Certain matters discussed in this report constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, including statements which relate to, among other things, expectations of the business environment in which ADDvantage Technologies Group, Inc. (the “Company”, “We”, “Our” or “ADDvantage”) operates, projections of future performance, perceived opportunities in the market and statements regarding our goals and objectives and other similar matters.  The words “estimates”, “projects”, “intends”, “expects”, “anticipates”, “believes”, “plans”, “goals”, “strategy”, “likely”, “may”, “should” and similar expressions often identify forward-looking statements.  These forward-looking statements are found at various places throughout this report and the documents incorporated into it by reference.  These and other statements, which are not historical facts, are hereby identified as “forward-looking statements” for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended.  These statements are subject to a number of risks, uncertainties and developments beyond our control or foresight, including changes in the cable television andwireless telecommunications industries,industry, changes in customer and supplier relationships, technological developments, changes in the economic environment generally, the growth or formation of competitors, changes in governmental regulation or taxation, changes in our personnel, our ability to identify, complete and integrate acquisitions on favorable terms and other such factors.  Our actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in the forward-looking statements.  We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

The Company (through its subsidiaries) provides turn-key wireless infrastructure services for wireless carriers, tower companies and equipment manufacturers, and distributes and services a comprehensive line of electronics and hardware for the telecommunications industry. The Company was incorporated under the laws of Oklahoma in September 1989 as “ADDvantage Media Group, Inc.”  In December 1999, its name was changed to ADDvantage Technologies Group, Inc. In 2019, the Company moved its headquarters from Broken Arrow, Oklahoma to Carrollton, Texas and acquired Fulton Technologies, Inc. (“Fulton”) on January 4, 2019, which established the Company’s Wireless Infrastructure Services segment. The Company’s Telecommunications segment operates through its subsidiaries, Nave Communications Company (“Nave”) and ADDvantage Triton, LLC (“Triton”).

Our wireless infrastructure subsidiary provides services such as wireless macro site development, distributed antenna systems, small cells and project management expertise with national and regional scalability. Fulton's expertise includes site modifications, tower retrofits, including 5G, civil construction, tower erection, utility installation and testing, site acquisition including leasing, zoning and permitting, design and A&E.architect-engineering services.

For our telecommunications subsidiaries, we sell new, surplus-new and refurbished equipment that we purchase in the market as a result of telecommunications system upgrades or overstock supplies.  We maintain one of the industry's largest inventories of new and used equipment, which allows us to expedite delivery of system-critical products to our customers. In addition, we offer our customers decommissioning services for surplus and obsolete equipment, which we in turn process through our recycling program. We continually evaluate new product offerings in the broader telecommunications industry as technology evolves and upgrade our product offerings to stay current with our customer’s technology platforms.

The information contained on our website, or available by hyperlink from our website, is not incorporated into this Form 10-K or other documents we file with, or furnish to, the SEC.  We intend to use our website as a means of

disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.  Such disclosures will be included on our website in the “Investor Relations” section.  Accordingly, investors should monitor such portions of our website, in addition to following our press releases, SEC filings and public conference calls and webcasts.

The Company’s current reportable segments are Wireless Infrastructure Services (“Wireless”) and Telecommunications (“Telco”).   The Cable TV segment was sold on June 30, 2019.  Therefore, the Company has classified the Cable TV segment as discontinued operations (see Note 4 – Discontinued Operations).

We provide turn-key wireless infrastructure services for the four major U.S. wireless carriers, communication tower companies, national integrators, and original equipment manufacturers that support these wireless carriers.  These services primarily consist of the installation and upgrade of technology on cell sites and the construction of new small cells for 5G.

The Telco segment provides quality new and used telecommunication networking equipment, including both central office and customer premise equipment, to its customer base of telecommunications providers, enterprise customers and resellers by utilizing its inventory from a broad range of manufacturers as well as other supply channels.  This segment also offers its customers repair and testing services for telecommunications networking equipment.  In addition, this segment offers its customers decommissioning services for surplus and obsolete equipment, which it in turn processes through its recycling program.partner.

