agreement will provide that Mr. Tung will be designated as Chairman of the Board at the closing of the acquisition. The shareholders' agreement will also provide that for so long as Investcorp's level of beneficial ownership of the Company's common stock continuously equals or exceeds certain percentage thresholds, at each annual or special meeting of the Company's shareholders at which directors are to be elected, Investcorp will be entitled to designate to our nominating committee up to two candidates for nomination for election to our board of directors. These rights will expire at such time as Investcorp owns less than 5% of the issued and outstanding shares of the Company's common stock, subject to a 20-day grace period.

27




Under the terms of an amended loan agreement, dated March 29, 2005 (the "Amended Loan Agreement"), between Investcorp and Willtek, effective at the closing of the acquisition, the Company agreed to guaranty payment of certain outstanding indebtedness of Willtek to Investcorp equal to €3.5 million (approximately $4.6 million), plus accrued but unpaid interest at the rate of 8% per year through the closing date of the acquisition. As a result of the Company's agreement to guaranty payment under the Amended Loan Agreement, after the acquisition is completed, the Company will have a significant business relationship with Investcorp, which will also be the largest single shareholder of the Company immediately following the acquisition (owning approximately 31.4% of the outstanding shares of the Company's common stock on a primary basis).

Item 14.    Principal Accountant Fees and Services

Audit Fees

The aggregate fees billed for professional services and paid for the annual audit and for the review of the Company's financial statements included in the Company's Annual Report on Form 10-K for the years ended December 31, 2004 and 2003 and the Company's Forms 10-Q for the years ended December 31, 2004 and 2003 were approximately $98,896 and $91,604, respectively.

Audit-Related Fees

The aggregate audit-related fees billed for all respective services for the years ended December 31, 2004 and 2003, were approximately $0 and $0, respectively.

Tax Fees

The aggregate tax fees billed for all respective services for the years ended December 31, 2004 and 2003, were approximately $22,000 and $32,904, respectively.

All Other Fees

The aggregate fees billed for all other non-audit services, including fees for acquisition analysis, rendered by the principal accountant for the years ended December 31, 2004 and 2003, were approximately $11,000 and $1,175, respectively.

The Audit Committee has reviewed the non-audit services provided by the principal accountants and determined that the provision of these services during fiscal years 2004 and 2003 are compatible with maintaining the principal accountants independence.

28




PART IV

Item 15.    Exhibits, Financial Statement Schedules

(a)    (1)  Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2004 and 2003
Consolidated Statements of Operations for the Three Years in the Period ended
    December 31, 2004
Consolidated Statements of Changes in Shareholders' Equity for the Three Years in the
    Period ended December 31, 2004
Consolidated Statements of Cash Flows for the Three Years in the Period ended
    December 31, 2004
Notes to Consolidated Financial Statements
(2)  Financial Statement Schedules
Schedule II – Valuation and Qualifying Accounts

All other schedules have been omitted because the required information is included in the financial statements or notes thereto or because they are not required.

(3)   Exhibits

  3.1 Certificate of Incorporation, as amended
  3.2 Amended and Restated By-laws
  3.3 Amendment to the Certificate of Incorporation (2)
  3.4 Amendment to the Certificate of Incorporation (3)
  4.2 Form of Stock Certificate (1)
  10.1 Summary Plan Description of Profit Sharing Plan of the Registrant (1)
  10.2 Incentive Stock Option Plan of the Registrant and related agreement (1)
  10.3 Amendment to Registrant's Incentive Stock Option Plan and related agreement (3)
  10.4 Form of Manufacturers Representative Agreement (1)
  10.5 Lease between the Company and Paramus Parkway Building Associates (4)
  10.6 Asset Purchase Agreement, dated as of January 7, 1999, between the Company and Telecom Analysis Systems, Inc.(5)
  10.7 Non-Competition Agreement, dated March 11, 1999, between the Company and Telecom Analysis Systems, Inc. relating to the Test Equipment Assets (5)
  10.8 Non-Competition Agreement, dated March 11, 1999, between the Company and Telecom Analysis Systems, Inc. relating to the Noise Assets (5)
  10.9 Agreement and Plan of Reorganization dated March 2, 2000 among the Company, WTT Acquisition Corp. and Boonton Electronics Corp.(6)
  10.10 Amendment No. 1 to the Agreement and Plan of Reorganization dated April 28, 2000 among the Company, WTT Acquisition Corp. and Boonton Electronics Corp.(7)
  10.11 Wireless Telecom Group, Inc. 2000 Stock Option Plan (8)
  10.12 Stock Purchase Agreement dated December 21, 2001, by and among the Company, Microlab/FXR and Harry A. Augenblick (9)

