NOTE 3 - ACQUISITION On February 17, 2017, Wireless Telecommunications, Ltd. (the Acquisition Subsidiary), a company incorporated in England and Wales which is a wholly owned subsidiary of Wireless Telecom Group, Inc., completed the acquisition of all of the issued shares in CommAgility a company incorporated in England and Wales (the Acquisition) from CommAgilitys founders. The Acquisition was completed pursuant to the terms of a Share Purchase Agreement, dated February 17, 2017, and entered into by and among the Company, the Acquisition Subsidiary and the founders. The Company paid $11.3 million in cash on acquisition date and issued 3,487,528 shares of newly issued common stock (Consideration Shares) with an acquisition date fair value of $6.0 million. In addition to the acquisition date cash purchase price the sellers were paid an additional $2.5 million in the form of deferred purchase price in installments beginning in March 2017 through January 2019 and were paid an additional purchase price adjustment based on working capital and cash levels of $1.4 million. Lastly, the sellers could have earned an additional purchase price (contingent consideration) if certain financial targets were met for the years ended December 31, 2017 and 2018 (See Note 1). The contingent consideration liability as of December 31, 2018 is $1.4 million and is expected to be paid in the first quarter of 2019. Pursuant to the claw back provision of the Share Purchase Agreement, 2,092,516 of the Consideration Shares were subject to forfeiture and return to the Company if (a) 2017 EBITDA, as defined, generated by CommAgility was less than 2.4 million; or (b) 2018 EBITDA, as defined, generated by CommAgility was less than 2.4 million (in each case as determined by an audit of CommAgility conducted by the accountants of the Acquisition Subsidiary in accordance with the terms of the Share Purchase Agreement). In March 2018 all consideration shares were forfeited as the 2017 EBITDA threshold was not achieved. The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Accounting for acquisitions requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. During the twelve months ended December 31, 2017 the Company recorded measurement period adjustments related to the completion of the valuation of intangible assets, contingent consideration, the contingent asset associated with the equity claw back and deferred taxes. The Company incurred $1.3 million of acquisition-related costs during the twelve months ended December 31, 2017, which is included as part of general and administrative expense in the accompanying Consolidated Statements of Operations and Comprehensive Income/(Loss). In 2017, from the acquisition date of February 17, 2017, CommAgility contributed $9.6 million of net revenue to the Company. Various valuation techniques were used to estimate the fair value of assets acquired and the liabilities assumed which use significant unobservable inputs, or Level 3 inputs as defined by the fair value hierarchy. Using these valuation approaches requires the Company to make significant estimates and assumptions. The following table summarizes the allocation of the purchase consideration to the fair value of assets acquired and liabilities assumed at the date of acquisition including measurement period adjustments (in thousands): Amounts Recognized as of Acquisition Date Cash at close $ 11,318 Equity issued at close 6,000 Completion Cash Adjustment 1,382 Deferred Purchase Price 2,515 Contingent Consideration 754 Total Purchase Price 21,969 Cash 4,567 Accounts Receivable 2,234 Inventory 1,085 Intangible Assets 5,117 Contingent Asset 3,599 Other Assets 168 Fixed Assets 304 Accounts Payable (1,174) Accrued Expenses (417) Deferred Revenue (639) Deferred Tax Liability (835) Other Long Term Liabilities (339) Net Assets Acquired 13,670 Goodwill $ 8,299 Goodwill is calculated as the excess of consideration paid over the net assets acquired and represents synergies, organic growth and other benefits that are expected to arise from integrating CommAgility into our operations. None of the goodwill recorded in this transaction is expected to be tax deductible. The following table summarizes the activity related to Contingent Consideration and Deferred Purchase Price for the twelve months ended December 31, 2017 and December 31, 2018 (in thousands): Contingent Consideration Deferred Purchase Price Balance at December 31, 2016 $ - $ - Fair Value At Acquisition Date 2,700 2,515 Accretion of Interest 73 - Payment - (1,408) Measurement Period Adjustment (1,946) - Fair Value Adjustment (253) - Foreign Currency Translation 56 123 Balance as of December 31, 2017 $ 630 $ 1,230 Accretion of Interest 281 - Payment - (805) Fair Value Adjustment 578 - Foreign Currency Translation (47) - Balance as of December 31, 2018 $ 1,442 $ 425 As of December 31, 2018, $0.4 million of deferred purchase price and $1.4 million of contingent consideration is included in accrued expenses and other current liabilities on the consolidated balance sheet. As of December 31, 2017, $0.8 million of deferred purchase price is included in accrued expenses and other current liabilities on the consolidated balance sheet and $0.6 million and $0.5 million of contingent consideration and deferred purchase price, respectively, is included in other long term liabilities on the consolidated balance sheet. Pro Forma Information (Unaudited) The following unaudited pro forma information presents the Companys operations as if the CommAgility acquisition and related financing activities had occurred on January 1, 2016. The pro forma information includes the following adjustments (i) amortization of acquired definite-lived intangible assets; (ii) interest expense incurred in connection with the Credit Facility (described in further detail in Note 4) used to finance the acquisition of CommAgility; and (iii) inclusion of acquisition-related expenses in the earliest period presented. The 2017 pro forma combined statement of operations is not necessarily indicative of the results of operations as they would have been had the transaction been effected on the assumed date and is not intended to be a projection of future results. Pro-forma results for the year ended December 31, 2017 are presented below (in thousands, except per share amounts): (Unaudited) 2017 Net Revenues $ 48,130 Net loss $ (1,843 ) Basic net loss per share $ (0.09 ) Diluted net loss per share $ (0.09 )