In addition, we offer our customers decommissioning services for surplus and obsolete telecom equipment, which we then process through oura Responsible Recycling (“R2”) -certifiedcertified recycling program.partner.

Revenues attributed to geographic areas are based on the location of the customer.  All of our long-lived assets are located within the United States.

The Wireless segment accounted for 43%32%, 38%, and 41%33% of consolidated revenues for the yearsyear ended December 31, 2022, the transition period of three months ended December 31, 2021, and the year ended September 30, 2020 and 2019,2021, respectively. In 2020,2022, wireless tower and small celltemporary tower services, including the procurement of the requisite materials, represented substantially all of the Wireless segment’s revenues.  In this segment, we market and sell our productsservices to wireless carriers, wireless equipment providers and tower companies.

The Telco segment accounted for 57%68%, 62%, and 58%67% of consolidated revenues for the yearsyear ended December 31, 2022, the transition period of three months ended December 31, 2021, and the year ended September 30, 2020 and 2019,2021, respectively. Sales of new products in 2022 represented 29%16% of revenues and refurbished products represented 66%83%. Repair services, represented less than 1% of Telco sales.  Recyclerecycle sales and other services contributed the remaining 4%1% of Telco segment revenues. In this segment, we market and sell our products to franchise and private MSOs,multiple-system operators,, telecommunication companies, system contractors, other industry resellers, enterprise customers and directly to consumers via on-lineonline sales. Our sales and marketing are predominantly performed by our experienced internal sales and customer service staff, outside sales representatives located in various geographic and strategic areas of the country, and many on-lineonline sales channel platforms such as our own website, Amazon, Walmart, eBay and Newegg.  The majority of our sales activity is generated through customer relationships developed by our sales personnel and executives, referrals from manufacturers we represent, and on-lineonline advertising.

We maintain a wide breadth of new and used products and many times can offer our customers same day shipments.  We believe we carry one of the most diverse inventories of any telecommunication product reseller in the country, and we have access to additional inventory via our various supply channels.  We believe our investment in on-hand inventory, our product supply channels, and our experienced sales and customer service team create a competitive advantage for us.

The Telco segment primarily purchases its used inventory from telecommunication companies and wholesale suppliers that have excess equipment on hand or have upgraded their systems or from other resellers in this industry.

In the Wireless segment, the services that we provide on our customers’ wireless towers are outdoors and can be damaged by storms and power surges. Consequently, we can experience increased demand on certain product offerings during the months between late spring and early fall when severe weather or consistent rain tends to be more prominent than at other times during the year. Winter months are generally slower due to the cold weather conditions, and the inability to access wireless towers during periods of heavy snow and ice.

In the Telco segment, we do not anticipate that quarterly operating results will generally be impacted by seasonal fluctuations, other than normal business fluctuations during the winter holiday season.

For the Wireless segment, we believe our differentiation from other service providers in the marketplace is primarily the following:

The overall telecommunications equipment industry is highly competitive.  We compete with numerous resellers in the marketplace that sell both direct and on-line.online.

For the Telco segment, we believe our differentiation from other resellers includes:

Working capital practices in our business differ by segment. In the Wireless segment, we utilize quick payment accounts receivable programs with our major customers and our bank to decrease the amount of time between project completion and payment. The majority of working capital needs result from the payment of project related costs before invoicing the customer. This includes personnel, subcontractors, equipment rentals and materials.  Although the quick payment programs are in place to accelerate receivable payments, working capital is necessary to complete the jobs and provide the necessary closeout packages required for customer approval. In addition, we also have access to our revolving bank line of credit to meet our working capital needs.