29





  10.13 Stock Purchase Agreement made as of December 21, 2001, by and among the Company and Microlab/FXR Employees Stock Ownership Plan (9)
  10.14 Amended Employment Agreement dated as of January 25, 2002, by and among Edward Garcia and the Company (10)
  10.15 Amended and Restated Stock Purchase Agreement, dated as of March 29, 2005, among the Company, Willtek Communications GmbH, Investcorp Technology Ventures, L.P., and Damany Holding GmbH (11)
  10.16 Amended and Restated Loan Agreement, dated March 29, 2005, by and among Investcorp Technology Ventures, L.P., Willtek Communications GmbH and Wireless Telecom Group, Inc. (11)
  10.17* Severance Agreement, dated March 29, 2005, between Wireless Telecom Group, Inc. and Paul Genova
  10.18* Stock option Grant Certificate, granting options to purchase 100,000 shares of common stock, to Karabet "Gary" Simonyan
  11.1* Computation of Per Share Earnings
  14 Code of Ethics (12)
  23.1 Consent of Independent Registered Public Accounting Firm (Lazar Levine & Felix LLP)
  31.1 Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
  31.2 Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
  32.1 Certification pursuant to 18 U.S.C. section 1350
  32.2 Certification pursuant to 18 U.S.C. section 1350
* Previously Filed.
(1) Filed as an exhibit to the Company's Registration Statement on Form S-18 (File No. 33-42468-NY) and incorporated by reference herein.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 1994 and incorporated by reference herein.
(3) Filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 1995 and incorporated by reference herein.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 1996 and incorporated by reference herein.
(5) Filed as an exhibit to the Company's Current Report on Form 8-K, dated March 11, 1999, filed with the Commission on March 26, 1999 and incorporated by reference herein.
(6) Filed as an exhibit to the Current Report on Form 8-K, dated March 2, 2000, filed with the Securities and Exchange Commission on March 8, 2000.
(7) Filed as Annex B to the Company's Registration Statement on Form S-4/A, filed on June 13, 2000 and incorporated by reference herein.
(8) Filed as Annex B to the Definitive Proxy Statement of the Company filed on July 17, 2000 and incorporated by reference herein.
(9) Filed as an exhibit to the Company's Current Report on Form 8-K, dated December 21, 2001, filed with the Commission on January 4, 2002 and incorporated by reference herein.

30




(10) Filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 2001 and incorporated by reference herein.
(11) Filed as an exhibit to the Company's Current Report on Form 8-K, dated March 29, 2005, filed with the Commission on March 29, 2005 and incorporated by reference herein.
(12) Filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2003 and incorporated by reference herein.

31




SIGNATURES

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


  Wireless Telecom Group, Inc.
Date: April 22, 2005 By: /s/ Karabet Simonyan
Karabet Simonyan
Chief Executive Officer

32




INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

WIRELESS TELECOM GROUP, INC.


  Page(s)
Independent Report of Registered Public Accounting Firm   F - 2  
Consolidated Financial Statements:
Balance Sheets as of December 31, 2004 and 2003   F - 3  
Statements of Operations for the Three Years in the Period Ended December 31, 2004   F - 4  
Statement of Changes in Shareholders' Equity for the Three Years in the Period Ended December 31, 2004   F - 5  
Statements of Cash Flows for the Three Years in the Period Ended December 31, 2004   F - 6  
Notes to Consolidated Financial Statements   F - 7  

F-1




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors
Wireless Telecom Group, Inc.
Parsippany, New Jersey

We have audited the accompanying consolidated financial statements of Wireless Telecom Group, Inc. as listed in the index under item 15 in this Form 10-K as well as the financial statement schedule listed in Part IV, Item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Wireless Telecom Group, Inc. as of December 31, 2004 and 2003 and the results of its operations and its cash flows for the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America.


  /s/ LAZAR LEVINE & FELIX LLP
  LAZAR LEVINE & FELIX LLP

New York, New York
March 11, 2005, except
for Note 11, which is dated
March 29, 2005

F-2




CONSOLIDATED BALANCE SHEETS

WIRELESS TELECOM GROUP, INC.

ASSETS


  December 31,
  2004 2003
CURRENT ASSETS:
Cash and cash equivalents $ 15,783,816   $ 16,265,765  
Accounts receivable — net of allowance for doubtful accounts of $190,155 and $175,399 for 2004 and 2003, respectively   3,196,750     3,076,080  
Inventories   6,780,445     5,903,191  
Current portion of deferred tax benefit   198,266     264,880  
Prepaid expenses and other current assets   338,144     665,366  
TOTAL CURRENT ASSETS   26,297,421     26,175,282  
PROPERTY, PLANT AND EQUIPMENT — NET   5,937,788     5,528,931  
OTHER ASSETS:
Goodwill   1,351,392     1,351,392  
Deferred tax benefit   886,741     383,861  
Other assets   933,526     184,745  
TOTAL OTHER ASSETS   3,171,659     1,919,998  
TOTAL ASSETS $ 35,406,868   $ 33,624,211  
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,915,707   $ 1,795,658  
Accrued expenses and other current liabilities   778,704     367,437  
Current portion of mortgage payable   43,485     40,329  
TOTAL CURRENT LIABILITIES   2,737,896     2,203,424  
LONG TERM LIABILITIES:
Mortgage payable   3,045,395     3,088,880  
Deferred rent payable   144,745     111,855  
TOTAL LONG TERM LIABILITIES   3,190,140     3,200,735  
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, 20,511,001 and 19,992,378 shares issued for 2004 and 2003, respectively, 17,461,301 and 16,942,678 shares outstanding for 2004 and 2003, respectively   205,110     199,924  
Additional paid-in capital   14,086,756     13,100,857  
Retained earnings   22,888,395     22,620,700  
Treasury stock, at cost — 3,049,700 shares   (7,701,429   (7,701,429
    29,478,832     28,220,052  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 35,406,868   $ 33,624,211  