In the Telco segment, working capital centers onwe utilize quick payment accounts receivable programs with our bank to decrease the time between sale of inventory and accounts receivable.collection.  We choose to carry a relatively large volume of inventory due to our on-hand, on-demand business model.  We typically utilize excess cash flows to reinvest in inventory to maintain or

expand our product offerings. The greatest need for working capital occurs when we make bulk purchases of surplus-new and used inventory, or when our OEM suppliers offer additional discounts on large purchases. Our working capital requirements are generally met by cash flows from operations

On March 17, 2022, the Company replaced its $3.0 million credit facility for its Nave and our revolving bank line of credit.

During the year ended December 31, 2022, one wireless customer accounted for 17% of consolidated revenues, and 52% of our Wireless segment revenues. Our top five Wireless customers accounted for 29% of consolidated revenues and 92% of Wireless segment revenues during fiscal year 2022. One Telco customer accounted for 11% of consolidated revenues, and 17% of Telco segment revenues. Our top five Telco customers accounted for 32% of consolidated revenues and 47% of Telco segment revenues during fiscal year 2022.

During the year ended September 30, 2020,2021, though we were not dependent upon a single or few customers to support our consolidated revenues, our Wireless segment realized increased concentration in revenues from our largest customers. A singleone wireless customer AT&T Mobility, accounted for 14%10% of consolidated revenues, and 32%31% of our Wireless segment revenues. Our top five Wireless customers accounted for 33%28% of consolidated revenues and 77%84% of Wireless segment revenues during fiscal year 2020.

Inflation in the United States has been relatively low in recent years and did not have a material impact on our results of operations for the fiscal yearsyear ended December 31, 2022. For the fiscal year ended September 30, 2020 and 2019.2021, component price increases were observed in the fiscal fourth quarter, which negatively impacted our gross margins in the Wireless segment.

At September 30, 2020,December 31, 2022, we had 124147 employees, including 123145 full-time employees.  Management considers its relationships with its employees to be excellent.  Our employees are not unionized, and we are not subject to any collective bargaining agreements.

Each subsidiary leases property for office, warehouse and service center facilities. Our corporate headquarters is located in Carrollton, Texas. Our Wireless Segment leases additional space in Chicago, Illinois, and our Telco Segment has operations in Miami, Florida and Huntsville, Alabama.Florida. We believe that our current facilities are adequate to meet our needs.

The Company has a right-of-use for a buildingsbuilding in Minneapolis, Minnesota and Jessup, Maryland which werewas no longer being used in operations. The MinnesotaMaryland property was subleased as of December 31, 2022 and the Maryland property was partially subleased at September 30, 2020.will end in November, 2023.

From time to time in the ordinary course of business, we are a party to various types of legal proceedings.  We do not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations or cash flows.

The table sets forth the high and low sales prices on the NASDAQ GlobalCapital Market under the symbol “AEY” for the quarterly periods indicated.

At DecemberMarch 15, 2020,2023, we had approximately 5080 shareholders of record and, based on information received from brokers, there were approximately 1,3004,600 beneficial owners of our common stock.

We have not declared or paid any cash dividends on our common stock, and we do not currently anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all future earnings to fund the development and growth of our business. Any future determination relating to our dividend policy will be at the discretion of our board of directors and will depend on our results of operations, financial condition, capital requirements and other factors deemed relevant by our board.

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated historical financial statements and the notes to those statements that appear elsewhere in this report.  Certain statements in the discussion contain forward-looking statements based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions.  Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors.

The Company reports its financial performance based on two external reporting segments: Wireless and Telecommunications.  These reportable segments are described below.

On January 4, 2019, the Company purchased substantially allThe Company's Wireless Segment, which consists entirely of the net assets of Fulton, which comprises the Wireless segment. Fulton, provides turn-key wireless infrastructure services for the four major U.S. wireless carriers, communication tower companies, national

integrators, and original equipment manufacturers that support these wireless carriers.  These services primarily consist of the installation and upgrade of technology on cell sites and the construction of new small cells for 5G.

The Company’s Telco segment sells new and refurbished telecommunications networking equipment, including both central office and customer premise equipment, to its customer base of telecommunications providers, enterprise customers and resellers located primarily in North America. This segment also offers its customers repair and testing services for telecommunications networking equipment. In addition, this segment offers its customers decommissioning services for surplus and obsolete equipment, which it in turn processes through itsa recycling program.partner.

During 2020,2022, Fulton achieved revenues of $21.4$30.8 million.  As part of the 2019 acquisition, we hired and retained the majority of Fulton’s existingFulton has maintained a strong employee base, and we continue to successfully recruit strong industry talent throughout the business to help us implement operational improvements with a focus on improving our quality and project margins.  We also have a large part of our workforce made up of reliable, high quality subcontractors that give us the ability to flex up and down with the changes in workload and to ramp up quickly for new programs. We are seeingexpecting increased opportunitiesactivity in the industry as wireless carriers prepare for the roll out of 5G and the required densification of their networks.  We believe the recent merger news in the industry will present additional opportunities as networks are rationalized and a new carrier potentially expands their network to gain market share.  Our goal is to solidify our processes and project oversight to successfully and profitably take advantage of new growth opportunities as the 5G expansion becomes essential. We believe the initial stages of integration with ADDvantage have been successful and Fulton will continue to provide strong revenue growth and gradually improving margins.

The Telco segment achieved revenues of $66.2 million during 2022. We continue to see efficiencies from the operational restructuring put in place during 2019, which enabled us to focus our core team on sales procurement and recycling opportunities. We are also ramping up our repair activities to take advantage of our new capabilities as we further expand our business lines. Our teams across bothprocurement. Both Nave and Triton have strong experiencegrew over 40% year-over-year in online marketing.2022.

At Triton, our facility is designed to streamline our processes, including inventory management, shipping and receiving and the refurbishment operations. We have developed the internal systems necessary to expand our refurbishment capabilities and new equipment sales by adding additional product lines and manufacturers. We have also increased our focus on the brokerage business and internet sales by expanding our sales channels. We believe that Triton is poised to expand, capturecapturing additional market share and developdeveloping new customers. 

LineOur Nave business experienced significant upside during the year related to the global chip shortage along with expansion of Creditour offerings to both wireless and Notes Payable

Consolidated sales decreased $4.9increased $34.8 million, or 9%56%, to $50.2$97.0 million for 20202022 from $55.1$62.2 million for 2019.2021.  The decreaseincrease in sales was related to $1.6 million in the Wireless segment and $3.4an increase of $24.7 million in the Telco segment mainly attributable to delays in capital spending by our major wireless customers as they transitioned budgets from 4G to 5G, and the decrease inincreased demand for office telecommunicationsrefurbished network equipment resulting from the global chip shortage. Sales for the Wireless segment increased $10.1 million as consumers shifteda result of the 5G network rollout.

Consolidated gross profit increased $11.6 million, or 72%, to work-from-home.$27.8 million for 2022 from $16.1 million for 2021.  Telco gross profit increased $9.3 million and our Wireless segment gross profit increased $2.3 million. The improvement in gross profit was due to strong demand in our Telco segment fueled by global supply issues, along

The income tax benefit from continuing operationsprovision (benefit) was $1.2$8 thousand for 2022 and $(0.1) million for 2020 and $13,000 for 2019,2021, or an effective tax benefit rate of 6.7%1.7% and 0.3%(0.8)%, respectively. The benefitincome tax provision in 2020fiscal 2022 was as athe result of the CARES Act, the Company took advantage of a provision to carry back net operatingState income taxes which were not offset by losses generated in 2018 through 2020 for a period of five years. As a result, the Company’s effective tax rate included anfrom other subsidiaries. The income tax benefit recognized duringin fiscal 2021 was the year ended September 30, 2020 related to tax losses generated during the fiscal year up to the amount that the Company estimates is realizable based upon taxable incomeresult of an increase in the carry back periods. Therefore, as of September

Gross profit increased $0.2was $8.6 million, year over year, and gross margins were 31% andor 28% for the yearsyear ended December 31, 2022 and $6.3 million, or 30%, for the year ended September 30, 20202021. The decrease in the gross profit percentage was the result of new business with a major customer at a lower margin level caused by deploying to new markets and 2019, respectively.related startup costs, and as a result of a couple of non-profitable markets, due to lower volume commitments from some customers, which we have exited.