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

F-3




CONSOLIDATED STATEMENTS OF OPERATIONS

WIRELESS TELECOM GROUP, INC.


  For the Year Ended December 31,
  2004 2003 2002
NET SALES $ 22,105,207   $ 19,724,240   $ 20,747,707  
COSTS AND EXPENSES:
Cost of sales   10,321,916     9,464,878     10,280,865  
Selling, general and administrative expenses   9,461,819     8,125,284     7,678,996  
Interest (income)   418,017   (378,898   (208,648
Interest expense   235,206     238,133     240,849  
Other (income) expense   (116,594   (300,734   164,877  
TOTAL COSTS AND EXPENSES   19,484,330     17,148,663     18,156,939  
INCOME BEFORE PROVISION FOR INCOME TAXES   2,620,877     2,575,577     2,590,768  
Provision for income taxes   289,400     812,582     823,150  
NET INCOME $ 2,331,477   $ 1,762,995   $ 1,767,618  
NET INCOME PER COMMON SHARE:
Basic $ 0.14   $ 0.10   $ 0.10  
Diluted $ 0.13   $ 0.10   $ 0.10  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic   17,192,728     16,904,036     17,080,648  
Diluted   17,578,185     17,113,472     17,340,264  

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

F-4




CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

WIRELESS TELECOM GROUP, INC.


  Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
at Cost
Total
Balance at December 31, 2001 $ 198,077   $ 12,792,657   $ 21,979,416   $ (6,863,050 $ 28,107,100  
Dividends — $.08 per share           (1,367,701       (1,367,701
Stock options exercised   677     111,932             112,609  
Purchase of treasury stock               (732,668   (732,668
Net income           1,767,618         1,767,618  
Balance at December 31, 2002   198,754     12,904,589     22,379,333     (7,595,718   27,886,958  
Dividends — $.09 per share           (1,521,628       (1,521,628
Stock options exercised   1,170     196,268             197,438  
Purchase of treasury stock               (105,711   (105,711
Net income           1,762,995         1,762,995  
Balance at December 31, 2003   199,924     13,100,857     22,620,700     (7,701,429   28,220,052  
DIVIDENDS — $.12 PER SHARE           (2,063,782       (2,063,782
STOCK OPTIONS EXERCISED   5,186     985,899             991,085  
NET INCOME           2,331,477         2,331,477  
BALANCE AT DECEMBER 31, 2004 $ 205,110   $ 14,086,756   $ 22,888,395   $ (7,701,429 $ 29,478,832  

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

F-5




CONSOLIDATED STATEMENTS OF CASH FLOWS

WIRELESS TELECOM GROUP, INC.


  For the Year Ended December 31,
  2004 2003 2002
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 2,331,477   $ 1,762,995   $ 1,767,618  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization   491,257     497,599     592,611  
Deferred rent   32,890     68,478      
Deferred income (benefit) taxes   (436,266   (155,785   11,971  
Provision for losses on accounts receivable   14,756     (439   11,889  
Write down of investment — other assets           499,000  
Other income           (11,096
Changes in assets and liabilities:
(Increase) decrease in accounts receivable   (135,426   12,343     (232,334
(Increase) decrease in inventory   (877,255   (418,568   831,463  
Decrease (increase) in prepaid expenses and other current assets   328,420     (149,485   46,378  
Increase (decrease) in accounts payable and accrued expenses   531,316     1,044,444     (423,738
(Decrease) increase in income taxes   (164,650   150,650     (218,391
NET CASH PROVIDED BY OPERATING ACTIVITIES   2,281,169     2,661,582     3,093,762  
CASH FLOWS FROM INVESTING ACTIVITIES:
Costs associated with potential acquisition   (787,119        
Purchase of investment — other assets           (16,000
Capital expenditures   (896,913   (450,816   (666,072
Officers' life insurance   33,940     (879   (4,703
NET CASH (USED FOR) INVESTING ACTIVITIES   (1,650,092   (451,695   (686,775
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of mortgage note   (40,329   (37,401   (34,687
Dividends paid   (2,063,782   (1,521,627   (1,367,701
Proceeds from exercise of stock options   991,085     197,437     112,609  
Acquisition of treasury stock       (105,711   (732,668
NET CASH (USED FOR) FINANCING ACTIVITIES   (1,113,026   (1,467,302   (2,022,447
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (481,949