Operating, selling, general and administrative expenses were $10.2Loss from operations was $4.8 million and $7.9$6.9 million for the years ended December 31, 2022 and September 30, 2020 and 2019. This increase2021, respectively. The decrease is mainly attributable to the inclusion of a full year of expense during 2020 compared to approximately nine months of expense during 2019. During 2019, these expenses included $0.2 million of acquisition costsincrease in connection with the acquisition of Fulton as well as integration expenses of $0.3 million.revenues and improvements in operating efficiencies.

Revenues for the Telco segment were $28.8$66.2 million and $32.2$41.5 million for the years ended December 31, 2022 and September 30, 2020 and 2019,2021, respectively, a decreasean increase of $3.4$24.7 million, or 10%59%. The decrease inincrease was related to increased sales resulted from decreased spending on office telecommunicationsof used and refurbished equipment as workers sheltered-in-place during the COVID-19 pandemic.a result of global supply chain constraints along with expansion of our offerings to both wireless and optical network carriers to support both wireless and broadband connectivity for optical and IP transport.

Gross profit decreased $2.0increased $9.3 million, or 28%95%, to $5.1$19.2 million for the year ended December 31, 2022 compared to $9.9 million for the year ended September 30, 20202021.  Gross margin was 29% and 24% for the years ended December 31, 2022 and September 30, 2021, respectively. Gross margin increased primarily as a result of the segment's increase in revenues coupled with an increase in gross profit percent by 5% due to price elasticity associated with global supply chain issues.

Income from operations was $6.3 million for the year ended December 31, 2022 compared to $7.1a loss of $2.4 million for the year ended September 30, 2021. The increase was attributable to the increase in revenue and the aforementioned improvements.

Loss from operations was $2.3 million and $1.1 million for three months ended December 31, 2021 and 2020, and 2019 respectively. IncludedThe increase is mainly attributable to investment in operating expenseour regional growth strategy associated with anticipated 5G infrastructure build outs.

Adjusted EBITDA is a supplemental, non-GAAP financial measure.  EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization.  Adjusted EBITDA as presented also excludes restructuring charge, stock compensation expense, gain on extinguishment of debt, impairment of intangibles and right of use assets, other income, other expense, interest income and income from equity method investment.  Adjusted EBITDA is presented below because this metric is used by the financial community as a method of measuring our financial performance and of evaluating the market value of companies considered to be in similar businesses.  Since Adjusted EBITDA is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, net earnings as an indicator of operating performance.  Adjusted EBITDA may not be comparable to similarly titled measures employed by other companies.  In addition, Adjusted EBITDA is not necessarily a measure of our ability to fund our cash needs.

We finance our operations through cash flowsCash provided by operations, and our line of credit of up to $4.0 million. During 2020, cash used in operations(used in) operating activities was $3.8 million. We currently have cash of $8.4$2.2 million, $(0.9) million and availability under our bank line of credit of $0.5$(7.5) million for a total liquiditythe year ended December 31, 2022, the transition period of $8.9 million. Cash used in operations duringthree months ended December 31, 2021, and the year ended September 30, 2019 was $4.8 million.2021, respectively. Cash flows from operations in 2022 were positively impacted by net income of $0.5 million, net cash provided by working capital of $30 thousand primarily related to the reduction of receivables associated with our new accounts receivable purchase facilities, an increase in inventory,, and non-cash adjustments of $1.7 million, primarily depreciation, amortization, provision for excess and obsolete inventories, charge for lower of cost or net realizable value inventories, and stock based compensation expenses.

Cash (used in) financing activities consist primarily of repayments on our bank line of credit and payments of $2.6 million on financing lease obligations, partially offset by net proceeds from the note receivable related to the 2019 sale of the Cable Segment.our common stock using our shelf registration and proceeds from stock options exercised. Cash provided by investing(used in) financing activities duringwas $(1.3) million, $0.5 million and $(1.4) million for the year ended December 31, 2022, the transition period of three months ended December 31, 2021, and the year ended September 30, 2019 was $6.6 million, representing primarily cash proceeds from the 2019 sale of the Cable Segment, including sales of real property held in connection with Cable Segment operations

Note 1 to the Consolidated Financial Statements in this Form 10-K for fiscal year 20202022 includes a summary of the significant accounting policies or methods used in the preparation of our Consolidated Financial Statements.  Some of those significant accounting policies or methods require us to make estimates and assumptions that affect the amounts reported by us. We believe the following items require the most significant judgments and often involve complex estimates.

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  We base our estimates and judgments on historical experience, current market conditions, and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results could differ from these estimates under different assumptions or conditions.  The most significant estimates and assumptions are discussed below.

For our Telco segment, our position in the telecommunications industry requires us to carry relatively large inventory quantities relative to annual sales, but it also allows us to realize high overall gross profit margins on our sales.  We market our products primarily to telecommunication providers, telecommunication resellers, and other users of telecommunication equipment who are seeking products for which manufacturers have discontinued production or cannot ship new equipment on a same-day basis as well as providing used products as an alternative to new products from the manufacturer. Carrying these large inventory quantities represents our largest risk.

We are required to make judgments as to future demand requirements from our customers. We regularly review the value of our inventory in detail with consideration given to rapidly changing technology which can significantly affect future customer demand.  For individual inventory items, we may carry inventory quantities that are excessive relative to market potential, or we may not be able to recover our acquisition costs for sales that we do make.  In order to address the risks associated with our investment in inventory, we review inventory quantities on hand and reduce the carrying value when the loss of usefulness of an item or other factors, such as obsolete and excess inventories, indicate that cost will not be recovered when an item is sold.

Our inventories are all carried in the Telco segment and consist of new and used electronic components for the telecommunications industry. Inventory is stated at the lower of cost or net realizable value, with cost determined using the weighted-average method. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.  At September 30, 2020,December 31, 2022, we had total inventory, before the reserve for excess and obsolete inventories, of $8.8$13.4 million, consisting of $1.3$2.3 million in new products and $7.5$11.1 million in used or refurbished products.

We identified certain inventory that more than likely will not be sold or that the cost will not be recovered when it is processed through our recycling program.recycling.  Therefore, we have an obsolete and excess inventory reserve of $3.1$3.9 million at September 30, 2020.December 31, 2022.  In 2020,2022, we increased the reserve by $1.8$0.3 million.  We also reviewed the cost of

Inbound freight charges are included in cost of sales. Purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs and other inventory expenditures are included in operating expenses, since the amounts involved are not considered a material component of cost of sales.

Management judgments and estimates are made in connection with establishing the allowance for doubtful accounts. Specifically, we analyze the aging of accounts receivable balances, historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in our customer payment terms.  Significant changes in customer concentration or payment terms, deterioration of customer credit-worthiness, or weakening in economic trends could have a significant impact on the collectability of receivables and our operating results.  If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, an additional provision to the allowance for doubtful accounts may be required.  The reserve for bad debts was $250,000 and $150,000 at September 30, 2020$0.3 million as of December 31, 2022, 2021, and September 30, 2019, respectively.2021. At September 30, 2020December 31, 2022, 2021, and September 30, 2019,2021, accounts receivable, net of allowance for doubtful accounts, were $4.0$1.7 million, $6.5 million and $4.8$7.0 million, respectively.

Intangible assets that have finite useful lives are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 10 years. Intangible assets are also tested for impairment when events and circumstances indicate that the carrying value may not be recoverable. Due to our continued operating losses and the uncertainties surrounding the COVID-19 pandemic on the overall economy and the resulting impact on our Company, we determined that there were indicators for us to test our intangible assets for impairment at March 31, 2020. It was determined that we needed to perform a specific fair value assessment for each of the intangible assets at both Nave and Triton as their individual undiscounted forecasted cash flows did not exceed their respective carrying values. We then performed a fair value assessment of each of the intangible assets and compared them to the individual carrying value amounts at March 31, 2020. As a result of this assessment, we recorded an impairment charge of $3.9 million related to the customer relationship intangibles in the Telco segment as of March 31, 2020. As of September 30, 2020, there were no further indicators of impairment.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable.  The Company conducts its long-lived asset impairment analyses in accordance with Accounting Standards Codification (“ASC”) 360-10-15, “Impairment or Disposal of Long-Lived Assets.”  ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows.  If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals. The Company recorded a $0.7 million impairment of a right-of-use asset in the Telco segment as of September 30, 2020, related to vacating and partially subleasing a leased facility. As of September 30, 2020, there were no further indicators of impairment.

Our consideration of recent accounting pronouncements is included in Note 1 - Summary of Significant Accounting Policies to the consolidated financial statementsConsolidated Financial Statements included in this annual report.

To the Shareholders and the Board of Directors of

The consolidated financial statements include the accounts of ADDvantage Technologies Group, Inc. and its subsidiaries, all of which are wholly owned (collectively, the “Company”).  Intercompany balances and transactions have been eliminated in consolidation.  The Company’s reportable segments are Wireless Infrastructure Services (“Wireless”) and Telecommunications (“Telco”). 

Cash and cash equivalents include demand and time deposits, money market funds and other marketable securities with maturities of three months or less when acquired.  Restricted cash consists of cash held by a third-party financial institution as a reserve in connection with an agreement to sell certain receivables with recourse, in the Wireless segment, see Note 53 - Accounts Receivable Agreements.

The Company recognizes revenue at the time a good or service is transferred to athe customer and the customer, obtains control of that good or receives the service performed. Most of the Company’s sales arrangements with customers are short-term in nature involving single performance obligations related to the delivery of goods or repair of equipment and generally provide for transfer of control at the time of shipment to the customer. The Company generally permits returns of product or repaired equipment due to defects, historically, returns have not been significant.

Additionally, the Company provides services related to the installation and upgrade of technology on cell sites and the construction of new small cells for 5G technology. The work under the purchase orders for wireless infrastructure services are generally completed in less than a month. These services generally consist of a single performance obligation which the Company recognizes as revenue over time. The Company uses an input method based upon a ratio of direct costs incurred to date compared to management’s estimate of the total direct costs to be incurred on each contract, since it best depicts the transfer of control to the customer. The Company’s principal sales are from Wireless services, sales of Telco new and refurbished equipment and Telco recycled equipment. The Company’s customers include wireless carriers, wireless equipment providers, multiple system operators, resellers and direct sales to end-user customers.

The timing of revenue recognition from the wireless segment results in contract assets and contract liabilities. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company sometimes receives advances or deposits from customers before revenue is recognized, resulting in contract

Trade receivables are carried at original invoice amount less an estimate made for doubtful accounts.  Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions.  Trade receivables are written off against the allowance when deemed uncollectible.  Recoveries of trade receivables previously written off are recorded when received.  The Company generally does not charge interest on past due accounts.

For both the Company’s Wireless segment,and Telco segments, the Company has entered into various agreements one with recourse, to sell certain receivables to unrelated third-party financial institutions. The other agreements without

recourse are under programs offered by certain customers of the Wireless segment.  The Company accounts for these transactions in accordance with Accounting Standards Codification (“ASC”) 860, “Transfers and Servicing” (“ASC 860”).  ASC 860 allows for the ownership transfer of accounts receivable to qualify for sale treatment when the appropriate criteria is met, which permits the Company to present the balances sold under the program to be excluded from accounts receivable, net on the consolidated balance sheet.sheets. Receivables are considered sold when they are transferred beyond the reach of the Company and its creditors, the purchaser has the right to pledge or exchange the receivables and the Company has surrendered control over the transferred receivables. The Company records a recourse obligation if it determines that any portion of the sold receivables with recourse are uncollectible.

For the Telco segment, inventories consist of new, refurbished and used telecommunications equipment.  Inventory is stated at the lower of cost or net realizable value.  Cost is determined using the weighted-average method.  Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.  For the Telco segment, the Company records an inventory reserve provision to reflect inventory at its estimated net realizable value based on a review of inventory quantities on hand, historical sales volumes and technology changes. These reserves are to provide for items that are potentially slow-moving, excess or obsolete.

The Company determines if an arrangement is a lease at inception of the arrangement. To the extent that we determine an arrangement represents a lease, we classify that lease as either a right-of-use ("ROU") lease or a finance lease. We capitalize ROU leases on our consolidated balance sheets through a right-of-useROU asset and a corresponding right-of-useROU lease liability. ROU assets represent our right to use an underlying asset for the lease term and ROU lease liabilities represent our obligation to make lease payments arising from the lease.

Intangible assets consist of customer relationships, trade names, and intellectual property. Intangibles assets that have finite useful lives are amortized on a straight-line basis over their estimated useful lives ranging from 3 years to 10 years. 

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals.

The Company provides for income taxes in accordance with the liability method of accounting.  Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and tax carryforward amounts.  Management provides a valuation allowance against deferred tax assets for amounts which are not considered “more likely than not” to be realized.

Advertising costs are expensed as incurred. Advertising expense was $0.5$0.3 million, $0.1 million and $0.6$0.4 million for the yearsyear ended December 31, 2022, the transition period of three months ended December 31, 2021, and the year ended September 30, 2020 and 2019,2021, respectively.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.

Any significant, unanticipated changes in product demand, technological developments or continued economic trends affecting the wireless infrastructure or telecommunications industries could have a significant impact on the value of the Company's inventory and operating results.

The Company holds cash with one major financial institution, which at times exceeds FDIC insured limits.  Historically, the Company has not experienced any losses due to such concentration of credit risk.

Other financial instruments that potentially subject the Company to concentration of credit risk consist principally of trade receivables. Concentrations of credit risk with respect to trade receivables are limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. As of December 31, 2022, two Telco customers accounted for 24% and 11% of trade accounts receivable, respectively. The Company controls credit risk through credit approvals, credit limits and monitoring procedures.  The Company performs credit evaluations for all new customers but does not require collateral to support customer receivables. 

conditions are valued at the closing market price on the grant date. Option grants are valued using the Black-Scholes-Merton model using model inputs that are determined on the date of the grant. Once the per-share fair value on the grant date is established, the aggregate expense of the grant is recognized on a graded vesting basis over the vesting period of the grant.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate fair value due to their short maturities.

The Company sponsors a 401(k) plan that allows participation by all employees who are at least 21 years of age and have completed one yearover 60 days of service. The Company's contributions to the plan consist of a matching contribution as determined by the plan document. Costs recognized under the 401(k) plan were $0.1 million, $34 thousand and $0.3$0.2 million for the yearsyear ended December 31, 2022, the transition period of three months ended December 31, 2021, and the year ended September 30, 2020 and September 30, 2019, respectively, after temporarily suspending matching contributions during 2020.

The Company’s principal sales are from Wireless services, sales of Telco equipment and Telco recycled equipment, primarily in the United States. Sales to international customers in Central and South America totaled approximately $1.9$6.2 million, $1.1 million, and $2.4$4.7 million infor the yearsyear ended December 31, 2022, the transition period of three months ended December 31, 2021, and the year ended September 30, 2020 and 2019,2021, respectively.

The Company’s customers include wireless carriers, wireless equipment providers, multiple system operators, resellers and direct sales to end-user customers. Sales, which individually amounted to 10% or greater of the Company’s largest customerCompany's revenue, to two customers totaled approximately 14%28%, 37%, and 28% of consolidated sales.sales for the year ended December 31, 2022, the transition period of three months ended December 31, 2021, and the year ended September 30, 2021, respectively.